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The Sucking Vacuum

The Sucking Vacuum

February 4, 2007
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" turning a buck off a given title is harder and riskier than it used to be "

Over my 20-plus years as a writer, producer, director and sometime performer in the field of X-rated video, I've occasionally been asked how I settled on my nom de porn, Ernest Greene. Actually, it was the kind of dumb joke industry newcomers often make on the assumption that they won't be here too long. Like so many others, I was primarily motivated by the desire to turn a few quick bucks, so what I was really all about at the time was "earnest green."

During the ensuing years, I've found many other sources of creative and personal satisfaction in what turned out to be a career rather than a day job, but I've never lost interest in what singer Van Morrison wittily called "blue money."

The lack of cogent analysis of bottom-line issues that affect every participant in this vast enterprise strikes me as a sucking vacuum in need of filling. Having both made and lost money in virtually every way possible playing this game, I welcome the opportunity to share what insights I may have picked up along the way. If you're looking for hot gossip, there are plenty of better sources, but if you want to check out the operations of the money machine, perhaps I can help.

Certainly the timing seems apropos, as longtime observers all agree that 2006 was a very, very difficult year for X-rated video, and the auguries for 2007 are murky and somewhat ominous as well. There's been a lot of crepe-hanging for "the business as we know it," and an air of pessimism unseen during the porn boom of the past two decades is pervasive among small gonzo shops and big feature producers alike. While much is assumed, little is known, and before we all head off to the Mojave Desert with vacuum-cleaner hoses for our exhaust pipes, it might behoove us to examine what evidence we do have.

We're hampered in our speculations to no small degree by a lack of the kind of specific business intelligence available to more conventional industries. Hard numbers are hard to come by, and political biases, which can never be ruled out in any discussion of porn, tend to skew what data we do have toward particular points of view. There is, for instance, no general agreement on the overall size of the adult entertainment business and what its total revenue might be, which makes it hard to tell which way the line is trending. I hear estimates from somewhere near $7 billion a year to more than $20 billion a year. Personally, I incline toward a number closer to the low side of in-between and remain skeptical of any projections extrapolated from the minimal data available.

The New York Times recently concluded that X-rated video sales and rentals for 2006 came in at about $3.5 billion, down a troubling 15 points from 2005. On the other hand, the Times claimed that adult Internet spending was up about 13 percent and adult cable and pay-per-view an impressive 35 percent. While we may not know exact totals, it's clear that some people in this game are making more than they used to and others less. I suspect that if these increases and declines are balanced out, the net share of consumer spending devoted to adult entertainment hasn't changed all that dramatically. What has changed and clearly continues to change is how the pie is divided.

It's no secret to any video producer that turning a buck off a given title is harder and riskier than it used to be. Big feature producers that used to count on streeting major releases at 10,000 pieces out the door are relieved to see five, and smaller companies are looking at the kinds of numbers that used to be considered not-bad-for-specialty.

Major players are increasingly dependent on cable, hotel and video-on-demand revenue streams to assemble razor-thin margins on their more ambitious projects, while poverty-row manufacturers are turning increasingly to web-driven mixes in which physical products play an ever-shrinking part.

Even industry titans with legendary names are whispering quietly about an eventual end to DVD distribution, with ripple effects all the way down to neighborhood brick-and-mortar video stores, which some fear face eventual extinction. There is an overall sense of alarm about market saturation, aging demographics and a failure to attract new audiences and, of course, the ever-present menace of Internet competition.

Taken together, these observations do not paint a very pretty picture, but examined in greater detail, they may not be as dire as they seem, and many of the worst problems we face are at least partially of our own creation and subject to mitigation by measures within our own control.

Asked what the single biggest problem faced by our industry is today (beyond the catch-all excuse of competition from the Internet), almost everyone offers the same answer: overproduction.

There is simply too much product chasing too few customers. Certainly, with more than 12,000 new video titles released last year, that's an obvious concern. The cost of making video is higher than ever, from production expenses to duplication to shipping, and with flat growth in the size of the audience, the squeeze created by too much product is decidedly painful. Retailers can only stock so many titles, and consumers can only invest so much time in finding the ones they want.

But to some extent this situation may prove self-correcting. A number of companies have consolidated in the past 12 months, some have gone under, and I confidently predict that even more labels — including a few that have been around a very long time — may fade out this year. While that's bad news for those who have no place to sit when the music stops, it may result in a reduced glut that could raise revenue for the survivors.

The question, then, is what will separate the survivors from the doomed? That's exactly the conundrum I intend to address next time. I'll conclude this time with the admonition that, from what I can tell, those who have the most to lose are doing exactly the things most likely to lose them whatever they now have. Next time, we'll look at the madness in the method and how it might be abated.


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