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Broadband Boosts Video Chat

Broadband Boosts Video Chat

May 16, 2005
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" ...what reason would a surfer have to purchase porn? The answer is simple: to obtain content that he or she could not obtain for free. "

Many merchants in the online adult industry cite the glut of free porn as a major factor in their inability to meet sales volumes.

After all, with so many free photos and videos available today, what reason would a surfer have to purchase porn? The answer is simple: to obtain content that he or she could not obtain for free. One of the best examples of this type of content is live video chat.

Early purveyors of live video chat services faced a major problem in trying to deliver the "live" feeling that consumers demanded due to slow dial-up connection speeds, limited video sizes and frame rates, all of which generally precluded the use of high-quality audio and other features.

The growing penetration of broadband Internet access has enabled customers to receive and increasingly demand a "near-television" experience, and providers are growing to accommodate this demand.

Today, users of high-speed connections are able to engage in high-quality, private, interactive, one-on-one, two-way, live audio and video chat sessions, with a select model of their choice. This broadband driven technological advance has caused growth, challenges and innovation within the video chat market segment.

"We have been shifting our video that has been our core technology for the last six years to offer a better solution for the higher speed broadband connections that are now available," Legendary Lars, owner of Streamray Inc. and Cams.com, told XBiz. "We are also moving to a more intense tour and interface due to better connection speeds."

However, with this type of growth comes various market, technical, legal, staffing and other challenges being faced by live video chat businesses, and coping with these challenges is not an easy task.

New Challenges
Operators face increasing competition and escalating costs within the live video chat market segment and are forced to sometimes take drastic measures in order to effectively compete. Reducing profit margins and paying out more for traffic, while working diligently on the back-end to increase conversions, are some of the ways that competition is being dealt with.

In addition, operators face billing issues, database management and extensive hardware support, DDOS attacks, hackers and viruses, plus evolving 2257 compliance issues.

In the face of these challenges, however, market leaders are showing innovation in their latest offerings and evolving their technology and approach in order to cope with shifting consumer demands and legal operating requirements. Companies also are much more apt to brand themselves and set themselves apart as better, more appealing places than ever before for a person looking to buy a membership.

"Continually growing our business in the live video chat sector is a challenge, as it is one of the most saturated sectors in adult online entertainment," Chuck Tsiamis of Video Secrets told XBiz. "The barrier of entry is low. With a video cam, Internet connection and a PC, you can stream a show from your home."

Due to the transient nature of the models performing live video chat sessions, staffing issues are always a major concern. In many cases, there are too few models to choose from, with not enough variety to attract and retain surfers. There also may not be enough revenue available per model to keep her or him interested in performing. Where the models are required to work is also an issue, many operators say, since not all video chat companies own or operate their own studios. Some may have reps that operate from studios around the world, some use models that work from in-house studios, while others may employ models that appreciate the convenience of working directly from their own homes.

"We don't operate studios," Tsiamis said, adding that Video Secrets employs a 50/50 mix of in-house and at-home operators and that studio relationships vary.

"Third-party independent contractors around the world handle our production," Legendary Lars said. "We do not own or operate any studios. We have a number of reps that operate studios around the world and about 60 percent of our models are in studios; the rest work from home."

Models can work from various locations both in and out of the United States. Some are located in Asia, South America, North America and South Africa, while many others come from Central and Eastern Europe. When asked if operators had a preference over using stateside or offshore models, and if having them work from a central studio or from home was preferable, Legendary Lars said, "In recent years more models are offshore because they are willing to work for less than models in the U.S."

The approximate total number of models in any given network varies, as does the total number of models working online at any given time.

"We have 2,000 total performers in the Flirt4Free network, with 100 plus available at any given time," Tsiamis said. "Offering an ever higher number of models working online 24/7 is well advised and should be based on sales volume."

"We have more than 5,000 models in our system, and we have generally between 130 to 200 models online at any one time," Legendary Lars said. "Our goal this year is to reach 400 models at a time. Live sites have a built-in economic control on the number of models who log in versus the amount of total sales available on the site."

While the number of available models has increased tremendously over the years, it used to be a very difficult factor in the beginning, with turnover still being an issue. Turnover is lower with successful models, however, as the longer a model stays online, the more money they make.

"The number of models available now is huge," Legendary Lars said. "We used to have to beg models to go on. Now we take 50-100 new applications a week."

Branding plays a big part in a model's retention, as well as for building a solid clientele base. Branding also comes into play when "big name" models make special appearances.

"We allow not only the every day girl, guy and transgendered performers to stream their live performances through Flirt4Free, but we also have the big-name, adult superstars, straight and gay, on once per week," Tsiamis said.

Endless Opportunities
At this point in the evolution of live video chat businesses, many operators would agree that the sky is the limit for the future of the market and going mobile will play an increasingly large part in its continued growth.

"It's all going to broadband," Tsiamis said. "When the average person can sit at home and log in via a TV/PC hybrid machine and connect via broadband to live performers, that will be the beginning of the second phase of live video chat."

Legendary Lars defined the future of Cams.com and its offerings as including a lot more content, more interaction and more customization, more competition, better quality video, more women and niches, a better customer experience, more money for webmasters and cheaper video prices for customers.

"There are lots of amateur sites that nibble on the big pie, but there are only a dozen commercially run sites, and of those there are a handful that are committed and driven to grow legitimate, professional, legally compliant and socially responsible live video chat sites now and into the future," Tsiamis said. "Slow and steady wins the race."


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