Navigating Across The Pacific

Stephen Yagielowicz

Given the widespread changes in the adult marketplace, it is no wonder that marketers are seeking deals wherever they occur. From U.S.-based operators eyeing the European audience to European porn purveyors wanting a slice of the American market, exporting erotica is all the rage.

In addition to the needs of the adult entertainment industry, however, is a business requirement that is echoed by many mainstream merchants as well — the desire to source quality goods at the most attractive and profitable prices possible. Today, this means obtaining goods from China and other Asian countries — but beyond the search for the best dildo manufacturer or lube packager, discussions about marketing online adult entertainment in Asia are rarely found on webmaster boards, such as XBIZ.net.

Asia differs very widely among and within its regions with regard to ethnic groups, cultures, environments, economics, historical ties and government systems.

Part of the problem is the prevalence of antiporn legislation within the region; from Indonesia’s ban on adult content, to China’s notorious firewall and social campaign against viewing adult entertainment, “porn friendly” doesn’t seem to fit — despite the perception that the region is a haven for sex tourism.

English comedian Benny Hill joked years ago, “Once upon a time there were two Chinese ... now look at how many!” underscoring the vast size of the population — indicating that sex is indeed on the menu, but curiously punctuated by an almost puritanical viewpoint towards eroticism by government officials.

While Indonesia, among others, bases its objection on religious grounds, China limits porn based on moral reasons coupled with a view that prohibition protects the nation’s youth from harmful influences. Nevertheless, this enormous audience holds tremendous appeal to adult marketers.

According to Wikipedia, Asia is the world’s largest and most populous continent, covering nearly 30 percent of the Earth’s total land area, and serves as home to approximately 60 percent of the world’s current human population.

“Asia differs very widely among and within its regions with regard to ethnic groups, cultures, environments, economics, historical ties and government systems,” states the online encyclopedia, which explains that Asia “Is more a cultural concept incorporating diverse regions and peoples than a homogeneous physical entity.”

This diversity extends beyond population groups to products and services as well.

For example, the Asia Adult Expo (AAE), held in Macau, brings entrepreneurs and operators together from around the region and the wider world at large, to network and make new deals. Boasting a global reputation as a haven for gambling and the high-life, Macau, like Hong Kong, is a special administrative region of the People’s Republic of China — a communist nation not known for its support or tolerance of individual freedoms — but a land that needs the hard cash that these two regions bring in to its coffers.

Its sister show, AAE Taiwan, further extends business opportunities throughout Asia and beyond.

“[More than] half of the world’s adult products originate from Asia, so naturally it is the sourcing ground for importers around the world,” states the AAE website. “The estimated sales volume of adult products in Asia is [in the] billions of U.S. dollars every year [making] a promising market for innovative and quality items.”

According to the event’s promoters, with a population of 4 billion, Asia is the most populated area on the planet, with a market for adult products and services that has always been huge, and is growing.

Evidence of this trend is in AAE’s launch of companion event Intimate Lingerie Asia (ILA), said to be the first international erotic lingerie trade show in Asia; providing a showcase of the adult lifestyle that promotes trade and brand building for outlets such as retail shops and online merchants.

Of course, one size does not fit all.

For example, regional cultural factors are a mixed bag, with freedom, fun and sexual liberation coming to mind when the topic of Thailand enters the conversation. Japan, which is often thought of as a conservative culture, is seeing a new level of openness, where young women who were once reluctant to perform in porn are so drawn to it today that some companies not only seek college educated girls, but models from better schools.

Few if any talent agencies in L.A. require a robust resume for the job position of having sex on camera — illustrating the differences between cultures and customer bases.

Economic factors also play a significant role, with Asia featuring a wide range of economic prosperity among its inhabitants, with some of the world’s poorest and wealthiest citizens. While every country has an aristocracy or ruling class that is able to afford whatever they want, the distinctions between rich and poor are profound in many lands, where a growing middle class is striving to carve out a place for itself.

These consumers, many of whom may be enjoying their first encounter with disposable income, are an enormous potential market, if you can reach them with an attractively priced offer they can access — which for many Asian consumers, means via a mobile device.

This realization brings up a major hurdle for many marketers — finding a way to bill these customers using a payment mechanism that is available and comfortable for them to employ.

One company that serves Asian countries from China to Thailand plus everywhere else in between, is DialXS (DialXS.com), which provides credit card, premium short messaging service (SMS), Ukash and local bank transfer (LBT) processing for merchants serving consumers throughout the region. While not every option is available in every country (or widespread in its use), DialXS allows every customer to be catered to via the company’s extensive offerings.

Beyond the services provided by DialXS and other billing companies, mobile marketers seek direct carrier billing, where one-click purchases are added to the customer’s phone bill — but just as they are in the American market, Asian carriers are wary of porn.

According to Timo Matthias of KissMyAds (KissMyAds.com), there is no direct carrier billing for hardcore adult content in South East Asia, where telecoms are perhaps even more porn-shy than are U.S.-based operators.

For example, Matthias notes that in Singapore, “sexy” services are legally limited to glamour content depicting girls wearing bikinis, with a thong shot breaking the rules — let alone topless or nipple shots. Thailand is more liberal, however, allowing topless images, while Japan and Korea present opportunities for those able to play by the rules and find access.

Predominantly Muslim countries such as Indonesia or Malaysia are even stricter on sexy and risqué glamour content. For example, Indonesia will not even allow bikini content, so Matthias advises marketers to study “Fashion TV” style content (or even tamer fare) when seeking operator billing for these regions.

Offering explicit content is not required, however, for webmasters to make money from with their Asian mobile traffic.

“When I set up a bikini girl service in Singapore using operator billing, our company was getting 30,000 euro payouts from the operators per month, after we had the mobile advertising figured out,” Matthias said. “However, when we received adult traffic from webmasters with desktop porn sites redirecting their Singaporean mobile traffic to our bikini girl service, the payout increased to 250,000 euros monthly over 12 months.”

“Previously their mobile traffic would not convert with credit cards even on mobile pages, so we offered them a revenue share on our earnings,” Matthias added. “Everyone was making good money with the bikini girl service.”

This level of success does not guarantee smooth sailing, with the Indonesian government shutting down the VAS market in autumn 2011 because certain content providers were not playing by the rules, resulting in a ban that affected all service providers, forcing Matthias to cancel 60,000 subscriptions.

“The bottom line,” Matthias explains to XBIZ, is that “When it comes to operator-billed services, the environment is rather difficult and partly unpredictable. [In addition], billing cycles for operator payouts may take up to six months or longer and the operator’s share could be as high as 70 percent, like in the Philippines.”

This situation results in a profit margins as low as 10 percent, but profits nonetheless — and with volume, it adds up to decent revenues.

“It is all about volume,” Matthias says, citing the vital importance of working with a strong, well-connected, local billing aggregator, since business relationships are everything in the Asian markets.

Matthias also advises adult webmasters to monetize their mobile traffic by working with affiliate programs such as KissMyAds and others who work with local content providers offering VAS services that allow direct carrier billing for material that comes as close as possible to adult related content in each respective market. This involves redirecting their mobile traffic onto those offers via banners or directly, and then collecting the commissions for the resulting downloads and subscriptions.

For example, KissMyAds provides a mobile CPA / affiliate network that serves as a marketplace for webmasters and traffic buyers to meet local advertisers with operator-billed VAS services. Matthias is personally working with adult industry publishers in order to help them monetize their mobile traffic while sourcing new local content providers and business.

Long considered a prime audience for adult, Japan serves as a microcosm of the Asian porn scene.

According to XBIZ.net member Toshi, who lives near Tokyo, Internet porn is popular in Japan, where adult animation, as well as content featuring human actors, finds widespread appeal among consumers.

While people around the world enjoy adult content, there are some significant differences between audiences based on laws and local preferences. When comparing the U.S. and Japanese adult markets, for instance, these variances become apparent.

Toshi explains that while portrayals of rape and violence appear in Japanese porn, genitals tend to be obscured, with pubic hair making an onscreen debut in September of 2006. Contrast this to the American market, where although not necessarily illegal, billing services for porn sites depicting rape and violence may be difficult or impossible to come by — while imagery depicting genitalia knows few if any bounds.

Interestingly, while uncensored depictions of a woman’s vulva, and straight sex, are prohibited in the Japanese market, anal sex is apparently not a problem, as the anus is not considered a sexual organ.

As for examples of popular websites serving the Japanese audience, Toshi points to Soft On Demand (www.sod.co.jp) and Momotarou Eizou (www.indies-av.co.jp) — two sites that have a very different look and feel than typical American / European adult website designs — and notes that market demand is bringing more companies, including many smaller producers, into the fray.

As for the ability of foreign operators to serve the Japanese market, Toshi believes that the Internet has eliminated many barriers, with the majority of customers caring more about the site’s content than whether or not its sales text and customer service is available in Japanese.

Toshi also told XBIZ that although highly educated Japanese viewers might prefer foreign-based sites, blue-collar workers love the typical (Japanese) “girl next door” look — not unlike many American’s preference for real “amateur” models.

Another popular genre involves the “gravure idol,” or primarily big-boob softcore tease model, such as the popular Komukai Minako — along with the Japanese equivalent of celebrity sex tapes, with sexy content featuring famous mainstream performers.

As for platform preferences, Western porn promoters might view the Japanese market as composed of tech-savvy, Smartphone wielding consumers, but Toshi notes that nobody is watching porn in public (although semi-nude or lingerie videos might be discretely viewed in public places). Instead, Japanese consumers prefer to view adult content while in their own room, where they prefer to watch porn on a PC or DVD player, away from prying eyes.

On the topic of payment preferences, Toshi told XBIZ that privacy and security concerns prevent the widespread use of credit cards, but that the typical $30/month paysite pricing model is not expensive if the site offers exclusive content, is safe to patronize, and provides customer support in Japanese.

As with other countries, piracy and torrent use are taking their toll on the Japanese media market, driven partially by a desire to thwart censorship attempts, but the anecdotal evidence points to this dynamic nation as being a lucrative market for adult entertainment.

For further perspective, another XBIZ.net member, LeRoy of DTI (www.dticash.com), a program that specializes in live cams targeting the Asian market, shared his thoughts on the current state of the Asian adult entertainment audience, calling it one of the top sectors of the adult industry.

“Traffic is growing steadily and user retention within our network has been very stable,” LeRoy said. “The sinking dollar makes content from U.S. more affordable to Asian countries, so we have enjoyed a steady increase over the past couple of years.”

On the topic of the adult offers that he believes hold the most appeal for Asian consumers today, LeRoy notes that the Asian market is heavily saturated and its consumers are very particular customers.

“Cams with Japanese and other Asian girls are becoming very popular. Asian consumers will open their wallets for intimate one-on-one sessions with beautiful girls,” LeRoy told XBIZ.

As for which countries represent the most opportunity for adult marketers, LeRoy cites traffic from top tier countries as always having been a big hit for DTI’s sites.

“In Asia, our top converting areas are Japan, Hong Kong, Singapore and Taiwan,” LeRoy told XBIZ. “Malaysia, Thailand, Korea, Philippines, Vietnam and China are areas that we avoid, as these countries are blocked by our billing processors due to fraud.”

“But as far as future opportunities,” LeRoy added, “We see China’s porn consumption exploding.”

Serving the Asian market is not without risk, however, with a range of cultural, economic and legal issues throughout the region that affect would-be merchants, including restrictions in some areas that prevent webmasters from legally operating adult content sites.

“The penalties are very tough in China, South Korea and the Philippines,” LeRoy cautions. “If you live in these areas with harsh punishments, we suggest you move to a place where this type of promotion is legal.”

Even where this material is legal to promote, other factors conspire to hamper sales efforts.

“Torrent sites, file locker sites and tube site owners who steal, are making it difficult for smaller program owners and affiliates that are struggling to convert visitors and make a decent income,” LeRoy concluded. “Along with being very competitive, there are many producers calling it quits due to content theft.”

Despite these challenges, the size and growing prosperity of the Asian audience makes this market irresistible to adult entertainment producers and promoters — including those waiting in the wings for a wave of social change, as well as those willing to brave this final frontier.


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