Not So Private

Alex Henderson
If Vivid Entertainment CEO Steven Hirsch or Wicked Pictures President Steve Orenstein has a European counterpart, it is arguably Berth Milton Jr. As CEO and chairman of Barcelona, Spain-based Private Media Group, the Swedish entrepreneur (who speaks fluent English) oversees not only Europe’s largest adult entertainment empire but also its oldest.

Private, which Milton’s father, Berth Milton Sr., founded in Stockholm, Sweden, in 1965, is celebrating its 41st anniversary in 2006, and along the way, the outfit has evolved considerably. Private started out as a publishing company and subsequently branched out into adult films. Under the direction of Milton Jr., who took over the business in 1991, Private has undergone a considerable technological expansion and provides erotic content for the Internet, IPTV, video-on-demand, mobile phones, wireless and other technologies. And Milton has made sure that Private — like Hustler and Vivid — is recognized as a full-fledged brand. The Private brand in 2006 is being used to sell everything from condoms to clothing to an energy drink.

During an interview with XBIZ, Milton addressed a variety of topics ranging from Private’s technological evolution to the company’s decision to become publicly traded — and even Private’s ambitious marketing plans for the U.S.

XBIZ: In what ways has Private evolved and grown technologically since you took over in 1991?

MILTON: When I bought Private from my father in the early 1990s with a few investors, the first thing we did was to start home video. My father never took up video because he was always afraid of being pirated; he thought it was better to not sell videos at all than to have people make money from pirated copies, which I thought was a strange philosophy. After video, the Internet boosted the adult industry, and directly after the Internet, the DVD followed and also boosted the adult industry. Private was very fast with DVDs; we were one of the first adult companies to launch DVDs. And for sure, we were the first to launch adult DVDs with multi-language format. The competition was only doing one language, which made limitations for them in terms of where they could distribute. But because we had multi-language DVDs, we could launch DVDs on a big scale worldwide. So the multi-language DVD was one of the big things that kept us on the forefront when it came to technology. Now, we’re seeing a decline in DVD sales, and our focus is on newer technologies.

XBIZ: Technologically, where do you see the biggest growth for Private and adult entertainment in the future?

MILTON: Mobile phones, for sure, and everything that is wireless. Today, Private has four in-house attorneys who are signing contracts with mobile phone operators and telcos around the world on a daily basis. I think we will see enormous growth when it comes to triple play and IPTV — VOD with the big telcos. People are clever when it comes to searching and finding, and they start realizing that VOD service with triple play on the Internet with IPTV is actually a better service than you get with VOD from Comcast or Warners and so on. [Triple play is a telecommunications marketing term for the provisioning of the three services — high-speed Internet, VOD and telephone service over a single broadband connection. Triple play services are offered by cable television companies and telco operators.]

XBIZ: What do you see as the future for the small, mom-and pop adult webmasters — the people who are making a profit providing adult content out of a home office in Boston or Seattle? What is the future of the small online entrepreneur in the adult industry?

MILTON: Probably they will still have the live cam thing, but that’s what it will be. I don’t see any other major growth opportunities for the small entrepreneur in the adult business. In Hollywood, you will always find the small independent movies, but Hollywood is mostly the big studios, and the same will happen with adult.

XBIZ: So what you envision is the adult industry, at least the film side of the adult industry, becoming dominated by a handful of major companies? You’ll still have the small independent adult film companies, but mainly, it will be an industry dominated by a handful of major players like Private, Vivid, Playboy, Wicked and LFP/Hustler?

MILTON: Yes, it will be a handful of major players. It is going in that direction, for sure.

XBIZ: You said that DVD sales were decreasing for Private. Do you believe that DVDs have passed their prime in the adult entertainment market?

MILTON: Yes, by far. Some marketing people at adult companies in the U.S. have predicted that video piracy will be the downfall of adult DVDs. It’s not piracy. It’s that there are so many more ways to get access to movies today. Downloads are going quicker than we ever could have expected. Private has a contract with a company here in Spain called Imagenio, which is Telefónica’s IPTV service. My guess is that they have 500,000 subscribers; that means there are 500,000 people who will never go out and buy an adult DVD anymore. And that’s only one country and one operator. DVDs are fading away quickly in the adult industry, and it is the same thing for mainstream business. Why go out and rent a DVD and return it or go out and buy it when you can sit at home and do your own selection?

XBIZ: Some adult entrepreneurs are of the opinion that the future of adult DVDs will be strictly downloads, that instead of obtaining a DVD either by going to a video store or by mail order on the Internet, everyone will be downloading adult titles and burning them onto blank DVDRs. What do you think?

MILTON: That’s a dream scenario. In the future, it will be downloaded, but you will never burn it on a DVD. I have a box today, which is wireless, where I download my movies into. I can store 500 movies or maybe 1,000; I haven’t even reached the peak yet. It just downloads, downloads, downloads, and I can still use my computer because it doesn’t take all the bandwidth. I installed that technology more than a year ago, and I can imagine that it is more advanced today. I can just see what will happen in two or three years. I have a son who is 17 years old. He downloads all of his music for his iPod; he hasn’t been to a music store or a DVD store for the last three years. He will never be a customer of a DVD store, he will never be a customer of a CD store, and he will never buy a blank DVD and burn it because he can’t store it. Memory is the cheapest thing today when it comes to computers; it costs nothing. You can store so many gigabytes in a box that is no bigger than a DVD box.

XBIZ: Private has been publicly traded since 1999, though the vast majority of adult companies are still privately held. For an adult company, what are the advantages of being publicly traded?

MILTON: It gives you credibility more than anything else. Of course, it also gives you an opportunity to raise money if needed. We didn’t go public to raise money, we went public to create the credibility. We saw early on that all the big companies — all the big telcos, all the big broadcasters, everybody — were looking into adult, but dealing with small companies in the basement was really not what they wanted to do. Dealing with companies that could say they have a Nasdaq listing made the executives feel much more secure about their partners, and I think we have proven that with all the different contracts we have with the major players in these segments.

XBIZ: Do you envision more adult companies becoming publicly traded in the future?

MILTON: No. I find it more and more difficult for an adult company to become publicly traded. I know companies like Vivid have been looking at posbanker who is your underwriter. Private always had very good auditors — very well known auditors — and we were always run like a publicly traded company even before we were publicly traded. That made it possible for us to become public. It is not the different stock exchanges, I think, who have a problem with the adult industry; it is the underwriters. It is getting support from a banker or a broker, which is not that easy.

XBIZ: In 2006, which countries would you say are the most receptive to Private’s material, and which are the most challenging in terms of obscenity laws and the social acceptance of adult entertainment?

MILTON: If you take away the Middle East, where the social acceptance of adult material will probably not happen as long as I am alive, Asia is starting to open up. They had the first sex trade show in China in September of last year, which would have been impossible only a year and a half ago, and they had another one in Singapore. Of course, you can’t show much, but you can show some things. Japan, Korea, Hong Kong, China, Taiwan — these are the places we see opening up. The challenge is to get these places to understand that sex is not a bad thing — that sex is normal and that most people have sex and enjoy sex.

XBIZ: In various interviews, you have been quoted as saying that you find Spain to be more accepting of adult entertainment than Sweden, where Private started. Many Americans in the adult industry have been surprised to hear you say that.

MILTON: It sounds weird, but I think Spain has a more liberal view of adult than Sweden. Historically, Sweden was very liberal, but today, it is not as liberal as it used to be.

XBIZ: Would you say that the Spanish government is more tolerant of erotic entertainment than the Swedish government?

MILTON: No, it’s not the governments; the laws in Sweden and Spain are pretty much the same — or you could say they are exactly the same. It’s more the general acceptance of adult entertainment by the people; adult entertainment is more socially accepted in Spain than in Sweden. But law-wise, there is no difference.

XBIZ: What are some of your thoughts on the ways the U.S. government has treated adult entertainment during the George W. Bush era?

MILTON: Unfortunately, we’ve seen a little backlash the last couple of years in the U.S. with the Bush administration. But I think that normally, people start screaming very loud when they see that they are starting to lose the battle. When you know you are losing, you try everything, and I have a feeling it is that way in the U.S. The sexual liberation is there, and people have to accept the fact that women have the same sexual demands as men.

XBIZ: So you believe that despite U.S. Attorney General Alberto Gonzales’ vow to increase the number of obscenity prosecutions, the adult industry is really winning the cultural war — as Patrick Buchanan termed it — in the U.S?

MILTON: Sometimes it gets worse before it gets a lot better, and I think that is what we are now seeing in the U.S. The religious right wing is screaming a little bit louder now, but all that will change.

XBIZ: Private North America has been active since 2001. In what ways do Private’s marketing efforts in the U.S. differ from your marketing efforts in Europe?

MILTON: The European market, for sure, has been fantastic; the U.S. has been zero. But we’re changing that drastically right now. We’re going to be focusing tremendously on the U.S. because we’ve really been lacking in brand recognition there. We’ve been a totally European company. In the States, we never really put our name on the map with the DVD and video market, but I think that with mobile phones and IPTV, things will start to pick up in the U.S. We’re following the American standard and will be hiring contract girls who will be out promoting Private. We will do major competitions in the U.S. in the coming year; we’re doing a tour that will go all over the U.S. and will end in Las Vegas, where we will announce four winners. We’re trying to establish contract girls similar to the way Vivid has but with the look of Private girls. The Vivid girls are beautiful, but that look is maybe too plastic for Private girls. We always believed that the more natural look is better than the artificial look, and that is what we are aiming for in the U.S. — the best-looking American girls with the natural look.