Consider the traditional gay adult video production company that has built a powerful brand in the world of hard copy distribution. With years of investment and focus on building a valuable brand, it must now determine how to take that brand experience to the Internet. The importance of this transition has increased exponentially with the growth of online video-on-demand options for delivering adult video content directly to consumers via the Internet. Just as the VHS tape gave way to the DVD, the DVD is giving way to the Internet.
With the increasing importance of the Internet as a distribution channel, gay adult production companies need to get their content online. Some choose to do it themselves through their own membership or pay-per-play sites, while others enter into agreements with existing VOD companies that specialize in digital distribution. There are risks and rewards with both options, and careful planning is the key to success.
A brand is valuable because it makes selling easier. Transitioning a brand online while maintaining that value is not a simple task.
A brand is not a logo, slogan or publicity campaign. A brand is all about the expectations that consumers have when they interact with your brand. Consumers are loyal to favorite brands because they can predict what their experience is going to be. Some gay adult video production companies figured this out years ago. Everything they did, from production, to pricing, to promotion, to distribution was done in a specific, repeatable way. Consumers developed their expectations and loyalties based on this experience.
On the other hand, there are hundreds of other gay adult production companies that you simply can't recall, can't describe their content, have no idea how much you would pay or where you would buy it. Why? They have not invested in building strong brands. These are the commodity providers.
For those video production companies that have differentiated their brands, the Internet has the potential to destroy those hard-won advantages if an effective Internet distribution strategy is not implemented. Simply stated, while the Internet can enable a production studio to boost short-term sales and reach a large new audience, it also needs proper care and planning to ensure that in the longer term, the expectations that consumers have of those brands are not undermined.
So what makes up an effective Internet distribution strategy for an adult production company? Each producer needs to consider their own unique situation and objectives for the future. For example, do they want to maintain their differentiation or are they better off as a commodity provider?
Here are five areas that should be considered as part of any strategy. These five "Ps" are important components of the "magic mix" that goes into creating a powerful brand experience, both online and offline. In transitioning a brand online, it is important to remember that these principles still hold true.
PRODUCT: An evaluation of your current video product is required. Is it the same as most others? If the answer is yes, then you are going to want to pursue a commodity strategy. Or is your product differentiated? If yes, then your strategy must support that differentiation. This categorization is key to building your brand strategy. Your branding and marketing strategies should be the same online as offline, and you should not consider any avenue that would undermine or contradict any offline efforts.
PLACE: The channels of distribution selected to bring a product to market also impact the way it is perceived by the consumer. Prada, for example, would not sell their shoes at Payless. The retail provider is important to the value the consumer places on the Prada brand. To throw their valuable product on any store shelf would not make sense. To do so would mean that they would lose part of the cachét and devalue the product in the eyes of the consumer. The Internet should be treated as a single channel. Similarly, gay adult producers need to consider which "shelf" (Internet provider) their products will be found on. Does your shelf match your product, and is your product given boutique space in your online and offline resellers? Prada, for example, has small boutique areas in the department stores to add to their identity as a high-end brand.
PRICE: Carefully selecting distribution channels means paying close attention to price points. Price is dangerous ground online. The Internet is a single, large territory, and consumers can do worldwide price comparisons at the click of a mouse. Differentiated brands command higher prices. Commodity products are usually subject to greater levels of price competition. An average consumer is willing to pay a far higher price for a Prada shoe than a pair of Keds because their perception of the brand is that it is deserving of the higher price tag. An important part of brand protection is price integrity, which supports not only your own company but the industry as a whole by maintaining a higher price point and price differentials for varying production levels.
PROMOTION: How do you position and promote your brand currently? How will you want to promote it in the future? Your online positioning speaks volumes about the reputation of your products, and how you consider it in the overall market. The Internet requires special attention to your ongoing promotional strategy. Choosing the right online distribution partner is key to this. Think about how and where Prada promotes its brand versus Keds. The strategies are different for a reason. Your online strategy needs to reflect your brand. Again, consider the high-end boutiques at large department store chains. These areas separate a brand from the thousands of others available in the store. Online, you are competing against tens of thousands for the same promotional space and opportunities. You need a partner who can give you that space and attention.
PARTNERSHIPS: And now for the fifth "P" — partnerships. Choosing which partner will provide digital distribution of your videos is a key decision. Ideally, you will choose the partner with the same philosophy that you have. Are you a commodity producer? If so, your focus will not be on differentiating your brand but rather on making your videos commonly available and competing primarily on price. If you are building a brand, however, you'll want to choose far more carefully. Brand builders require partners who will work with them to promote and build recognition, while preserving the experience that the consumers are looking for.
Beyond the higher returns or promotional placement, proper branding lies a wider and more important issue — guarding against commoditization and cannibalization in the gay adult industry. The gay adult industry has so far escaped many of the problems experienced in the straight adult industry — devalued product, declining hard copy distribution and difficulty in funding future productions. The central reason for this success is the studios' refusal to glut the market with their product and license their content to competing distributors offline and online. Gay adult studios know that to protect the value of their brands within the larger industry they must protect the value of its core product: their videos.
One way that many of the leading gay adult brands have chosen to protect themselves is to enter into an exclusive relationship with an online distributor. Exclusive relationships mean that price competition is kept to a minimum and producers can continue to receive royalties in keeping with their production costs. These producers recognize that premium content should not be sold for pennies. Consumers, particularly in the gay market, have proven again and again that they are willing to pay a higher price for a better product.
More importantly, however, an exclusive relationship creates a partnership between the VOD provider and the studio — a partnership to promote a brand and work towards the mutually beneficial goal of earning maximum revenue per rental and building a sustainable online industry.
The Internet will either be the demise of the gay adult industry or it will cement its place in the larger adult industry. At the end of the day, it is up to the individual studios to decide where they want to position their companies, their reputations, and their brands. The right decisions now will not only deliver healthy revenues today but also ensure the longevity of your brand in the VOD marketplace.
Mary Gillis is product marketing manager, business to business, for Sureflix Digital Distribution.