trends

Not Done Yet: Porn Execs Ponder DVD Market

Q. Boyer

Once the centerpiece of content-driven revenue streams, the market for adult DVDs has taken a figurative beating over recent years, driven by factors ranging from profligate digital piracy to the advent of technologies that have greatly diminished the relevance of physical media in all entertainment sectors.

As such, it’s not unreasonable to begin an exploration of the current state of the market for adult DVDs by asking a simple, if highly charged, question: Is DVD dead?

I would say the primary demographic for the adult DVD purchasers would be the 40-plus crowd as more of the young people would be using the Internet to view their content. -Michael Klein President, Hustler

“DVD is not dead, it’s just not going anywhere, up or down,” Daniel Quinn, a veteran retailer who also owns Smash Pictures, told XBIZ, expressing a sentiment echoed by many of his high-profile peers. “Sales are still there, but the market is flat.”

Jeff Dillon, vice president of business development and marketing for Gamelink, concurred with Quinn, saying that while DVD is “far from dead,” he expects that the market “will continue to decline every year,” in large part due to the vast differences in purchasing behavior between different generations of consumers.

“Every day a DVD customer dies, and he isn’t being replaced,” Dillon said. “I’m not sure when it will die; VHS held out a lot longer than I expected, so I’m sure DVD will be around for many years to come. For customers who have to buy a hard copy it is the only format available.”

While the format continues to cling to life for the time being, it’s also pretty clear that the DVD market will never return to its glory days, according to Shelly Sandau, who serves as consultant to the Lion’s Den following years of service as the company’s director of marketing and purchasing.

“I don’t see a rebound coming, really,” Sandau said. “I think we’re going to be like the European market, where DVD levels off at around 20 to 23 percent of an adult store’s sales.”

Even so, there is still money to be made in adult DVD production and distribution, and “the right product still can do very well,” Scott Taylor, the president of New Sensations/Digital Sin who also owns National Video Supply/Universal Distributor, told XBIZ.

“The problem is that the market is evolving away from DVD,” Taylor said. “If it remained this way, then it would be a terrific business forever, but there is an uncertain future here. It is more a matter of when and not if DVDs will go away — but we still have time.”

Bob Christian, general manager of Adam & Eve, agreed with Taylor, noting that while his company’s DVD sales are decidedly down from where they stood five years ago, “some movies and categories remain very strong, such as high budget parodies like ‘Grease XXX A Parody,’ and our romance movies, such as ‘Intimate Encounters.’”

“The DVD is dying, but the industry has been too quick to declare its demise,” Christian said. “Adam & Eve still sells a heck of a lot of them, and uses a ton of them for promotions, bundling and inducements.”

If the consensus is that the DVD is dying but not yet dead, a logical next question is: “Who’s buying?”

On that point, there appears to be another consensus — the demographic of the DVD purchaser skews to the older end of the spectrum, especially when compared to the demographics of the online porn consumer.

“I would say the primary demographic for the adult DVD purchasers would be the 40-plus crowd as more of the young people would be using the Internet to view their content,” said Hustler President Michael Klein. “That’s basically the platform they grew up watching all content, not just adult.”

Gamelink’s Dillon agreed, and noted that to a lot of younger consumers, DVD might not just be less relevant, but a less practical format as well, given the platforms younger consumers typically use to view content.

“I would say most customers under 30 don’t even own a DVD player,” Dillon said. “Other than their gaming systems (XBOX, PS4, etc.) or a computer drive, most of the 30-and-under customers don’t even have the ability to play a DVD,” Dillon said.

Sandau said that from the perspective of the Lion’s Den, there is nothing new about the DVD consumer hailing from a somewhat older demographic.

“We never had a lot of 18- to 35 year-olds buying DVDs,” Sandau said. “In my experience, that was always an older demographic. What has changed now is that we see a lot more women purchasing adult DVDs, in part because Lion’s Den tries hard to be as female-friendly as possible.”

Some see the ‘health’ of the DVD market as being bifurcated, in so far as there is sales data that suggests DVDs sell better (proportionately, at least) in a brick and mortar environment than they do online — a fact that might reflect the different purchasing demographics between the physical and virtual environments.

“There is probably more business to be done on DVD sales through brick-and-mortar stores since if a consumer is choosing a DVD online, they are more likely to use online to view the content, whether through streaming or download,” Klein said. “We do still sell DVDs through ads in our magazines and at our Hustler Hollywood stores, as well through other retailers worldwide. There are sales from e-commerce sites, too, but the stronger sales of DVDs comes from the brick-and-mortar stores.”

Regardless of where one sells DVDs, the key factor is “price, price, price,” according to Quinn.

“The days of getting $34.99-plus for a DVD are gone,” Quinn told XBIZ. “Set up specials like buy two, get one free, or set your price points at $4.99 - $14.99. If you’re lucky and have a great movie, you can draw $19.99. That’s what we’re doing on the East Coast, and you’re still getting five times your money, or more. It’s also the best time to buy DVDs; they’re at an all-time low to purchase for the retailer. Online always used to get a better price, but now it’s an even playing field so far as price goes.”

Sandau concurred with Quinn, observing that a lot of companies, particularly those of the “old school,” are reluctant to change their price points, and as a result have effectively priced themselves out of the current DVD market.

“They say ‘I have always been able to get $44.95 for a new DVD; why should I drop my prices and make even less money?” Sandau said. “But if the customer isn’t buying, the $44.95 price point isn’t making you money, it’s losing you money.”

Price point considerations are also at the center of the experts’ advice for how adult DVD retailers, distributors and marketers can squeeze more out of the current market, not surprising given the fact that “people are often price-driven,” as New Sensations’ Taylor put it, adding that it’s also important to remember that “not all porn is created equal.”

“Carry and push the best stuff,” Taylor said. “If your customer is only given a choice of run-of-the-mill porn, then they’ll want to pay as low a price as possible. If they see a reason to spend more because you are offering more of what they want, however, you may create a longer term customer rather than a quick sale.”

Asked what retailers can do to move more DVDs, Adam & Eve’s Christian advised a similar course of action to that endorsed by Taylor.

“Bundle DVDs with other products,” Christian said. “Offer DVDs as lower cost incentives with some other purchase and be DVD price competitive. Sell high-quality, positive movies and movies that your customers want, not just ones that you pick up cheap that have the same content customers can get for free on the tubes.”

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