Juniper also reported that the demand for mobile erotica is growing rapidly in Eastern Europe and that "a significant proportion of new revenues" from mobile erotica will be generated in North America, a part of the world that so far, has lagged way behind both Eastern and Western Europe when it comes to viewing sexually explicit material on cell phones.
Clearly, cellphone erotica is increasingly profitable for the adult entertainment industry, and mainstream mobile/wireless companies — like hotel chains, cable television providers and satellite television companies — are yet another example of mainstream corporate entities profiting from what Larry Flynt, Vivid Entertainment, Private Media Group and many other adult entertainment providers have to offer. But the mainstream mobile/cellphone companies (also known as "operators," "carriers" or "service providers" in mobile terminology) that have been embracing erotica in a big way have not been doing so in the U.S., which is the most porn-producing country in the world but is often described as "problematic" or "challenging" where cellphone erotica is concerned.
In December, XBIZ contacted mobile experts in the U.S. as well as Great Britain and Australia to discuss the challenges that cellphone erotica is facing in North America, and all of them said that despite those challenges, the U.S. could eventually become — under the right circumstances — a much bigger market for mobile adult entertainment.
Dr. Windsor Holden, principal analyst for Juniper Research and the author of Juniper's recent report on cellphone erotica, noted that one major difference between North America and Europe is the fact that in Europe, a long list of mainstream mobile operators/carriers have been willing to sell erotica on-portal.
In mobile/cellphone terminology, the term "on-portal" refers to content that cellphone users obtain directly from mobile/cellphone companies; "off-portal" content, meanwhile, can be viewed on cell phones but is obtained from sources other than mobile/wireless companies (for example, a wapsite, which is a website specializing in downloadable mobile content). And while mobile erotica can be purchased off-portal in the U.S. and viewed on American cell phones, companies like Verizon, Sprint Nextel and AT&T Mobility have been unwilling to sell on-portal erotica to U.S. consumers; however, their West European counterparts (such as Telefonica in Spain, Wind Telecomunicazioni in Italy and Vodafone in Holland, Portugal and other countries) have been more than happy to offer on-portal erotica to customers who want to buy it.
"If you speak off the record to these West European operators, they will say that adult is typically in their top two or three revenue earners for content services," Holden explained. "You have music, you might have sports clips — and after that, you are into adult. Certainly Wind in Italy has gotten a hell of a lot of revenue out of adult content."
And Holden said of Eastern Europe: "The Eastern European market for adult mobile content is huge. If you go to the operator portals in Eastern Europe, adult content is quite prominently placed. The mobile operators in Eastern Europe are making a lot of money from it. In a lot of former Eastern Bloc countries — Poland, Hungary, Slovenia and what is now the Czech Republic — it is massively popular."
Holden noted that while on-portal mobile erotica is "not as prevalent" in the U.K. as it is some parts of Continental Europe, the U.K. is still way ahead of both the U.S. and Canada when it comes to mainstream mobile companies offering adult entertainment. In early 2007, Telus (Canada's second largest mobile carrier) briefly offered on-portal erotica, but Telus quit doing so after receiving considerable pressure from social conservatives and anti-porn activists.
"I think that one thing that is worth looking at is the Canadian example," Holden said. "Telus started offering hardcore adult content behind an age-verification system — and within three weeks, they pulled the service because of pressure from the Catholic Church. That is the type of thing that the U.S. operators are afraid of. Adult content on mobile phones is comparatively limited in the U.S., and one of the main reasons is because there is a perception among the operators that it will negatively impact on their brand."
Holden added that America's mainstream mobile companies are reluctant to offer adult entertainment not only because of possible pressure from social conservatives, but also, because they fear the possibility of being heavily fined by the FCC.
"The example I keep going back to is what became known as Nipplegate with Janet Jackson," Holden said. "Back at the Super Bowl in 2004, Janet Jackson's breast was exposed for something like nine-sixteenths of a second, and the network was fined half a million dollars.
Now, if you get fined half a million dollars for flashing a nipple for nine-sixteenths of a second, what are you going to get as a mobile phone operator if you have hardcore adult content that can be accessed on a mobile phone? The FCC would just absolutely freak, and I think the operators are very, very wary of that and of the legal implications should a minor somehow get past an age-verification service were an age-verification service to be put in place."
Presently, Holden explained, American mobile companies are reluctant to implement age-verification systems because they fear that doing so would give the impression that they plan to offer adult entertainment eventually. Holden pointed out, however, that mobile age-verification services are the norm in Europe, where mobile companies that offer adult content have been going to great lengths to make sure that their age-verification services are as "robust" as possible.
L.R. Clinton Fayling, president of the Denver-based Brickhouse Mobile and one of the U.S.' leading proponents of cellphone erotica, said that although he would like to see mobile erotica become as popular in North America as it is in Europe, he realizes that mobile carriers in the U.S. and Canada need to be cautious where adult entertainment is concerned. "If you were to have asked me three years ago — when we first started to really enter the arena of mobile adult entertainment — if the U.S. market would still be a closed environment, I would have bet against it," Fayling said. "I would have thought that at least one or two if not more carriers would have engaged in the adult space in one way, shape or form.
"I'm not talking about jumping right into hardcore content, but something sedate and simple — maybe some topless content. But we haven't seen anything happen yet. The carriers are in a unique position, and I respect where they sit in respect to their decisions. If there is an adult offering in the cable TV medium, a parent doesn't become outraged and want to know why Comcast is offering adult content. But if adult content is offered on the phone, they do blame the delivery mechanisms.
"They will blame Verizon, or they will blame AT&T. They will blame Motorola, or they will blame Nokia because of how these carriers marketed themselves as really being the gateway and the portal — the all-encompassing provider of services, whether it be voice or data. The positioning is different, and so, their exposure is different. Their liability is different. And quite frankly, these guys make so much money on the voice side that to take any risks on the data side is probably not wise. Right now, the mobile adult market is kind of in a tough spot in the U.S."
But despite the challenges that mobile erotica faces in the U.S. and Canada, the mobile adult market has, in different parts of the globe, been great for Brickhouse — which, according to Fayling, has been doing business with "over 90 carriers throughout the world that account for roughly 400 or 450 million subscribers."
Fayling said that Europe (both east and west) has, by far, been the most profitable continent for Brickhouse, which was founded in 2004 and has worked with well known erotica creators such as director Andrew Blake, nude model Aria Giovanni and the gay-oriented Falcon Entertainment.
Fayling hopes that mainstream mobile carriers in the U.S. will eventually decide to embrace mobile erotica, but he understands their concerns. "Brickhouse is a strong advocate of the carriers in the North American market," Fayling said. "Many of them are friends and colleagues, and we are willing to be as patient as we need to be. We're not here to hard-sell anybody. If people want to enter this category, we would love to work with them and make sure it is done safely and correctly.
"If not, we respect that. Carriers have a lot to risk if they offer adult entertainment and don't market it correctly. Far be it from me to ask them to sacrifice billions of dollars of voice revenue to address the adult entertainment category. But by the same token, those who see the value in mobile adult entertainment and see how well it has performed overseas realize that it could be a nice additional revenue stream for anybody looking to bump up their data revenue."
The Australia-based CuriousToyBoy, business development manager for LionDollars.com, said that one of the reasons why mobile erotica has yet to catch on in the U.S. in a major way is the fact that other parts of the world, including Europe, are more advanced when it comes to mobile/wireless technology.
"'Portable porn' lags behind in the U.S. for a couple of very simple yet very important reasons: network protocols and billing," CuriousToyBoy asserted.
"If networks will not allow you to deliver it and you cannot bill a surfer to provide it to them, why would you do it? The situation is changing, but the European market remains far and away well in advance of America in these terms. A key factor in this has been that Europe has had mobile networks far in advance of anything the U.S. has seen for a long time, and in many ways, the gap continues to grow.
CuriousToyBoy described the U.S. as a "sleeping giant" where mobile erotica is concerned, but he also said that under the right circumstances, mobile erotica might someday become a huge seller in North America. CuriousToyBoy said: "Like with online porn, if delivery and billing and technical issues can be overcome, the U.S. will be the world's largest mobile porn market — eventually. But there are some very big 'if's,' 'but's' and 'maybe's' for that dream to ever reach fruition. The U.S. is not yet cell-educated to the point of some of the smaller affluent European nations, but beware he who wakes the sleeping giant."
Holden said that it is only a matter of time before the demand for cellphone erotica seriously increases in the U.S., and he predicted that an explosion of off-portal mobile erotica in North America will eventually lead to an explosion of on-portal mobile erotica in North America. If cellphone erotica sold off-portal becomes big in the U.S., Holden said, mainstream mobile operators/carriers will inevitably want to get in on the action.
"If more people find the off-portal adult content in the U.S. and it starts making money," Holden said, "the operators will think, 'Hang on a minute, we would like a cut of this.'"