Indeed, the example of the music industry is lighting the way for future strategies in adult distribution and sales. With most of the middlemen cut out of the equation, this will put the studios in direct touch with their customers and force a whole new relationship.
"Studios will have to develop a direct relationship with the customer now," Janarthanan insists. "Before, they had no relationship because the customer dealt with the retail store. Now the product will go directly from the studio to the customer, so studios will have to spend more time marketing to the wishes of the customer. I see this happening already online, where customers preorder the next DVD release. In adult, the guy who will make the most money is the one who has the closest relationship with the customer. Either the studios have to change, or the guy in the middle has to change and adapt to what's happening in the market."
Says Daris: "As the adult online distribution industry gets older, we become more commercial. So the adult distributors will start to go after the mainstream folks, and the mainstream distributors will start to sell the adult stuff. That's because you won't even need to have a computer because you'll be able to use your TiVo to download. It will become so easy to download that the marketing side will look more polished."
Changing Market Needs
The concentration on new marketing strategies is even more intense in the mobile field, with almost limitless potential. McAbian says Waat Media is constantly adjusting its approach to the ever-changing market needs and distribution platforms in mobile.
It is this breakthrough in downloading that may push the cellphone to real prominence in the distribution of adult content, especially when interactivity is improved.
"There are three things that need to happen to create fertile ground for mobile," McAbian cautions. "One, the networks need to be up to speed. We're kind of over that hump now, since most networks in Europe and a couple here in the U.S. are very robust. The next thing that needs to happen is for handsets to have a lot more functionality. The third thing is just educating the customer."
By 2010, mobile users will be able to download an entire movie in just 30 seconds. Joone of Digital Playground believes this will vastly increase the role of the cellphone in adult distribution.
Mobile already boasts of the most creative and customer-friendly billing strategies. Next up, mobile companies will go into recurring monthly charges for adult TV, which already accounts for several of the 100 mobile TV channels currently running.
"There's also a big difference in operator billing capabilities," McAbian adds. "Some customers have accounts and others are prepaid. This requires different billing strategies."
These new strategies also apply to online sales, with very positive signs coming in the wake of new technologies.
"We're seeing it open up more," Daris says. "When I started to look for merchant accounts six or seven years ago, everyone said, 'Ugh, adult! Get away from me.' CCBill stayed around, and a couple of other third-party billing companies. Now we're starting to see methods where adult can get a mainstream merchant account. This year it's been a lot easier to get merchant accounts than any other prior year that I've been doing this."
So it seems that online billing will continue to rely on credit card companies, especially now that the major carriers with powerful infrastructures like Visa and MasterCard are getting back on board. But there's a chance that the European-style telco billing system will make inroads in the U.S. in the not too distant future.
This all points to a rosy future for those companies who prepare for the great changes. In fact, the only thing that's holding back those changes is the speed of the Internet in America.
"Compared to most of the world," Janarthanan points out, "the speed of the U.S. Internet connection is slow, especially compared to the Asian countries. So until that changes, we really won't have true video-on-demand in the U.S. And to have good looking high-definition video, you still have to use a PC to download it, because of the low Internet connection. But once that changes, you'll be able to use your television to stream movies directly instead of waiting for it to get downloaded. When ease-of-use is achieved, that's when you see change."
And anybody who doesn't change with the change, will fall by the wayside, Joone says.
"You have to please the consumer's appetite before somebody else does," he adds. "It's sort of like the Sony Walkman. They were kings, and suddenly Apple came around with iPod. The second you get comfortable and think you're king of the hill, you know something's wrong."
