Private Media Group Betting on Smartphone Content Delivery

BARCELONA — Private Media Group says it plans on becoming the main provider of an off-portal mobile platform solution to all major content providers in the adult entertainment industry.

The pronouncement was made in its quarterly filing released last night.

Private, which claims to be the most distributed adult brand in the world for on-portal mobile platforms, already is available to 1.2 billion handsets via 104 mobile network operators in 45 countries.

The push toward off-portal networks is important for adult operators because the erotic content doesn't reside on proprietary carrier networks, such as wireless networks Verizon, Sprint and AT&T, and can be viewed on the iPad, iPod Touch, iPhone and Android handsets

"In contrast to Private’s existing mobile content business, which is based on an on-portal model going through content aggregators and carriers, this new business is off-portal and provides substantially improved margins as content is sold directly by Private to the consumer," the company said, noting that it recently launched its new Sureflix mobile VOD platform based on the same principles as the GameLink mobile platform for its Maleflixxx network of hundreds of sites.

Private cited forecasts from research firm Nielsen, which said the mobile Internet market has seen a 74 percent increase between February 2007 and February 2009.

"We have recently enabled smartphone users to browse, purchase and consume our library of content on all of our web properties and expect to generate substantial growth from this initiative going forward," the company said.

Private, which Tuesday reported an operating loss of $3.3 million in its third quarter, also said in its filing that the DVD market continues to shrink, with sales for physical products declining by 35 percent. It produced 72 releases in 2010, the same amount as last year but far below its 101 releases in 2007.

"The DVD business is by no means dead even in this competitive landscape," the company said. "The content providers that manage to survive the current 'clean out' will control the DVD market going forward."

The quarterly report also proved to be a monologue for the company's dispute with former Private CEO Ilan Bunimovitz.

Bunimovitz has been questioning since last December current CEO Berth Milton's actions at the public company and how they might constitute violation of federal securities laws and other legal requirements. In May, Milton called for Bunimovitz's termination. A Las Vegas judge sided last month with Bunimovitz and several large Private investors, issuing a restraining order against the adult studio after the court found that the company violated a section of the federal Sarbanes-Oxley Act relative to personal loans to executives.

In a statement in the filing released Tuesday, Private said it has filed counterclaims against Bunimovitz, seeking monetary damages and other relief.

"The company also believes that the actions of Mr. Bunimovitz as a director since he was terminated as CEO, including pursuing a lawsuit with a creditor with whom the company is in protracted litigation, are a clear and serious breach of his fiduciary duties, and have been taken in bad faith to advance the personal interests of Mr. Bunimovitz."

Bunimovitz declined to comment to XBIZ on the statement connected to the legal action, but he said that the Las Vegas judge's ruling on personal loans speaks volumes. He also said he hasn't been served with a countersuit.