Sales declined 19 percent for DVDs, 83 percent for videos, 18 percent for magazines, 22 percent for internet services and 28 percent for broadcast offerings.
The company attributed the decreased DVD sales to delivery problems on the part of its duplicator and an outsourcing arrangement under which the company reports commissions of U.S. sales agents.
As for Internet sales, the company said the closing of its third-party payment processor in the United States and the transfer of transactions to a new processor with a more secure but less intuitive payment process resulted in lower conversion rates.
CFO Johan Gillborg offered several explanations for the decrease in profits.
“During the first half of 2005, we increased our investment in our library of photographs and videos by 145 percent and … will release 139 percent more new proprietary movie titles in the second half of 2005,” Gillborg said, adding that he expects the exclusive movie content to drive increased sales.
The company also will offer more third-party DVD content from Pure Play Media and Tera Patrick’s TeraVision in Europe during the second half of the year.
To help boost profitable traffic to its website, Gillborg said Private has contracted with a third party that will develop search engine optimization strategies as well as an affiliate program for webmasters called Private Cash.
Gillborg also said he expects to see positive results from a recent broadcasting deal with Playboy TV Latin America and a mobile content distribution agreement with data services firm MindMatics AG to market Private content to more than 220 million mobile customers throughout Europe.
