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At AEE: Troubles for Adult Industry Profits

Las Vegas- Richard Abowitz writes: AVN estimates the adult business is a $16 billion a year industry.

Considering the diversity of adult offerings and the number of private companies involved, I would be very suspicious of that estimate. But no matter the number, adult is a huge industry on many levels. This was clear yesterday when Adult Entertainment Expo opened to the public and the fans came pouring in to the convention hall to get posters, picture stills and DVDs signed by their favorite performers.

Since the adult stars were busy I tried to talk to producers, directors and distributors yesterday afternoon about the challenges the adult entertainment industry faces in 2007. I was surprised at what I found out. No one, for example, mentioned the Bush administration or law enforcement.

These days adult film makers have more parochial concerns than the importance of the First Amendment. Off the record, many I spoke to were disappointed with the number of companies doing business at the convention.

They also had grave worries about the current state of the adult industry. Bo Kenney [pictured] of Sex Z pictures was one person who spoke on the record. I was introduced to Kenney by Aurora Snow, who I interviewed last year for the Buffet; Aurora Snow is up for an AVN award this year for Best Supporting Actress for a scene she did in a Sex Z movie. Anyway, Kenney told me only the foreign companies were placing orders for his movies at the convention this year and it was the worst AEE for business he had ever seen.

He also had a very glum view of the state of the adult industry that echoed many of his peers. According to Kenney, adult DVD sales, the backbone of the industry, have tanked in the past year with consumers moving to Internet downloads and cable. But, despite press reports of the technological sophistication of the adult business, the creators of adult content have yet to figure out how to make as much off of Internet and cable as they do off DVDs.

Kenney says: “What’s happened is that a lot of the producers treated as secondary income things like Internet, iPods and cell phones. So, they never really concentrated on it. Now DVD sales are in a rapid decline because there is so much out there in other mediums. When you talk about the Internet there is just so much you can get for free why would people pay for it? All the money is being sucked out.

“I’ll give you another example. We have a movie called ‘Desperate Housewives’ that played on a cable system. There were 86,000 plays in two months; it generated $1.2 million revenue for the cable company and of that Sex Z pictures got $7,000. The cable operators kept every bit of the money. It is a crime. It is the same way in hotel rooms. They have a monopoly and we don’t have a free market to sell our goods in. Eventually the major players in the adult industry are going to need to sue the cable companies because that is the only way. Mainstream operators would never put up with what we are going through. In cable you want to sell your goods there is only 5 people you could sell to and they all have the same price. It is hitting every company here. As producers we can’t control our content and as a result our revenues are starting to fall apart. It is a tough business right now.”


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