Adult video has driven innovation in home entertainment. From the days of VHS and Beta it was the lust for private, personalized porn that has traditionally driven consumer demand for the latest consumer technologies.

Not surprisingly, several leading adult video companies are at the cutting edge of innovation in the development of an infrastructure and business model for marrying their core DVD and new next-gen DVD businesses with digital downloads.  What can Hollywood learn from their counterparts on the other side of the Hills?  

Ali Joone, founder and director at Digital Playground has been developing his company’s digital supply chain business for seven years when he launched his first membership site, followed by his first VOD service in 2004.  With over 300 full-length features in his library, all digitized for streaming or download, he has been delivering content for mobile devices in 38 countries.

“Our business right now is 60 percent finished goods, 20 percent Internet, 10 percent broadcast and 10 percent mobile; finished goods are still growing because our distribution is expanding worldwide and because people are getting comfortable with purchasing on line,” he explains. “However, the potential for streaming and digital download is even greater as a global business since we’re now able to deliver our content to countries like India and China where they couldn’t otherwise get our DVDs.”  
In the DVD category, Joone is increasing the number of HD DVD and Blu-ray releases.  For a $29.95 monthly membership fee, meanwhile, he provides customers with unlimited streaming access to his library, which is serving to promote both his DVD and download- to-own lines.  He has carefully priced his downloads and DVDs at the same price-points to avoid cannibalizing his core business and the business of his dealers.
  ”Our goal ultimately is to have a one-on-one relationship with our customer.  With digital downloads we can help build that relationship; we can learn what they like and what features they are after.  We can learn how to sell them better, which ultimately helps us develop better content to begin with. It is vital, however, that the customer have a rich experience with our web site; we need to deliver everything they need to make the right buying decision.”

Currently, he says, 50 percent of his online customers are opting for membership, while the remaining 50 percent are choosing download-t- own.

Digital Playground has release windows just like the majors; however their DVD is akin to the studios’ theatrical release, which is delivered prior to download-to-own, and before the production is added to the membership-only streaming site.  “There is not one type of customer just like there is not one type of distribution.  Our job is to make the content and distribute it everyway possible. With the adult business, it is not like a theatrical business where you need to sell your movie in one or two weeks; you can have as long as a year or two to sell a title,” he says.

Digital Playground is one of the few adult film companies to control its own preproduction and authoring in house, All movies are now being shot in high definition and are stored on their own servers; the emphasis on HD, he feels, will support the continued sales of DVDs, though he says that it likely that his standard definition DVD business will mostly go to the Internet while, due to file size, HD content will remain a physical goods business for quite some time.  In fact, he relates, his high definition disc business is outpacing sales he experienced during the first years of his standard definition DVD business.

Joone feels that online video memberships are a tremendous opportunity for the Hollywood studios.  “If someone was offered a membership that gained them access to streaming-versions of the Disney catalog for $29.95 per month, what parent wouldn’t subscribe?  If you have a million people giving you $29.95 per month, it becomes better than cable and with streaming you don’t have piracy issues to contend with.”

Like any director, Joone feels that success begins with the quality of the content, while the studio executive side of him reminds his counterparts that it is vital to “market and distribute that content as many ways as possible.  These are times when you need to experiment.  Don’t get too comfortable.  You have to explore every option.  Sticking with one solution could be a dead-end road.  Keep your options open and don’t wait.  Now’s the time to make your move,” he says.