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AVN.COM RETAILING PROFILE - FASTER FORWARD: Be It Sales or Rentals, DVD Beats VHS

AVN.COM RETAILING PROFILE - FASTER FORWARD: Be It Sales or Rentals, DVD Beats VHS

Somewhere between the Jurassic period and the second you read this, there once existed an era we now refer to fondly as "The '80s." Sure, you've heard of it. VH1 does shows about it, and, way back then, most of the lovely ladies that comprise the current crop of porn talent had nothing more offensive than warm baby food dripping from their chins.

It was another time. Habits were different. People watched rental material on their VCRs. Whether it was mainstream fare like Paramount's Better Off Dead orseminaladult works such as VCA's Café Flesh, few were actually buying what they were viewing. Consequently, video store owners looked for innovative ways to make their money back on the movies they were renting. Plus, mainstream studios kept the prices of their films high to protect their intellectual property and to keep storeowners from selling it, thus insuring ongoing rental revenue.

In his informative book The Big Picture: The New Logic Of Money And Power In Hollywood, Edward Jay Epstein tells the story of how, in the late eighties, Paramount experimented with the system, bucking the trend and offering Top Gun on VHS for the "low" wholesale price of twelve dollars. Would there be a market? Were consumers interested in owning a film if the price was accommodating?

Three million Top Gun sales later, the answer was a resounding yes. Of course, this was no shock to adult retailers; consumers always bought porn if it was a title they simply had to have. Powers in the industry--from production companies to the brick and mortar contingents—astutely kept unit prices at a feasible purchase level for the average fan's wallet.

Of course, porn outlets rented VHS titles too, making hundreds of dollars from a single cassette, a seemingly bottomless revenue stream. Those rentals were a great way to get the mostly-male home viewer comfortable with eventually purchasing the product. A rental tape was a discreet way to go. No telltale box art, and, once the viewing pleasure was over, a quick return and it was out of Mr. Renter's life. "I swear to God, honey, it was Rocky IV!"

Fast forward to 1996, to the advent of the DVD. Epstein quotes a Viacom studio executive who called the format "the beginning of the end of the video rental system." Makes sense, as videos were on the wane. Still, from the mainstream perspective, this change in the movie-viewing medium induced a load of problems. You couldn't avoid reading about mega-chain Blockbuster's troubles/latest "innovations" in the business pages. For a concern as large as Blockbuster, change was particularly cumbersome. Consumers started buying movies, a serious threat for a company based on rental profits. By the same token, the DVD revolution could have affected the adult retailers as well, but it didn't.

Why not?

There are a number of reasons. The birth of adult DVDs meant that rentals went down but sales went up, according to every adult retailer contacted by AVN. Vanessa Keegan, online managing editor of straight adult material for TLA Video--a Philadelphia-based video store chain with a strong online presence, had this to say:

"The DVD rental customers haven't given us any problems with the product like the VHS customers once did. I guess people have figured out now, you wipe it off and stick it in the machine and it works, for the most part. If you've got a tissue handy, which, if you're watching porn, you should."

Crystal MacDowell, manager of Spartacus in Clackamas, Oregon, one of two adult stores owned by leather fetish gear makers Spartacus Leathers, agreed completely.

"The surface scratches on a DVD, compared to a tape being run through heads and being caught and then torn, are much easier to deal with."

And, in terms of literal stock room storage benefits, the relatively wafer-thin DVD package trumps the unwieldy cardboard box cocoon of the behemoth VHS tapes. But let's go back to rental figures going down and sales figures going up.

THE PRICE IS RIGHT

Walk into any Best Buy in this land of ours and you'll see Americans readily plopping down hundreds of bucks on DVDs for their home libraries. This is something that most people just didn't have with VHS--home libraries. Why? Comparatively speaking, it's price, it's physical size, and these factors extend to adult collections as well.

When it costs five dollars to rent a copy of Hustler's Barely Legal Corrupted for a couple of days versus investing a hair over twenty dollars to own the DVD, most people are willing to take the financial leap. We're talking about Missy Monroe here, who could be yours in all her filthy glory forever.

Ellen Barnard, co-owner and manager of adult shop A Woman's Touch in Madison, Wisconsin said of her store's DVD stock, "I have a lovely selection now of $20 and under DVDs, and those are flying out of here. I think that is the price point that people need to aim at if they want to see numbers. When we first opened the store, I was talking to a retailer that said, 'Hey, if you can price it so they can have a $20 bill and change and buy something, they're gonna buy it more easily than it if goes over $20', and I see that's true."

Production companies have responded to the desire for competitively priced products in droves, keeping the cost of their features at a reasonable level and amping up production of their compilations. Also, the user- friendly technology of the DVD format jigsaws with compilation features perfectly, making it easy for the viewer to get exactly where they want to go quickly.

Even Wicked Pictures, one of adult's major high-end feature producers, released its first-ever maxed-out compilations this year, beginning with the performer-centered Wicked Divas line, plus the well-received, gorgeously packaged Jenna Jameson's Wicked Anthology series, as well as multiple, four hour, all-sex compilations.

"They're selling like crazy and I'm finding that it really has not had an impact on the sale of our feature titles," said Joy King, Wicked's Vice President of Special Projects. "The other reason that we wanted to do comps, and the reason that so far we haven't seen an impact is because it's a different consumer. A couple who wants to watch a story-driven feature is not gonna go pick up [Wicked comp titles] Trading Races or Jenna's Tough Love. They want to see a feature. They would like a story. They want to see Dream Quest. They want to see Flashpoint."

THIS BABY COMES LOADED

Here at AVN, your home for the intelligent, comprehensive view on the adult industry, we offer a monthly review section. Among other things, it's where we outline the many extra features that are offered on DVD releases, often hours and hours of stuff: Behind the scenes featurettes, bonus scenes,still galleries, trailers from other productions and more.

As "bonus tracks" began to be included on mainstream music CDs, so did porn discs offer extra delights. It all breaks down to a tremendous value for the consumer, yet it also means more time is needed to delve into all that good stuff. And that much more reason to keep it.

"The lower pricing has turned people into collectors without a doubt, and there's a lot on DVDs now," offered Bill Murphy, owner and president of the Florida-based Fairvilla megastore chain. "The customer today is more clearly a larger buyer/collector than in the past 10 years," agreed David Betesh, part owner of the Excitement Video chain, headquartered in Reading, Pennsylvania. "What we're seeing is a decline of rental income of almost 5% a year, with sales of DVDs increasing substantially to compensate for the decline in both combined DVD/VHS rentals and VHS sales income."

The gorgeous packaging many adult companies are now offering rivals anything on mainstream shelves, and only adds to the collectibility. For example, Adam & Eve's leather-encased feature Rawhide, and Private U.S.A/Pure Play Media's elegantly boxed Millionaire. One hundred years from now, this stuff will be turning up on Antiques Roadshow.

TALKIN' 'BOUT MY GENERATION

Generation X and Generation Y--the nation's twenty and thirty year olds--are all about embracing new technology, from DVDs to iPods to their prodigous use of the Internet (more on that in the sidebar). Most importantly, the Children of Today have money to spend and they like to do it. And they aren't just renters.

"My younger customers are more knowledgeable and they really are much more inclined to buy a movie than rent it," admitted Donna Tietz, manager of Video Dimensions, a mom and pop establishment in Glenview, Illinois. "It's really helped us make the transition through the VHS sales going down."

Add this to being a young person in the era where Ron Jeremy is a reality TV star, hotel heiress/professional celebrity Paris Hilton is a top selling porn draw and Jenna Jameson is a best-selling author and you have a recipe for retail gold.

"I just think you're coming into a different era where a lot more couples are more honest with each other, instead of hiding behind each other's back, so that's presenting a different class of people that are in the retail part of the adult industry," opined Chapelle Briggs, buyer for R & R Adult Toys, a Bellevue, Washington video store that focuses on adult DVDs. "People aren't hiding as much as they used to have to. You don't have to rent it here during the day and try and get it back before the wife comes home. Different things of that nature have become a lot more open."

Jessica Ledford, buyer for the Fairvilla Megastores, agreed, saying, "I think people have become a lot more relaxed about the adult industry than they used to be. It's fun to buy porn now and it's cool to own it."

PUSSY POWER

As Henry Kissinger once remarked, "Sooner or later, the women will come." He could have been talking about the raging tide of hands-on female porn interest, and God knows the retailer would back him up. In 2005, female customers aren't afraid to lay down their cash; whether it's dropping thirty bucks on a new mascara or the same amount on a copy of Reign of Tera, the ladies have no problem. Studies indicate that women are also picking up copies of the latest Evil Angel and Red Light District releases, and aren't just sticking with the plot-based features anymore, a fact Donna Tietz knows well.

"I'm noticing that women aren't into the Candida Royalle type movie anymore," said the Video Dimensions manager. "They want [what] the men want, an all-sex movie. I see they're becoming braver, and their tastes are changing, as opposed to when I got into this business 14 years ago. Now they're a little bit easier going. They're a little bit more knowledgeable. There's still those fifty-year-old women who claim, 'Well, I don't know, I've never watched one,'" laughed Tietz. "Bull!"

WHERE DO WE GO FROM HERE?

As far as the future is concerned, the majority of the retailers that AVN spoke with agreed that the shelf life for adult VHS is growing nigh.

"DVD was the cure-all for VHS," said Fairvilla's Bill Murphy, who is nothing if not forward-thinking. "I'm seeing these new mini-discs. I just bought a Sony PSP for my son and they have these little mini-discs that have the same information on them, which is frightening. Don't get me wrong; it's frightening in a good way. We can put four times as many of those on the shelf as we can with DVD, plus there's the new technologies. The future will change the way that some people buy but not for everybody."

Or, as Chapelle Briggs put it, "Rental will be alive as long as the retail store's alive." Considering the undeniable craving that Americans have for adult entertainment—regardless of what color state they live in--that's going to be a long, long time. God bless free enterprise, and God bless America.

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