.FLYINGHEAD INDUSTRY ANALYSIS
.TITLE The state of adult content in the handheld device market
.AUTHOR Jacques LeDisco
.SUMMARY For good or bad, adult entertainment is a substantial driver for new technology and to truly cover new technology in a way that’s accurate, some coverage of adult content is honestly necessary. This article, by an expert who’s been involved in this field for quite some time, provides a thought-provoking analysis. Frankly, we found the size of this market — just the portion that’s mobile — to be shockingly large.
.OTHER
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.H1 About this article
For good or bad, adult entertainment is a substantial driver for new technology and to truly cover new technology in a way that’s accurate, some coverage of adult content is honestly necessary. This article, by an expert who’s been involved in this field for quite some time, provides a thought-provoking analysis. Frankly, we found the size of this market — just the portion that’s mobile — to be shockingly large.
As is always the case when our journalistic explorations take us into adult territory (and if you’re dealing with new technology, this does happen), we discussed this article at length internally. We do our best to limit exposure to our readers, but since this article has nothing inappropriate in it, rather just analyzes the state of the market, we consider it valid and even necessary news. To protect you, the reader, we have eliminated all links and URLs from this article.
We’ve dipped our toes into these waters every year or so, have ticked off a few people (very few, thankfully, because of how we treat it), and have given some background to a simple truth: mankind has baser instincts and those baser instincts drive technology. — David Gewirtz
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As we all know, adult entertainment purveyors have been early adopters of new media, including the printing press, film, video, and the Internet. In fact, adult entertainment products have driven the widespread adoption of media we now all use on a daily basis.
However, because of display limitations on early handheld computing devices, many did not consider adult content on handhelds as a serious market. And yet, British research firm Visiongain, estimates that sales of wireless erotica could reach $4 billion by 2006.
.CALLOUT According to Nick White, an executive at Virgin Mobile, ‘Sex represents a big revenue opportunity. We would be naive to ignore it.’
.BREAK_EMAIL For the full story, tap here to read the rest.
In 1999, I decided to test market a nightlife guide: Nite Crawler – Las Vegas. This was a text-only guide to Sin City. Although similar in concept to Vindingo’s popular guides, the Nite Crawler guides featured information on strip clubs, casinos, nightclubs, and other adult-only entertainment.
In addition, the nightlife guides also included a help menu, offering information on embassies, detox centers, and emergency rooms, should the party get out of control.
Nite Crawler – Las Vegas was offered as a download on PalmGear and Handango (then known as Palm Central). As there were few mature content titles in 1999, neither site had any restrictions on adult software, other than assignment to the mature content category.
Despite having no presence on the new titles pages of either site, Nite Crawler sold well, worldwide.
I immediately launched new titles, covering more cities, and developed accessory titles such as Pocket Erotica, an illustrated sex guide (with wooden models) and Street Talk, an international guide to street slang.
This series of titles became known as the Lounge Lizard Collection.
Encouraged by the unexpected commercial success of these titles, I began planning an adult-themed sports series. However, by 2002, both PalmGear and Handango had banned all mature content from their sites. I tried to sell directly from the Web, but the cost of reaching the active software users in the small Palm market proved cost prohibitive.
Other handheld Palm OS developers tried similar tactics. In this article, I’ll look at both my experiences and those of others, and then look at how handheld devices (especially cell phones) are becoming vibrant markets.
.H1 PDA experiences
Tony O’Neill, a 20-year-old college student, developed one of the first adult content sites exclusively for PDAs, a site called PalmStories. This mobile site provided subscribers with HotSync pictures and text stories daily on an AvantGo adult channel. For $6 a month, O’Neill provided erotic stories daily, which he compiled from the Internet.
Initially, PalmStories managed to sign up more than 8,000 people for the free demo site. However O’Neill was unable to convert these signups into subscribers. After the launch of PalmStories, the first Adult channel, AvantGo decided to bar any other X-rated channels.
"We have a company policy now that wasn’t in place when Palmstories joined the service," said Karen Longston, a spokeswoman for Avantgo. "The policy is not to have those kind of channels on the site."
Another adult text service was offered by Erotigo, which published a free wireless directory listing strip clubs, video stores and lingerie stores in New York City. Erotigo carried the corporate slogan: "Sex in the palm of your hand."
The company followed in the footsteps of a similar service in Britain called Puntersearch, a WAP (Wireless Access Protocol) mobile phone directory which allowed users to search for prostitutes by location or personal attribute. While the Erotigo guide is no longer available, Puntersearch can still be accessed on WAP browsers.
With the advent of Palm OS 3.5, and color displays, several hardcore porn services were offered for the handheld, these included Pocket XXX (for Palm and PocketPC), and SinPalm.
Again, with limited distribution channels available, both services were marketed directly or via affiliate programs.
Another development was the launch of HandPleasures, an adult-themed download portal for handhelds. Given a number of site redesigns, and low download traffic, the success of this venture is uncertain.
.H1 Mobile phones: the new frontier
As a result of content restrictions on the most lucrative handheld portals, and the Palm OS losing marketshare to increasingly sophisticated mobile phones, I decided to abandon the Palm handhelds in favor of smartphones.
In addition, while the Palm market peaked at approximately 3 million users, over a billion mobile phones are presently in use. As with the Palm, few saw the potential for adult data services on mobile phones.
In 2000, a number of primitive porn sites were launched, based on WAP (Wireless Application Protocol). Most of these early sites originated from the United Kingdom and featured low-resolution black-and-white graphics, or erotic-themed text.
The arrival of MMS (Multimedia Message System), Java, mobile video, and 3G (third generation, high bandwidth) networks have been immediately exploited by the adult industry. In Europe today, there are now dozens of SMS (Short Message Service), MMS and WAP porn sites. In the US, the adoption level has been slower, due to more primitive wireless network technology, and hostile telecoms.
Skeptics argued that porn is unlikely to sell on wireless devices because of their small screens. Yet sexual content is already widely available in the wireless world in the form of erotic logos, and wallpapers. Even using relatively simple technology like SMS and MMS, users can create and consume ASCII (character-based) porn.
.H1 Telecoms: fear vs. greed
Mobile adult content poses a dilemma for telecom companies.
If mobile phone companies market pornographic content as a vehicle to recoup the billions they have spent on third generation phone network licenses, they must ensure that the material is not accessed by those under the age of 18 or incite a media and parental backlash.
According to Nick White, an executive at Virgin Mobile, "Sex represents a big revenue opportunity. We would be naive to ignore it." While Virgin Mobile will supply softcore content, other services will be provided by partners.
Jupiter Research Inc. estimates that worldwide revenue from this market segment will jump from $500 million in 2004 to $2.5 billion in 2009. Strategy Analytics estimates mobile phone users spent $400 million globally on pornographic pictures and video in 2004, a figure that is expected to rise to an astounding $5 billion by 2010.
Before carriers can capitalize on this opportunity, they must adhere to the obligation of preventing underage viewing of adult content on the networks. Thus, they face a twin business challenge: civil rights violations and costly child protection regulations.
The mobile phone poses some unique regulatory challenges: what happens when a porn subscriber from a country with liberal porn laws, like the Netherlands, roams to a restrictive country in the Middle East where pornography is illegal? Another issue is the threat of children being exposd to hardcore spam.
While European carriers typically have allowed their premium SMS systems to bill for access to adult content, all U.S. carriers refuse to allow their billing systems to be used for any mobile adult content service, regardless of a customer’s age.
In addition, there are still some inter-carrier SMS compatibility issues in the USA network. In 2004, six of the largest mobile telecom operators in the UK–Orange, O2, T-Mobile, Virgin, Vodaphone and 3–have joined to adopt a code of practice, which regulates underage access to adult content.
The code requires that the companies must ensure a customer is over 18 before allowing them to buy a phone with unlimited access to the Internet. The regulations will come into force later in 2004.
Ironically, telecom restrictions on adult mobile content and self-regulation have resulted in soaring traffic on phone porn sites. PhoneErotica, a leading adult WAP site based in Montreal, has generated more wireless traffic than MSN on at least one major U.S. carrier.
.H1 The players
In 2003, Las Vegas-based PocketJoy received worldwide press coverage for being one of the few companies offering standalone adult wireless porn. However, the long-term success of this service is questionable. Despite being limited to direct Web-only subscriptions, the site has not been updated since 2003.
In 2003, Playboy signed an exclusive multi-year agreement to offer content on 3G mobile phone services operated by Hong Kong conglomerate Hutchison Whampoa. The service will include pictures and video clips from Playboy Enterprises’ library of 13 million photos and 2,000 hours of video programming. Access will be controlled by a PIN number to satisfy legal concerns.
Penthouse has just started distributing what it calls "Petfolios," or minimagazines for PDAs that feature a Penthouse pet in a multi-media packet of Windows-compatible text, video clips and pictures. Penthouse visitors can download them from the site free of charge.
Vivid Video launched a mobile porn site in 2004. Although the company was attempting to profit from just a portion of the one billion mobile phone users, the legal, marketing, and telecom access challenges quickly doomed this venture.
.H1 Attack of the porn stars
In the current feeding frenzy, porn stars are now launching independent mobile portals. As ringtone download revenues have surpassed online porn subscriptions, porn star (and best-selling book author) Jenna Jameson has launched "moan tones" on Wicked Wireless.
For $2.50 fans of Jenna can choose from a variety of signature moans, grunts and sexual noises from the sex siren. For more stimulation (and cash), Jameson will talk trash to you when your phones. Also available are nude color mobile wallpapers for $2.99.
"Rock stars make music tones, porn stars make moan tones," said Dennis Adamo, head of Wicked Wireless. "We thought it would be an interesting novel approach of introducing new content to the mobile users."
While Jameson’s siren calls are currently being downloaded in Argentina, Ecuador, and Venezuela, U.S. users will have to wait to get Jameson on their phones, as no mobile carriers in the United States have shown interest in carrying the service.
Male porn star Ron Jeremy has launched RJ Mobile, a self-branded adult entertainment site. For #1.5 a download, users will receive recommendations of Jeremy’s favorite all-time scenes from his and his friends’ personal. As with Jenna, Jeremy will offer moantones, wallpapers, and SMS text flirting.
Porn queen and CEO Danni Ashe announced a wireless deal with ClearSky Mobile Media, Inc. in September 2003. The mobile site was to feature more than a thousand pictures and a handful of video clips scaled to cell phone size. However, due partnership issues, and U.S. telecom restrictions on adult content, this deal went nowhere.
.H1 Gambling: the killer app?
Along with pornography, gambling has generated billions in revenue online. What about wireless gambling?
A study by the firm Juniper Research projected mobile-gambling services to generate $5.7 billion worldwide by 2006. The firm forecasts casino-style services to total around $900 million, with lotteries and competitions to account for the remainder.
Therefore, gambling has the potential to be the "Killer App" for wireless vendors.
In addition to turning mobile phones into "personal gambling machines," a major advantage of wireless gambling is the novelty of live sport betting with odds that change in real-time.
Almost any type of gambling is available to wireless users today. Technology companies have developed applications that allow mobile-phone users to play poker, bet on horses, play lotteries and scratch games, deal in Blackjack and even try the slots.
Such applications are designed for a variety of platforms, including Java-capable mobile phones, Palm- and Pocket PC-based personal digital assistants, and even Symbian smartphones. However, to realize the promise of mobile gambling, vendors must addresses numerous issues, including security, reliability, payment processing, and global legal restrictions on gambling.
All in all, wireless vice, whether in the form of mobile porn or mobile gambling, is becoming a huge market. Whether or not you approve, the fact is, there’s a tremendous amount of money to be made in this market — and that may yet drive further technological innovation that can benefit (or at least captivate) us all.
.BIO Jacques LeDisco is a consultant specializing in mobile betting and Adult applications. He can reached at consult@radicaltek-mobile.co.uk. Jacques has also recently completed a market research report on mobile gambling for Mind Commerce Publishing.
