The consumer electronics business has become much more of a well oiled machine today with low-cost, low-margin, feature-laden HDTVs driving the market. Costco, Wal-Mart and Best Buy are selling paper-thin, large format HDTVs by the hundreds a day. Vizio came out of nowhere to become a multi-billion dollar company in five short years. The adult industry hasn't advanced past massively profitable DVD-Video sales just like the music business never embraced anything other than Compact Disc sales. Consumers are rejecting the value proposition because of new technology in the adult business just like they did with music and Napster. A $10 per month Netflix account gets you a host of movies into your home plus streaming, but one short porn DVD sells at Larry Flint's Hustler retail store on Sunset Boulevard for $40 per title. HD video hasn't been kind to the adult industry. I've seen the girls on flights to Vegas and at the AVN Show, which is on the way from the specialty audio displays at The Venetian to The Wynn Hotel across the street. I hate to ruin anyone's fantasy here but - to be polite - these girls look a little rough in person. DVD-Video's 480i resolution or your computer's less-than-DVD resolution suits the content best whereas beaming 1080p is better for today's movies. Either way, porn isn't worth $40 per disc anymore. Additionally, people are shooting amateur porn on sub-$1,000 D-SLR cameras and uploading them to sites for a "thrill." Who knows if they will be the next Paris Hilton, but it's obvious that amateur porn is eating away at the adult industry's overall sales and ultimately its profit margins.
To date, the adult industry has lost a lot of its luster. It's a seedy business, albeit reportedly still a $14,000,000,000 industry. Stories about HIV-infected performers rain on the fantasy world about once per year. The adult industry has failed to adapt its pricing in many meaningful ways to keep up with the way that the consumer electronics business is going. Creative sites like�SugarDVD.com�are working to become the Netflix of porn with $10 per month rental services, downloads of well known titles and DVD-Video sales from $3 to $19 depending on the title. It's not the margins that the adult industry is used to but you can't force the consumer's hand. We learned that lesson with Napster in the music business and they never recovered.
Going forward, content featuring naked people doing adult things will still compel consumers to drive towards the illusive goal of AV convergence. Adult content can help shape the booming CE application market found on today's HDTVs, Blu-ray players and video game consoles. But where the adult industry has lost most of its power is that it no longer moves the needle as a business that can singlehandedly make or break an AV format. Like an aging starlet - its day has come and gone.