The boom of Los Angeles’s skin flicks is putting Hollywood in the shade, writes Edward Helmore
As Hollywood cuts production and frets over the economics of movie-making, one niche of the entertainment business headquartered over the hills in the San Fernando Valley is enjoying hot’n’heavy boom times.
According to figures released recently by the Los Angeles County Economic Development Corporation, feature-film making has declined by 13%, while the production of pornography is up 25% this year.
City fathers may wish the porn industry were located elsewhere – LA mayor Richard Riordan calls it a “black eye on our city” – but the Valley is where the bulk of the world’s adult films are made and is home to the world’s largest community of porn stars – about 1 600 of them – as well as 50 of the world’s 85 top pornography companies. It adds up to a significant role in the local economy.
“Given the distress of the entertainment industry, the adult segment is a welcome anchor in the wind,” says Jack Kyser, chief economist at the development board, who estimates that porn contributes between 10 000 and 20 000 jobs to the area.
Adult entertainment film shoots, though lower-budget than their mainstream peers, now account for nearly four out of five shoots in the city, says Bryn Pryor, managing editor of Adult Video News. The business is worth an estimated $4,1- billion a year to the Valley – up from $1,6-billion in 1992. This year the industry is on track to release 10 000 new titles, up from 8 950 in 1998 and 1 275 in 1990.
The Valley’s porn boom is reflected across America, where about 700 000 porn titles are rented each year. Encouraged by loosening social mores, pornography has moved towards the mainstream. “Contract” porn stars such as Jenna Jameson host prime-time shows on the E! entertainment channel, while Alicia Klass, America’s reigning anal sex queen, hosts Showtime specials and recently did an ad for Virgin.
Pryor says: “People see that others are making money [average industry profit margins are about 15%], and it seems easy so they hop on.” Although prices are being pushed down, there are no signs yet of a profit-threatening glut. “The market is still absorbing that extra product.”
Although men form the biggest market for porn, an evolving trend is more couple- friendly porn films with higher production values and comparatively sophisticated plots, sometimes costing as much as $400 000 to make.
This is in keeping with mainstream Hollywood, says Pryor. “People are either doing very low-budget or very high-budget films. The mid-range has virtually disappeared because it’s harder to make money.”
But the Internet has done the most for the porn boom. “The Internet has made anonymity easier for people. They can access adult products without having to leave their home or deal with the embarrassment of going out to a video store,” says Pryor.
It’s no secret that adult entertainment spurs the adoption of new technology – Debbie Does Dallas and Deep Throat were famously held to be key to the early take- up of the VCR machine.
“Porn doesn’t drive the Net, but [porn] businesses were quick to offer short subscription terms and digital products in the form of image galleries, as well as the sale of hard goods,” says Mark Hardie, analyst at Internet tracking company Forrester Research, which estimates that $1-billion of the $7,8-billion spent online last year went on porn.
Forrester forecasts that the market will grow at an annual rate of 20%. The vast sums that can be made from Internet porn were shown earlier this year when Steve Cohen, owner of Sex.com, made a $3,6- billion bid for the Caesar’s Palace chain of hotels and casinos. Sex.com claims to have nine million subscribers paying $24,95 a month.
With the coming of broadband Internet delivery, video-on-demand services by cable TV companies and digital versatile disc (DVD) technology, the adult entertainment industry has no reason to fear a downturn. The growth in video sales and rentals this year suggests the new technology is already making an impact.
Vivid Video Inc, one of the largest porn film companies, is the leader in DVD production: it estimates it will ship 1,2- million porn discs this year. Punters can already see scenes from four different camera angles – like the slow motion replay of a goal in football – and 3-D and interactive porn are under development.
The mainstream entertainment industry may shy away from association with its saucy cousin, but it stands to benefit nevertheless. “Just as with VCRs, pornography is driving out new technology platforms that will then be available for non-pornographic, mainstream entertainment,” says Ken August, entertainment expert at Deloitte and Touche, who wished to make it clear that he has no business dealings with the porn industry.
While corporate America may not wish to manufacture pornography, it has taken notice of the enormous profits to be made from distribution. Castle Superstores Corp ,”an adult version of Toys ‘R’ Us”, operates outlets in 11 Wal-Mart stores in the Mid West; United States cable and satellite companies make as much as $310- million a year from porn distribution; Hilton and Sheraton hotel chains profit from offering porn to their guests; and AT&T profits from connecting callers to sex chat lines.
As for the porn companies, two of the largest, Private Media Group and Metro Global Media, are already listed on Nasdaq. New Frontier Media and LodgeNet, the major carrier to the hotel pay-and-play trade, have seen their stocks double in price this year. Internet Entertainment Group, one of the major online players, is preparing to go public.
Forbes estimates the global porn market at $56-billion and there is no reason to think the good times in San Fernando Valley’s skin trade will end soon.
As Steve Orienstein, president of Wicked Films, told The LA Times: “You have to try really hard to lose money in this business.”