Special Report: Outlook for the Adult DVD in a Post-COVID World

CHATSWORTH, Calif.—The DVD has had a helluva run. While it may not have been the titanic shift that came with VHS, which for the first time facilitated the average person’s enjoyment of adult movies at home, DVDs combined with a synchronous revolution in cameras that were small, high quality and inexpensive to create an explosion both in content and sales.  The death of the DVD has been predicted, debated and, seemingly, debunked for well over a decade. The impending doom for the DVD is still not here, but is it coming?  Yes.  Someday.  While time may have sped things up in our collective memory, the VHS tape sputtered to its death. The format entered the market in the late ’70s, and DVDs, which were introduced in 1997, didn’t overtake VHS rentals for another six years. While the VHS format managed to hang on for a few years after that—the last machine was manufactured in 2016—DVDs were an easy choice for most due to audio/video quality, durability and convenience. And no more getting sassback from the clerk at the video store for not rewinding your VHS tape.  There have been countless tales of doom over the past decade: Typical is a New York Times story from 2011 titled “Goodbye, DVD. Hello, Future.” Nine years later, that adios seems like a premature ejection. Still, it sure seemed like it at the time, with sales down 40 percent from the previous year, Blockbuster in bankruptcy and Hollywood studios cutting back on library titles on DVD. On-demand was being offered by cable companies, Netflix and Hulu were making their marks, and Apple and Amazon were beginning to offer digital content, too. Yet the DVD has kept on hanging on. The numbers for the adult industry have always been hard to pin down since most companies are privately held, but there’s no question that DVD sales aren’t what they used to be. Do DVDs have a future for Porn Valley producers? And how will this year’s coronavirus and its accompanying shutdown change things?  Few companies in the industry are in a position to get a bird's-eye view like Pittsburgh-based Adult Empire. The company launched as an online adult DVD retailer in 1997 and in 2007 became the first adult retailer to offer iPhone content. Today, Adult Empire, which has won the AVN Award for Best Web Retail Store 13 times, offers both DVDs and streaming.  “The DVD market is still rolling along in 2020, but the impact of the pandemic is taking a toll on the retail stores, replicators, studios, and DVD distributors which have been forced to shut down,” Adult Empire VP Colin Allerton said. “The DVD market is the last physical format for adult, so they will continue to sell for the foreseeable future. A lot of the customers who still buy DVDs are collectors, older customers, or people living in rural areas where high speed internet isn’t available, so I do not see DVDs completely dying off anytime soon.” Overall, the numbers appear pretty bleak. DVD sales peaked in 2005 with sales of $16.3 billion. Blu-ray was unveiled the following year, but despite a huge increase in quality, never really caught on, peaking in 2013 with sales of $2.37 billion. Sales numbers for the two formats today are almost equal, with DVDs in 2018 falling to $2.2 billion and Blu-ray not far behind at $1.8 billion. Combined they are less than a quarter of DVD’s sales at their peak. Allerton said that mainstream’s DVD sales decline is not mirrored by the adult industry and suggested the format’s death isn’t yet on the horizon.  “For Adult Empire, DVD sales are not down as significantly as they are with mainstream,” he said. “We’ve seen a slow decline, however sales for the past two years have stayed consistent and are still very substantial. I do not foresee a time in the near future where it’s no longer profitable to produce DVDs, as long as the content being produced is high quality.”  Pulse VP of Sales Hyland C. has been with the company long enough to have heard the predictions of the DVD’s demise pretty much since people started making them and, since he has seen no sign of it still, he is unconcerned.   “Ten years ago, people were saying that DVDs had maybe five years left,” C. said. “And now here we are, 10 years later, still selling strong. I think we have many years left in this market. Studios are still making money from DVD sales, and it helps to have other streams of income going along with it, like VOD and broadcasting.” Jules Jordan of Jules Jordan Video is one of the biggest figures in the adult industry over the past 25 years and echoes Allerton’s sentiment that the older porn fans are helping keep the DVD profitable, noting that younger viewers aren’t paying for porn either way, be it on DVD or streaming. “Adult VHS had a long life after mainstream was well over it,” Jordan said. “This is due to the older generations’ hesitance to evolve technically, so I think DVD will be around for a while longer, as long as there are sex stores selling adult toys/lingerie. It's the last tangible format for adult film. Most millennials aren't paying for adult film entertainment, most have found a way to watch endless amounts of porn for free.” The attitude from Girlfriends Films owner is Moose is positively positive, though he said the effects of the shutdown are yet to be seen.  “Right now, I think the future of the DVD market is strong,” Moose said. “The temporary shutdown has hit all of us pretty hard, but just in the past few days adult retailers have been on track to reopening safely in their regions, and I think that’s a testament to the demand for product that hasn’t gone away.  “It’s not the same [as mainstream]. If you look for mainstream DVD stores, they are pretty hard to find. But our retailers, before this happened, they were thriving and many of them have multiple locations, so it’s probably not a fair comparison. I think adult DVDs offer things to the consumer that mainstream viewers are not really looking for when they watch non-adult programming.” In April, there was a hullaballoo in Hollywood when Universal Pictures decided to forsake theatrical showings and release their Trolls World Tour on-demand—and racked up $100 million in three weeks. That caused quite the kerfuffle with the AMC Theatres folks, who would have preferred Universal wait until theaters are open again so they could get a piece of the pie. When NBCUniversal CEO Jeff Shell made comments suggesting the movie's success might alter the studio's historical paradigm of giving theatrical exhibitors an exclusive opening run window, AMC, the world’s biggest theater conglomerate, decided to fight back, vowing to ban all Universal movies from their screens. While porn was immediately available (and wildly popular) on the internet since its advent, Hollywood was slower to adapt to the new model. The adult industry took to the internet as well as consumers took to finding it there—studies over the years have revealed that about 25 percent of all searches were for porn—and the adult industry’s fight has largely not been among themselves like AMC vs. Universal, but against a shared enemy in pirating. It’s always been a problem with DVDs, and the internet, with its instant and anonymous nature, has made things all that much more difficult. But could Universal’s lesson—that it can profit without a major platform like theaters—hold true with porn by eliminating the DVD? While theater showings are a non-issue for the adult industry today, there was definitely much to be learned as production, manufacturing and distribution came to various states of standstill in recent months. Could this be the kind of shake-up that forces consumers to finally forsake the disc for downloads and streaming? At the very least, a temporary increase in streaming was to be expected, as was a decline in DVD sales, since distribution took a hit.  “There has been an impact, I think everyone can agree,” Moose said. “But it’s hard to compare the two service deliveries, because the numbers have been pretty fluid. In the beginning we definitely saw an uptick in streaming sales. Now as the weeks have passed, we’ve had requests for more product, new product, because our retailers are running out of DVDs. So, the folks who have continued to ship DVDs have been getting orders for sure. And we have continued to ship product from our distribution center with safety measures in place. It’s not the same amount as before the shutdown, and I think that’s largely because we haven’t been able to put out the new releases. But it’s gearing up to happen and I think when it does the sales will definitely be there.” Allerton at Adult Empire said streaming sales definitely increased, but because the stoppage has lasted so long, some sites have begun to see their content reseves run dry. Since virtually every aspect of the industry has been shut down, the effects will likely be felt well into summer—assuming things will be able to open up and stay open by that time.   “The coronavirus has really boosted our streaming and membership sales across our network,” Allerton said. “It’s also had a big impact on temporarily stopping most DVD new releases as studios, replicators and distributors have been forced to shut down and cancel shoots. Distributors and studios cannot release new DVDs until the replicators reopen and replicate the new titles, which will become a bottleneck. Some of the online sites are also running into the problem of running out of new content updates, since they haven’t been able to shoot for weeks. Some of them are resorting to content swaps with other studios, so that they have new content to keep subscribers happy.” Jordan confirmed that things have shut down to the point where his studio is putting out new releases digitally, and that he expects DVD production to be backed up once restrictions are lifted, due to a combination of the above-mentioned bottleneck of producers cued up for services and a potential lack of supplies. “Streaming and subscriptions are up of course since most people are forced to quarantine and have limited entertainment options, especially with sports and live events sidelined,” Jordan said. “With the closing of virtually all brick and mortar stores during the coronavirus outbreak, it’s basically shut down all of the distributors and studios for DVD distribution. Online retailers such as adultempire.com have done well during this time with DVD, however we've had to halt replication of new titles to date, and opted for digital only releases with our online retailers. DVD replicators may have many problems opening back up after this, and there may be shortages on materials.” Ultimately, the consensus seemed to be that the DVD market for adult product will stay strong for the foreseeable future. The streaming surge during the time of coronavirus may or may not contribute to speeding up the transition from disc to digital. In what would be welcome news for many directors and performers who have struggled during the shutdown, Allerton said he is hearing that there will be an increase in shooting once everyone has the green light. “We anticipate a surge in new releases in the next few weeks as all of these businesses begin to reopen,” Allerton said. “I’ve spoken with numerous studio owners that plan to increase their shooting schedule when they can return to filming, to ensure they’ll have additional content if they are forced to shut down again. The shutdown has made us rethink the possibilities and benefits of remote workers. The effects will almost certainly be felt in other ways: producers may want to have more content ready just in case another shutdown happens.” Image by Hebi B. from Pixabay