IVD Says Adult May Save Video Retailers’ Bottom Line

(HIGHTSTOWN, NJ) — The adult video business continues its impressive growth and retailers should strongly consider carrying adult product to bolster their bottom line.

This is according to International Video Distributors’ (IVD) president, Frank Kay. IVD is the East Coast’s largest adult video distributor.

The recent Chapter 11 filing of Video Update, a video chain with 620 stores and news of Hollywood Video’s (the country’s second largest video chain with roughly 1000 stores) downsizing has prompted speculations about the retail video business in general. Blockbuster’s third quarter loss only adds to those arguments.

Blockbuster is the nation’s largest video chain with roughly 4000 stores controlling about 32% of the domestic video rental market. According to the National Association of Video Distributors, nearly 1400 independents folded in 1999 and another 285 went out of business in the first quarter of 2000. Additionally, Paul Kagan Associates, a respected research firm, called video rental a “dying business”.

Contrary to the mainstream video business, adult videos are doing quite well. IVD General Manager, Mike Savage, has estimated year-to-year increased sales of approximately 30%.

Savage attributes the impressive figures on two major factors – independent video retailers are now looking to distinguish themselves from the big chains who refuse to carry adult material; and the increased acceptance of adult into the mainstream arena. The latter factor has been demonstrated time and again by the coverage of adult in general media.

In fact, the New York Times recently published an article by Timothy Egan in their Technology section entitled “Technology Sent Wall Street Into Market for Porn”.

Forrester Research, a Cambridge, MA research firm, and Securities and Exchange Commission filings indicate that the business of selling sexual desire through images has become a $10 billion annual industry.

Additionally, according to Adult Video News, an industry magazine that is to adult films what the trade publication Billboard is to the music industry, last year, there were 711 million rentals of hard-core sex films.

The New York Times article points out that at home, Americans buy or rent more than $4 billion a year worth of graphic sex videos from retail outlets and spend an additional $800 million on less explicit sexual films – all told, this accounts for about 32 percent of the business for general-interest video retailers that carry adult topics.

“Our numbers are up and it’s largely due to the acceptance of adult in mainstream. Vivid (a leader in the adult industry) is in the midst of taking their company public. It’s a feat no one could have imagined back in the eighties when the only way people had access to adult film was to go through the ordeal of a trip to a run-down part of town and purchase it from a ”sleazy“ adult bookstore.” says Kay.

Kay goes on to say “Considering the current situation of mainstream video, video retailers should seriously consider carrying adult product to help bolster their bottom line. Aside from the competitive advantage this presents against the big chains, their customers will be thankful for the added convenience. They won’t have to make two trips for different themes (mainstream and adult). Besides, if you study most of the independents that have recently gone out of business, a majority did not carry an adult line. That should stand for something.”