The digital adult content industry has a relatively simple value chain, given that the transition to online content has broadly simplified the market, rather than complicating it.
Digital adult content is usually accessed via a website, rather than an app, with distributors frequently owning multiple websites. The exception to this is AR (Augmented Reality) pornography, in which 3D avatars are imposed onto the viewer’s home environment using a smartphone application. Content is created by brands, which make full content available behind paywalls, with samples of this content distributed via more general digital adult content websites, often for free.
In general, digital adult content websites enable consumers to view videos, images, and other digital content. Most modern websites follow a similar business model, where premium packages are offered that provide higher-quality ad-free content, free content is monetised via advertising, and links are made to third party-related websites (video-camming services, sex toy manufacturers, etc). While many popular websites are run by large distributors, there are still individual websites available for adult entertainers, such as OnlyFans, which are often monetised directly via tips/subscriptions.
Digital adult content producers and performers are central to the market, but usually have a small amount of influence compared to other areas in the value chain. The monopoly of the main distributors means that much of the production is undertaken in house. However, services such as OnlyFans allow performers to interact directly with consumers; obtaining small revenue streams. It should be noted, however, that social media platforms such as Facebook, Instagram and Twitter are cracking down on digital adult content; making it harder for performers to promote their services on these platforms.
In the digital adult content market, marketing remains a difficult proposition. Given the ongoing moral concerns around pornography and the effect it has on individuals, it is largely out of scope for mainstream marketing platforms. Therefore, marketing is often run by distributors and focuses around referring the customer to other digital adult content (usually within the distributor’s network), or further services (such as video-camming, again through the distributor’s network).
Three corporations maintain control over a significant proportion of leading digital adult content brands: Hammy Media, MindGeek and WGCZ Holdings. This industry monopoly makes it incredibly difficult for emerging production companies and websites to enter the market, with many smaller entities required to work in collaboration with MindGeek or its competitors. By using MindGeek as a distribution channel, smaller pornographic film websites are able to promote their content via the leading digital adult content sites and improve the visibility of their content. Despite this costing a proportion of revenue, working in partnership with MindGeek brands to distribute content is likely the only viable revenue stream presented to smaller studios and websites. These smaller studios and sites may also wish to pay for advertisement space on MindGeek’s leading websites.
Whilst large networks such as MindGeek tend to focus on mainstream pornography, the group also covers websites that focus on ‘reality’ porn, submitted by amateurs, or shot from a point-of-view perspective. If smaller studios do not wish to enter into partnership with larger companies such as MindGeek, we recommend a focus on a more niche offering. By catering to niche consumer tastes, such as specific fetishes, smaller production companies and websites will be able to distinguish themselves from other providers in a saturated market. One way that production companies may wish to achieve this is through investment in AR or VR pornography, in which the viewer consumes pornography through an AR or VR headset.
Our latest whitepaper, Pornography in a Pandemic: Monetising Digital Adult Content, explores the current digital adult content landscape, analysing business models and current industry trends.
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Related Research: Digital Adult Content