TABLE OF CONTENTS Sep 2004 - 0 comments

Sex Please, We're Canadian

Distributors and their customers now have much adult content from which to choose

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By: Greg O'Brien
For a long time, Canada had lagged behind the United States when it came to the number of adult channels available on cable and satellite.

We seemed so genteel, we Canadians, what with just Playboy TV as the lone all-adult channel available for so long. Oh sure, we had our blue movies on late at night thanks to Citytv or The Movie Network or pay per view, but for a wide selection of hard core adult content, well, that's what certain video stores or mail-order or the Internet were for.

Well, no more (and if this story were a TV news report, this is where we'd probably cue the wailing guitar hard rock soundtrack).

This fall, Canadian distributors will have access to at least seven more 24/7 adult channels, more SVOD and VOD content, in addition to the incumbent Playboy and last year's spiciest cable and satellite additions, Hustler TV and 10 X.

Ottawa-based 10 Networks, owners of Hustler TV and X, plans to launch three more channels this fall while AOV Inc., in association with Channel Zero (Silver Screen Classics, Movieola), will launch a trio of their own. As well, lesbian and gay channel PrideVision TV has said it will launch a 24/7 gay erotic channel, too (although it does not yet have a license). All are digital category two specialty channels, meaning a certain percent of its content is made in Canada. The new adult content doesn't stop with the channels, either. The companies mentioned above are also key sources for that type of programming found on the cable operators' video on demand services.

Now, this isn't a subject that most cable and satellite carriers are comfortable talking about, but in pure business terms, adult content makes a lot of sense. It earns. Adult content is a key driver of VOD and in getting digital cable boxes and satellite receivers into homes.

No longer do adult film fans have to order movies on the Internet or visit their local retail outlet with their sunglasses on and collars up high. Once they have a box, they can order whatever they wish, in private, with a click of their remote or a phone call.

Randy Jurgenson, president of AOV, which for years was the number one storefront retailer of adult movies, has seen the future and it's not in bricks and mortar. He has sold off 80 of his once 90-store coast-to-coast chain and has moved into television, launching AOV Adult Movie Channel and AOV XXX Action Clips with Channel Zero this fall.

Both channels will be ready as of October 1st, he says, with about 250 hours of content each, adding new titles every week. At press time, a brand for the gay adult channel it is planning had yet to be announced.

Despite the fact that he believes video and DVD retail is no longer a business with much growth potential, his two decades in retail means he can offer "20 years of market intelligence from all the major markets in Canada," he says.

For example, his data tells him that "there's at least a 15% to 20% market penetration potential for adult programming," meaning that for every 1,000 customers, 150 to 200 will pay a monthly fee for adult content. And, since these channels are generally the top-priced channels, the opportunities for operators are lucrative. However, those percentages are based on his retail experience, where people actually have to get in their car and go to the store, rather than simply use their remote.

From a consumer standpoint, the channels are not cheap. Rogers offers 10 X and Hustler together for $29.95 a month, separately for $19.95. It offers Playboy for $12.95. Star Choice offers Hustler and Playboy together for $24.95 a month. Almost no other channels sell for that much.

Stuart Duncan, owner of 10 Networks, wouldn't divulge how his channels are faring, but one guesses that he wouldn't have three others lined up to launch if they weren't performing well. Duncan recently got licenses for four new channels and has immediate plans to launch three, to be called: Red Light District, H2 (European films) and XXX Clips. (The clips channels are near steady streams of the so-called "money shots".)

Duncan's company has over 12,000 titles in its library (he has shot many adult movies, as well as distributed them) and adds up to 60 new titles per channel per month. He also has a French hard core channel, Canal Plaisir, but no operator carries the channel as yet.

The adult market is not easy-money, as it may seem to some, says Duncan. It's work. It's difficult marketing the channels because the distributors don't overtly advertise them, customers must buy or rent a digital box and "it's $19 a month. It's no cakewalk," he says.

Duncan owns the rights to one of the hottest titles in adult right now: One Night In Paris, the infamous Paris Hilton video, which is pulling steady VOD buys from Comcast customers in the U.S., for example, he adds.

As for the incumbent, Playboy, the more the merrier, says Playboy TV's Canadian account manager Ruby Tan. "I'm not sure what the appetite is for all these additional channels, but variety is good," she says.

Playboy is quite a bit different from the newcomers in that it offers much of its own original programming, can put its popular Playmates on television and airs fun programs such as talk shows, which the others don't offer.

It will also have something else over the others when it launches a Playboy subscription video on demand service with Rogers Cable this fall.

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