Premium Porn’s Getting Hit By Free Competition, Too

1 Comment

The online porn business – long regarded as one of the few publishing sectors to successfully charge for web content – is now suffering from free competitors, just like other parts of the industry…

Digital revenue at Daily Sport publisher Sport Media Group (SMG) fell 42 percent to £5.4 million over the 17 months to December 31, from £9.3 million in the previous 12 months.

“Revenues in the entire adult industry have fallen dramatically in the last two years, as a consequence of ‘free’ adult internet content supported by advertising,” SMG said.

SMG in its current form was created when web and mobile adult operator Interactive World acquired Sport Newspapers Ltd in 2007. The combined group’s 19-person digital division now leverages its services, which also include mail order, through the Daily and Sunday Sports. It’s not that SMG isn’t playing the free game itself – it says it makes some money by giving away DVDs in the Sunday edition using “lock ‘n play” technology.

But SMG acknowledged it “lost customers and margin as well as some key support contracts as the market declined“. It’s trying to diversify in to online infrastructure, forming a host called Telecom2.

The group has been wracked by debt problems over the last year and took a £1.7 million rescue loan. It’s now spending 35 percent less on producing content each month, and today announced a renegotiation of banking facilities until 2013, giving it much more certainty about the future.

In the print division, “bad winter weather impacted both newspaper distribution and readers working in the building sector”, the group says. Here, it’s planning “our own studio facilities will significantly improve the opportunity to provide exclusive video and still content online, to complement the printed products”. This will feed “wholly-owned content to the digital division to help reinvigorate the mobile side of the business”.

Group revenue over the 17 months was £30.9 million, down from £29.4 million in the previous 12 months, and losses widened from £18.2 million in the previous 12 months to £29.2 million over the 17.


1 Comment

Comments are closed.