Things move quickly in the U.S. mobile entertainment ecosystem – unless you’re an adult content vendor.
From sex texts to moantones to bikini-clad models to full-on hardcore video, wireless porn is gaining traction in certain markets around the world. Wireless wantonness rang up about $1.7 billion last year, according to Juniper Research, and the market will swell to $4.6 billion by 2012, with lusty Western European users fueling the growth.
North Americans will account for a small but growing percentage of those revenues. The continent generated only $25 million in 2007 and will ramp up to $575 million in 2012, marking a market-share increase from 1% to 12%.
Slow uptake in U.S.
For adult content providers, those dollars will be a long time in coming. The U.S. market for mobile porn has failed to move beyond anything but a curiosity as carriers have kept the steamy stuff at arm’s length.
“There’s really not much news to report” in the U.S. market, according to Clinton Fayling, CEO of Denver’s Brickhouse Mobile. “We’ve taken the stance that if the U.S. carriers come around to it, great, and if they don’t we’ll be fine. There’s no pressure from our end.”
It’s not like we Americans don’t have an appetite for the stuff, of course. The United States accounted for $13.3 billion in adult content revenues in 2006, according to a TopTenReviews report, with only China, South Korea and Japan outpacing it.
And while mobile porn certainly provides an inferior experience than, say, the traditional Internet, the new wave of Web-friendly devices seems well-suited for the stuff. Handsets such as Apple Inc.’s iPhone and Samsung Electronics Co. Ltd.’s Instinct not only offer bigger and better screens, they can access content in a flash thanks to 3G networks.
Carrier concerns
But U.S. mobile operators have sidestepped any controversy by declining to bill their customers on behalf of third-party vendors of adult content. While that stance has effectively shackled the market – asking a user to type in a credit card number is a non-starter, many vendors say – it may be a wise one. Canada’s Telus Corp. suffered a public-relations flack last year when its experiment with edgy content drew the wrath of local religious leaders. The carrier was forced to pull the offerings – which consisted of nude images but no hardcore smut – just two months after bringing it to market.
That kind of protest would pale compared to the outcry an operator would be subject to if adult content got into the hands of a child, noted Alykhan Govani, CEO of MX Telecom’s North American business. “As a whole, if the wrong consumer – like a minor – purchased adult content, ultimately that carrier is going to have to deal with the backlash,” Govani said. “It’s all about putting the right protocols in place.”
Indeed, much of the heavy lifting surrounding adult content has been done by network operators. Carriers adopted a content-ratings system several years ago as R-rated content such as “The Sopranos” and “Sex and the City” came to mobile, and every tier-one operator has adopted some form of parental controls.
“What carriers have done is to provide additional tools for folks who want to manage the open Internet” on their phones, said CTIA spokesman Joe Farren. “You have the on-deck content that carriers provide, and that’s pretty straightforward; it can be dealt with through a classification system. Now when we go to the open Internet it gets a little trickier, but carriers have stepped up to the plate and provided consumers with ways to filter that content.”
Billing and age verification
But the market continues to stagnate thanks to a lack of a viable billing mechanism. A small army of mobile banking startups have joined the field, allowing users to transfer funds, make micropayments and even send a few dollars to a friend, but no viable work-around has surfaced for those looking to consume porn on the phone without reaching for their wallets.
Obviously, operators believe more safeguards must be put in place before adult content can come to market in any substantial way. Ironically, carriers are fearful of deploying one of the most important of those safeguards – age-verification systems, namely – lest they draw the wrath of religious groups and other activist groups.
“Many operators now routinely employ age-verification systems, although their use is by no means universal,” Jupiter Research wrote in a white paper last November. “In the U.S., for example, operators are wary of their deployment, for fear of a conservative/religious outcry over the possibility that the operator might, at some point in the future, consider offering services that might not be suitable for minors.”
However, BSG Clearing Solutions, a Texas-based developer of payment software for telecoms, recently added an age-verification module to its mobile payment offering, joining a host of other companies looking to help carriers avoid delivering adult content to kids. And there’s simply too much money to be made for operators to leave it on the table.
“Those discussions are happening with carriers,” Govani confirmed. “I think it’s really important that we have a lot of consumer protections in place before it takes off, but I think it’s just a matter of time.”
