Adult Content Market Faces Wireless Struggle

The mobile adult services market is set to reach US$5 billion by 2010, according to a new wireless Internet applications service report from Strategy Analytics. But analysts said fear of consumer backlash and government regulation is stalling wireless adult content growth stateside.

Jupiter Research analyst Joe Laszlo told the E-Commerce Times he doesn't think it's an exaggeration to say U.S. wireless carriers are scared to death of offering adult content. U.S. cell phone carriers are reluctant to do anything that may offend customers in an ultra-competitive wireless landscape.

"Other companies on the PC-based Internet have been bit by efforts to even offer links to adult content from third-party providers," Laszlo said. "There isn't a lot of consumer backlash, but those who do speak out against adult content are very loud."

Web-Based Porn Wins

The report, titled "Mobile Adult Services Generate $0.4 Billion in 2004," points out some serious obstacles to the mobile pornography market as it seeks to gain a stronger foothold in a growing sector.

Despite positive drivers, which include greater availability of multimedia capable handsets, increased participation by established adult companies, the introduction of off-net portals, and the implementation of content certification and age verification systems, Strategy Analytics concludes that mobile porn will remain a small market given the availability of superior user experience on the fixed Web.

"Adult services are not a killer application in waiting," Strategy Analytics senior analyst Nitesh Patel said. "With so much free pornography available on the fixed Internet, and mobility conferring only limited advantages to adult content, we believe that demand for adult material will continue to be largely met by fixed Internet services."

US Versus European Consumption

Analysts said U.S. companies are also fearful of the possibility of government regulation. Plenty of headaches await wireless providers if the FCC steps in and forces them to regulate content or stop marketing to teenagers because they could access X-rated material on their phone's data service.

But the picture is very different in Europe, where the moral climate is more relaxed and wireless carriers have spent more money building out next generation wireless data networks.

"European carriers are more likely to strike deals with Playboy and Penthouse because they need to generate more revenue to pay for those data-capable networks," Laszlo said.

Future Growth Expected

Patel said adult entertainment publishers, such as Playboy and Private Media Group, will no doubt extend wireless connectivity as an option for paying customers, but even among this group he anticipates that mobile usage will be low.

"Despite these challenges, Strategy Analytics has upgraded its revenue outlook for mobile adult services from $1 billion in 2008 to $5 billion by 2010. David Kerr, vice president of Strategy Analytics' Global Wireless Practice, said, "This follows stronger-than-anticipated evidence of consumer demand and carrier implementation of strategies that lay a stronger foundation for future service growth."