As the sex industry continues to thrive on the Net, Penthouse is betting that adult video will also find a huge Web audience.
General Media, the publisher of Penthouse magazine, said it would invest $10 million in equipment and content development for a new project, Penthouse Internet Television, that will provide live, 24-hour-a-day video from its Web site for a fee. Penthouse already offers some video on its site, but the new investments will greatly expand the adult emporium's motion picture offerings.
Adult material has proved to be one of the few types of content for which Net surfers are willing to pay, and the Internet could provide a powerful and profitable new market for video distribution. Other well-known adult publishers such as Playboy are also planning on expanding their fee-based video libraries.
According to Playboy spokeswoman Rebecca Theim, the company will soon launch a Web site called Cyber Club that will sell adult pictures and video. Cyber Club, Theim pointed out, will also include video interviews from the Playboy archives with writers and artists such as Allen Ginsberg, Alex Haley, and Miles Davis.
Currently, the Playboy site is supported by advertising revenue and is already turning a profit, Theim said. Similarly, the Penthouse site is also "extremely profitable," according to Mark Cutsforth, vice president of the Internet group at General Media.
But the real competition may come less from marquee publishers and more from the dozens, if not hundreds, of smaller sites offering still adult images and video.
"The Web allows anybody from any garage or PC to be a porn distributor," said Mark Hardie, a senior analyst in the entertainment strategies division of Forrester Research. "The technology is not exclusive. You can be Penthouse or Joe Smith around the corner who has shot video of amateurs and who has decided to pump it on the Web."
Penthouse is trying to move into the smaller adult Web site market too. Today, the publisher said it will introduce the Penthouse Web Hosting services with Bell Technology, an Internet software and consulting company. The service will provide turnkey design and hosting solutions for smaller adult Internet entrepreneurs.
Bell Technology is also providing Penthouse with the video streaming technology for Penthouse Internet Television, the first channel of which launched this week. In addition to video-on-demand services, the site will offer interactive communications with "nude models."
According to General Media's Cutsforth, the video quality is decent now but will improve as more of its customers upgrade to high-speed cable modem and ADSL technologies. Until then, Penthouse believes that its Net video service will provide an attractive alternative to trekking down to the adult video store.
"We now have our products and service available to consenting adults around the world 24 hours a day," Cutsforth said.