• by Wayne Friedman , Staff Writer, January 4, 2007

Sexual entertainment content on cable systems still has a good growth rate. Porn everywhere else? Not so much.

The overall porn business--much of it coming from DVD sales--is set to grow by 2.4% to $12 billion. Cable industry revenue from sex-related content on pay-per-view and video-on-demand sales is moving at a clip nearly three times that, a 6.5% growth rate. Overall VOD revenue growth is expected to be double that.

Once again the Internet is to blame--but how much? Few people know, since financial data is hard to access, especially since many companies are private.

Sex movies bring in about $515 million a year for cable operators, representing about a third of all PPV/VOD business. To some, the porn business has been the cable operators' dirty little secret. But all that is set to change.

One can believe the slowdown isn't because consumers aren't interested in porn, but that, as with music, movies, and other entertainment, people are looking to get it for free--on the Internet.

What's next? Perhaps the porn industry should take its cue from non-porn video on the Internet, and offer up advertising-supported video porn content?

For years people have talked about how mainstream porn has become--which should lead to the next step. Perhaps a company such as Toyota, Cingular or American Express should consider sponsoring some of those soft-porn films  seen on Cinemax.

Such a move might not seem so far-fetched, considering the lengths marketers are going to hook up with risky and questionable content in other areas such as YouTube or MySpace.

One major distributor says not to worry about the porn business.

Speaking on the eve of the adult video convention, Steven Hirsch, an owner of Vivid Entertainment Group, a major producer of both soft- and hard-core movies, told The New York Times: "Right now, DVD is going down faster than video-on-demand is ramping up; it is just a lag in technologies."

That would be good news for cable--and perhaps not such a dirty little secret.