The XXX Factor: Blu-ray or HD DVD?

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The XXX Factor:
Blu-ray or HD DVD?

Back in the days of videotape, adult-entertainment titles were credited with helping nudge the VHS standard into the lead over Betamax. With two formats now vying to rule the new generation of high-definition DVDs, the adult-entertainment industry's preference could give one camp an edge over the other.

But the competition between the two high-def formats -- known as Blu-ray and HD DVD -- is muddled by a number of factors, including accusations by adult-entertainment companies that the Blu-ray camp is discouraging DVD manufacturers from accepting their business because it doesn't want to be associated with adult content. That forces the adult-entertainment companies to go to the HD DVD camp. Blu-ray is backed by a consortium led by Sony Corp., while HD DVD is backed by a group led by Toshiba Corp.

The situation has prompted many observers to claim HD DVD has the early lead overall. Yet it is still far from certain that an advantage with adult-entertainment companies can drive the HD DVD camp to prominence in the current format war.

Replicators -- the companies that stamp out DVDs -- lie at the heart of the matter. Setting up shop to manufacture HD DVDs, which run on very similar production lines to regular DVDs, is easy and inexpensive. Blu-ray requires significant investments in new equipment, and the individual discs in that format cost more to make.

Because manufacturing adult-entertainment DVDs isn't as lucrative overall as stamping out titles for mainstream studios, the specialty companies that replicate for adult-entertainment companies don't always have the same resources to gear up for Blu-ray. Although the manufacturers can make more profit per disc from adult entertainment than from mainstream content, the orders tend to be for smaller numbers of discs overall.

Complicating the situation, some adult-entertainment companies say they are having trouble getting their movies made in the Blu-ray format. The controversy began to swirl after comments made earlier this month to a German magazine by Ali Davoudian, who goes by the name Joone, the co-founder of adult-entertainment company Digital Playground Inc. He told the magazine Blu-ray disc manufacturers told him they couldn't accept his business because Sony was against it. That, he said, forced him to manufacture his movies in HD DVD.

Sony denies that, saying it doesn't tell manufacturers how to run their businesses. (Sony's own replicating unit, Sony DADC, doesn't accept adult content.) Nonetheless, Digital Playground charges that DVD replicators it has worked with in the past have Blu-ray equipment that sometimes is sitting idle, and yet they won't take its business.

Adult-movie makers also can't turn to bigger companies that are already making Blu-ray movies for mainstream studios. After a 1998 manufacturing mixup resulting in a split second of content from an adult film appearing on Disney VHS tapes of children's animated feature "The Rescuers," Disney created a series of measures that its replicators must take to prevent future problems. That makes it very difficult for the same facilities that stamp Disney's discs to handle adult entertainment. Other studios have followed suit. Because the big-studio business is so important, many major replicators will give priority to ramping up the facilities that handle major studio content, not the adult content.

Nonetheless, the adult-entertainment companies may be on the brink of a breakthrough. Vivid Entertainment LLC's co-chairman and co-chief executive, Steven Hirsch, says that after months of searching, he finally has found a replicator that will crank out adult movies in Blu-ray, although he won't say which company for fear of tipping off the competition. In March, he plans to release what he anticipates will be the first adult movie in both Blu-ray and HD DVD formats: "Debbie Does Dallas... Again."

HD DVD's early lead in adult entertainment wasn't a given. In fact, for much of last year, many adult-entertainment companies were leaning toward Blu-ray. Digital Playground's Joone previously said he planned to go with Blu-ray because he believed its greater capacity and ability to run on Sony PlayStation 3 game players would give it an edge. Jackie Ramos, vice president of DVD production at SBO Pictures Inc.'s Wicked Pictures, recalls some colleagues at another company he won't name visiting his office a few months ago to talk up the format. "The Blu-ray technology is really impressive," he says. But then he asked who would replicate it. "They were stumped," he says now.

A Blu-ray spokesman says the group didn't formally reach out to the adult-entertainment business, but that it periodically holds seminars on the technology that the adult-entertainment business is welcome to attend. The Blu-ray Disc Association seems increasingly sensitive to claims it has excluded adult content. While a statement last week on the subject said that the group "welcomes the participation of all companies interested in using and supporting the format," it didn't specifically mention adult content. A statement from the association released earlier this week specifically mentioned that "there is not a prohibition against adult content."

Adult-entertainment companies working with the format are encouraged by early HD DVD sales. Joone says his four titles on HD DVD are selling faster than when he introduced his first titles on DVD a few years ago. From checking Amazon.com rankings of mainstream movies that are out in HD DVD and Blu-ray, he notes that HD DVD titles seem to be outselling Blu-ray.

Some in the industry say adult entertainment won't have the influence it did in DVD days. Now, with so many people getting adult-entertainment over the Internet, how the industry settles the issue may not be the deciding factor.



	January 24, 2007