After rough 2013, porn studios look for a better year – CNBC

CNBC examines the state of the adult business in the run-up to the 2014 Adult Entertainment Expo in Las Vegas…

2013 couldn’t have gone much worse for the porn industry.

The DVD business, once the lifeblood of adult film producers, dwindled even further. Legal challenges over mandatory condom laws continued to dog the industry. And porn companies were forced to shut down production three times after four performers tested positive for HIV.

As the industry prepares for the Adult Entertainment Expo, its annual trade show in Las Vegas, the question on everyone’s mind is: What does 2014 have in store?

No one’s sure, of course, but some insiders are cautiously optimistic that the worst is over.

“My general impression is the industry has bottomed out,” says Alec Helmy, founder and publisher of trade publication Xbiz. “Companies have figured out how to change their business models to sustain profitability. In terms of the number of players, it’s at an all-time low, but those who have survived are obviously the stronger breed.”

Globally, porn is a $97 billion industry, according to Kassia Wosick, assistant professor of sociology at New Mexico State University. At present, between $10 billion and $12 billion of that comes from the United States. Revenue from traditional porn films has been shrinking, though, because of piracy and an abundance of free content on the Internet.

“DVD sales are barely alive at this point,” says Steven Hirsch, founder of Vivid, one of the industry’s largest and best-known studios. “We’ve seen probably an 80 percent reduction in sales over the past five years—to the point where fairly soon it’s not going to make sense to put movies out on DVD. It’s not going to happen tomorrow, but we are certainly marching towards that day.”

Read more of CNBC’s report on the adult business…