Why Vuli Can't Be Netflix for Porn (Yet)

Why Vuli Can't Be Netflix for Porn (Yet)

January 19, 2019 135 Comments

One of the biggest misconceptions I get surrounding Vuli is that it will be a similar business model to Netflix, but for adult – meaning that Vuli will offer an all-you-can-eat varied adult content experience for one low monthly price. This is partially my fault, since I often mention Netflix as a reference point for how I’d like to utilize modern personalization algorithms and user design on Vuli. While a straight up porn Netflix would be great, it’s largely implausible and I’ll tell you why: 

Netflix acquires content for their platform by licensing it. What this means is that their media buyers call Warner Brothers or whoever or vice versa, and they say hey we’d like to buy that Harry Potter movie (did I really just name drop Harry Potter in a post about a porn site…yes, yes I did). If the deal goes through, Netflix acquires the rights to stream Harry Potter for a designated amount of time to designated geographies. Presumably, Netflix crunched some numbers and saw that they were spending a ton of money on all these licensing deals and only getting revenue from one subscription per user per month, and wanted to increase their profitability. Thus, now when you go to Netflix you are bombarded with hundreds of hours of Netflix Original content, since they started pouring some of that money previously reserved for licensing in to generating their own content that they can stream any time, anywhere.

So why can’t Vuli do that? Well, for one, Warner Bro, Universal, Disney, and all the other hundreds of studios working with Netflix typically don’t have their own subscription pay site to which they are endeavoring to lure users. Their main methods of distribution are movie theaters, VOD (Amazon Prime etc.), DVD/Blu-Ray, broadcast, and streaming platforms like Hulu and Netflix. If they did have their own subscription sites, then they’d be far less likely to license their content out to another streaming subscription site (or at least require much higher licensing revenue) as that would cannibalize their potential user base. This is essentially the issue in porn. Pretty much every studio from which Vuli could potentially acquire content has their own subscription pay site that is usually that studio’s biggest source of revenue. The studios are happy to do revenue sharing agreements and share content for VOD as that is an extra revenue stream that caters to who they perceive to be a different sort of customer than the ones they are targeting with their all-you-can-eat subscription model. As a result, studios for the most part won’t sign with Vuli unless there is a clause in the agreement that stipulates that their content will not be sold under a subscription model (from the customer’s perspective: why sign up for one site’s subscription if I can get content from multiple sites all for one subscription somewhere else). 

Even if we could convince studios to participate in this model despite the perceived conflict of interest, the next problem is licensing costs. It’s tough to try to design a revenue sharing model based on a subscription, for example let’s say Sam pays $15 a month and watches 10 minutes of content from Studio A and 30 minutes from Studio B. How do we allocate that $15 among those two studios? Both provided value to Sam and both received his…liquid seal of approval. Do we pay studio B more because he watched that scene longer? Is that fair to Studio A? So because of this issue, the only way Vuli could ever do a Netflix-style subscription model is if we had a lot of money for licensing, which includes hiring people to manage that whole process because it’s quite a lot of paperwork. As a startup, currently this wouldn’t be feasible, but over time we hope it can be as we’d like to offer an all-you-can-eat option that includes all Vuli Originals as well as content we license from our studio partners. So business model wise, maybe think of our ultimate vision as Amazon Prime…for porn. 

Cheers!
Paige


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