Online porn to spar with gaming in paid market

In 1998, online pornography accounted for 69 percent of revenues for paid online content

(CNN) -- Analysts predict adult content will continue to dominate the U.S. and western European paid online content market, but it will have to contend with online gaming.

Adult content accounted for 69 percent of revenues for paid online content by the end of 1998 and will remain the market leader in 2003 at 58 percent, according to a report from Datamonitor, a market research company.

But its standing is expected to drop slightly due to increasing popularity of gaming sites. Gaming revenues are predicted to increase the most dramatically, jumping from 4 percent in 1998 to 13 percent by 2003 as online gaming becomes more sophisticated and sites feel justified in charging for it.

Online gaming services are currently poised to start charging for "premium zones" in their sites, where customer service, community centers and related content are superior.

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"Many of these game sites don't actually yet charge for the content," said Ellen Elcock, a Datamonitor analyst. Adult content dominates the market because it can take advantage of existing technology to deliver its content, and offer the most paid services.

And there is demand for the content offered at online porn sites. The study ranks it the most profitable genre of paid online content, with a U.S. and western European market worth $1.4 billion in 1998.

"They're early adopters and they're willing to experiment," said David Card, senior analyst for Web experts Jupiter Research. "The adult content market historically has always been a leader in new media."

Paid online content, or content that consumers purchase through subscriptions and pay-on-demand services, is largely limited to adult, gaming, and news and information sites. The market for it is expected to reach $5.4 billion in revenue by 2003 -- a success credited to wider acceptance of paid online content and increased spending by western European consumers as more households gain access to the Internet.

In this age of free access to most everything on the Internet, many content providers are finding it more profitable to gain revenue through sponsors and advertisers. But Datamonitor concludes that the nature of online pornography and the Internet make for an ideal paid content relationship; the Web allows a degree of anonymity, is easy to use, and delivers immediately.

In addition, adult material is cheaper to produce and easier to sell than many other types of content, analysts said.

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Datamonitor

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