National A-1 didn’t start out as a business with its hand in the adult entertainment cookie jar. In fact, before he launched one of the industry’s most successful movie streaming sites with Hot Movies, National A-1 founder and president, Richard Cohen, was working in a field that couldn’t have been further from pornography: finances.
Having attended Drexel University to study accounting and taxation, Cohen eventually found his way into the check-cashing and pawnshop business. Nine years later, he sold his three shops and decided to open a store on Jeweler’s Row in Center City, Pa., specializing in pre-owned watches and loose diamonds.
Although the jewelry store did and continues to do well for him, Cohen still wanted to supplement his income with a little something on the side. “I wanted something that would have no employees, no hassle, no problems,” he says. “It could just run itself and make me a few extra dollars a week.”
So, in 1988, after attending an audio-text trade show and seeing the potential in the adult marketplace, Cohen began his venture into the world of adult entertainment with a local 976- confession line. The success of that venture led him to expand into personal ads, virtual chat, and live one-on- one phone lines. In fact, the business did so well that before long, Cohen was able to expand the local pay-per- call line to more than 20 cities with the opening of a call center, leading him to become one of, if not the leading provider of audio-text services.
In 1998, Cohen realized that the time had come to join the frays of entrepreneurs who were flocking to the Internet. National purchased several hundred one-word domains and a few two-word domains (“We overpaid for some and underpaid for most,” Cohen recalls), hoping they would drive substantial traffic to future National websites. They developed several key sites (Girls.com, Teens.com and Spanking.com among them), and soon saw the results of their efforts.
Business was good, but Cohen was not satisfied, specifically with the sites’ existing billing model. “We never liked the membership billing model because it relies on earning substantial revenue from members who forget or who have a hard time canceling,” Cohen explains. “We wanted to charge [a low membership price], but it did not allow us to pay affiliates the large upfront fees they demand.” So, shucking industry convention, National decided to abandon the recurring billing model and instead direct their traffic to pay-per-click search engines. Having retained a few of their sites, they replaced the recurring billing model with a one-time, one-month membership that was 25 percent higher than the recurring one.
“We were surprised when we discovered that the higher price, fixed time membership outsold the recurring membership plan four to one,” recalls Cohen. “It became clear to us that people wanted to pay as they go and use a site when they wanted without being tied into it.”
Therefore, in January of 2003, National A-1 launched HotMovies.com, a website featuring a plethora of adult movies from some of the hottest studios in the business—with a pricing method that customers could get behind. Almost immediately, Cohen and company knew they had a success on their hands. “In the first few months after launching HotMovies.com, we knew we had a winner,” Cohen says. “Users emailed us every day to tell us how much they loved the site.” The reason for this, Cohen says, is really common sense. “People want to watch what they want, when they want,” he states. “They want a large amount of quality adult content at a low price. Membership sites do not offer enough quantity for the price they charge. We started believing a few fundamental facts and our success validated what we knew, [which is that] very few people want to watch an entire movie. They want to watch a little of this and a little of that. They go from movie to movie, scene to scene, studio to studio.”
Of course, there’s a bit more to it than that, he adds. “For every person who buys a DVD, there are at least a thousand people who will never purchase one. These people cannot have adult content in their homes for discretionary reasons. In addition, people will only purchase a certain number of DVDs. They enjoy watching additional adult content on the Internet.”
Hot Movies offers more than 32,000 movies from a range of popular studios, including both gay and straight companies such as Falcon, Legend, Heatwave, Devil’s Films, and Video Team. “There are quite a few top-selling studios, but bigger names do not do as well as one would believe,” Cohen reports. “People don’t usually search for a studio. They usually search by keywords, like ‘big black booty,’ and if they like a film, they may bookmark that studio. Basically, it comes down to the quality of the movies.”
Cohen says that he believes Hot Movies distinguishes itself because of its technology. “Most of the VoD or pay-per-minute sites look the same,” he asserts. “If you spend an hour on each site, we believe you would find ours to be the best—the most userfriendly with a multitude of options and features that enable Hot Movies to stand out from the competition.” Of course, Cohen acknowledges that anyone could start a VoD site today, but that doesn’t seem to worry him. “We have three years of programming ahead of them that they’d have to catch up with,” he says confidently.
Understanding traffic is another key way in which National A-1 stays ahead of the game. Utilizing a combination of tools that perform various real-time traffic analyses (such as Click Traxxx, Yahoo search optimizer, Google analytics, and analog), the company has figured out what surfers are most looking at and is offering it en masse.
“Understanding your surfers and customers is the key for success,” says National’s director of business development James Seibert, who adds that the company pays very close attention to suggestions, survey results, and polls that are posted on their sites. This, of course, makes it easier for them to target the specific niches that bring them the most opportunity for financial gain. “As long as the traffic is targeted to the correct niche, it all converts fairly well,” he offers. “When you have 32,000 movies, it’s hard not to convert. Send the traffic to the correct theater or category and you will do well.”
Fans and affiliates of Hot Movies can expect “a lot of changes” in the coming months, promises Cohen. Last month, the site began offering unlimited downloads (instead of seven-day and 30-day options) of 1,000 of their titles. According to Cohen, this is an ideal arrangement for all involved. “The studio can sell the content without delivering or shipping a product, and the surfer will have it on their hard drive so they can watch it for years.”
This month, the National team plans to unveil a new “play list” capability that will allow surfers to mark specific chunks of content and save these scenes to a personalized section of the site. These scenes can then be inserted into a play list that can be played in sequence—sort of a “mix tape” of one’s favorite scenes by category, studio, or subject. Phase two of this new feature will allow surfers to share their play lists with other surfers.
While Cohen says that he aspires to work in other fields not necessarily related to the adult industry (“My life goal is to build a large no-kill animal sanctuary [where] we take in unwanted, abandoned, and abused animals, care for them and find them good homes,” he confesses), he maintains that he is happy with the success that adult has afforded him. He also says that he had learned a lot about the evolutionary momentum inherent in the industry—and adds that he is happy to be at the forefront of such changes.
“If you’re in this industry, you quickly learn that it changes all the time—and changes fast,” he says. “Time passes fast, and if you do not get in on it, you will be left with outdated websites and old technology. Contrary to what you might expect, we welcome the new competition. It helps grow the market and show the world that what we do is the future for adult content.”
Pictured: National A-1 owner, Richard Cohen with "Katy"
