Steven Hirsch, a founding partner in Vivid Entertainment, sits in a fourth-floor office on Cahuenga Boulevard overlooking the Hollywood Freeway. The Vivid offices are, as those who live in the city say, over the hill—a reference to the Hollywood Hills that separate the city of Los Angeles and the San Fernando Valley, and also reference to the roots of the mainstream film industry and the adult industry that grew so close to each other. So close, yet so far.
Vivid’s offices are less than a mile from Hollywood. Considering that Vivid is the most mainstream of adult production companies, has a brand recognizable worldwide, and that the 44-year-old Hirsch brought the contract star system once employed by Hollywood to the adult world, the location seems appropriate.
Fashionably attired, carefully styled hair, bright smile, and a tanned and toned physique, Hirsch is an innovator and a businessman, and a goddamn fine one at that. He also just might be the man to legitimize this industry in the eyes of the mainstream business world.
Or maybe he already has.
MJ McMahon: What does it take to get a meeting with Steven Hirsch?
Steven Hirsch: I think I’m available. When we first started the company, one of the things we said we’d always do is make ourselves available to the media. That was never done in the old days. …. It was a very underground industry, and I think we were the first company that made a decision to say we’re here, this is what we do, we’re comfortable with it, happy about it, and we’re not going to hide.
There have been whispers of an IPO. Are you going public?
We’re always looking for ways to maximize the value of this business, whether it’s to go public or perhaps purchasing companies, merging with other companies … What the future holds, we don’t know. The IPO is very interesting to us. It’s something we looked at several years ago, and it’s something we’re taking a look at again now.
Vivid makes $100 million a year, according to Forbes. Which revenue stream is largest?
Domestic DVD sales are still the lion’s share. The Internet is now a much larger percentage than ever before. Our international sales are way up. Wireless is starting to kick in, but still, DVD distribution is the No. 1 revenue generator.
Which is growing most rapidly?
Our Internet business has been growing month over month the past couple of years and continues to be strong. Obviously Video-on-Demand has gone from nothing a year or 18 months ago to being a real business for us. It’s still a very small percentage of our overall business, but it’s probably grown 1000 percent in the last year.
Wireless, which was not a business at all a couple years ago, is starting to bring in significant revenue for us.
Is porn mainstream?
I think it’s more mainstream than it’s ever been. It’s funny, on one side you have the adult industry, people are talking about it, you see it on the news, and people really know who we are. With the Internet and with DVD distribution we’re able to reach people in a way we never were before. On the other side you have this right-wing conservative group that wants to put us out of business. There’s a struggle going on there, but we believe, ultimately, that people will be able to watch what they want in the privacy of their own homes.
You told Forbes that the industry is still the "wild, wild West." In what respect?
If you have a really good idea and a little bit of talent, you can go out and make a movie for very little money. The bar is very low. If it’s good and imaginative you will get distribution and ultimately, you will be able to make a good living. Because it costs so little to get in the business, you have a lot of people coming from a lot of different places trying to do it.
How close is today’s industry to the shady, underground world of the ’70s?
I’m not sure there ever really was that [bad] element. We’ve never had any experience with any of that, but again, this industry has grown. As we’ve been able to increase distribution and mainstream the business, I think that perception has gone away. There are still groups that will claim that [the adult industry is bad] because they want to scare people away from adult content, but I think for the most part, people get it.
Vivid has condoms, rims, a restaurant … is there anything you can’t put the Vivid name on?
Well, I don’t think we’ll be doing a kid’s book anytime soon, but for any products that are purchased by adults, I think we’d be interested if it were the right deal with the right people.
You’ve produced several mainstream erotic thrillers by director Paul Thomas. Do you want to cross over?
We did it several years ago, and we were very successful. We didn’t continue with it because we got bogged down in the day-to-day business of taking this company to the next level. I’m not a guy who’s a big dreamer, where ultimately my goal is to produce an Academy Award-winning movie. I’m comfortable with what we do.
Your father was involved in the industry. Did your family foresee today’s Vivid?
I think my family was confident I had the ability to make a success of whatever I choose to do. People ask that question all the time—"Did you ever think it would turn into this?" Well, yeah, I did, you know? That’s why I did it. We wanted to be the best and we wanted to be the biggest. Right from the beginning that was certainly the goal.
Your father worked with Rueben Sturman. Do you have any recollections of Sturman?
Oh, yeah. I met him many times and he was always extremely nice to me and very supportive. When we started this company we went to him to have General Video carry our movies. He was right there for us, and he was always on my side.
How is your model for content distribution changing?
For many years the majority of revenue came from video sales. That started to change with TV once Playboy became a player there. Then there was Spice and there was this other revenue source. Then the international market became real and then the Internet came on. Now there’s wireless and VoD. The revenue is now much more split up than ever before, and that’s a good thing because I don’t think it’s good to be dependent on any one revenue stream.
Vivid purchased Spice Hot in 1999 and brought hardcore to most of the country through cable television. How did you do it? (Spice Hot was the Spice Network’s hardcore channel. Playboy purchased two softcore Spice channels at the same time. Vivid made deals with nearly every major cable company and turned one channel into three before selling that portfolio to Playboy in 2001 for $82 million.)
When we bought Spice Hot, there were some cable companies that were carrying films more explicit than traditional cable versions. We were able to go to some of those cable companies – and that was all done by [Vivid president] Bill Asher – and convince them we were businessmen.
Vivid went gonzo for a bit with since discontinued Vivid Raw. What did you learn from that?
[Sigh] I think part of the problem was we’re a mandatory-condom company. I’m not sure that works with that style of movie. I don’t think we were great at it, and we sort of stopped before we made a run at it. I guess when it’s all said and done, we make features. That’s the territory that we’ve staked out and that’s what we’re best at.
How did your 1991 run-in with the government change your business? (Vivid was charged with Interstate Transportation of Obscene Materials. They plead guilty and were fined.)
It made us much more conservative. It’s one thing to hear about this guy having a legal problem or that guy having the legal problem, but when you’re sitting in Oxford, Mississippi [where they were charged and tried], it becomes very real, very fast. That confirmed the fact that we want to go right down the middle, and we want to get [as many] eyeballs [as possible] watching our movies. We made the decision to stay away from the niche stuff and just focus on features.
Do you still worry about the authorities knocking on your door?
It’s something everybody thinks about, but I’m extremely comfortable with the movies that we make and extremely comfortable with the distribution we have. I don’t know if it will or won’t happen. … I think that we are as comfortable as we can be with our product without sanitizing it to the point where nobody wants to see it.
You’ve said you were afraid of the Internet at first because you didn’t understand it. Why the apprehension?
It was a means of distribution I really didn’t know. I knew making movies, duplicating movies, dealing with distributors, dealing with retailers. The Internet was this electronic way of distributing content and technically I wasn’t comfortable with it. Over time, you bring in the right people and get a baptism by fire and we got it.
Vivid has had success in the mobile market overseas. Will it translate to the U.S. market?
Yes, I think it will and I think you’re going to see it sooner rather than later. As the U.S. operators become more comfortable with age verification, which I think is going to happen, I think they will start offering adult content. It’s coming and it’s going to be a real revenue generator.
Is the industry converging?
I haven’t really seen it yet. If you ask the top five producers who are the top five Internet companies, I’d bet they wouldn’t know, so I don’t think we’ve seen that happen yet. Ultimately, I think it will, but it’s funny, these are like two different businesses. The top guys on the DVD distribution end don’t really deal with the top guys on the Internet end. Maybe one or two have a relationship, but for the most part, no.
How do you think it will shake out?
Ultimately, successful people will find a way to work together. When it’s all said and done, there are two things that will make it work—good content is the key to any business, and then there’s distribution. It’s finding that marriage that will make it successful.
If Forbes wanted to put you on the cover, ideally, what would the headline read?
Adult Comes of Age.
