By Amanda Finnegan (contact)

Thu, Jan 8, 2009 (3 a.m.)

The economic downturn has many companies looking for ways to survive, and those in the adult-entertainment industry are also finding it’s not always easy to shake a recession.

Amid tough times, the industry’s largest convention, the Adult Video Network’s Adult Entertainment Expo, hits Las Vegas today with steady fan attendance and a host of challenges on the exhibit floor.

AVN’s four-day expo is expected to lure adult stars, about 25,000 visitors and 250-plus exhibitors showcasing the latest in adult novelties, DVDs and technology.

But aside from economic problems, porn professionals are confronting changing times in the industry with a new presidential administration, the ongoing threat of Internet pirating and challenges of marketing not-so-essential adult products during a recession.

Adult Entertainment Expo spokesman Sean Devlin said despite the tough economic climate, the mood on the eve of the Vegas convention was mostly upbeat.

“The feeling is positive,” Devlin said. “Everyone knows we’re in tough economic times and this industry is not insulated from the economic trends out there. I think we are all feeling it a little bit but our numbers are good.”

Devlin said official attendance numbers won’t come in until the expo closes but he expects to see a slight decline from last year’s numbers.

Publicity stunt or not, Hustler publisher Larry Flynt and embattled “Girls Gone Wild” founder Joe Francis even went as far on Wednesday as to propose a government bailout of the adult-entertainment industry. The pair will request $5 billion from Congress, citing DVD sales that have slumped 22 percent in the past year.

Citing such declines, Devlin said the industry has seen a change in its distribution model in recent years.

“We are seeing a shift from packaged goods to digitally delivered goods,” he said. “DVDs sales have declined and have been replaced by Web sites selling or renting content to consumers. That’s the biggest shift that we’ve seen in the industry.”

Steve Javors, managing editor of Xbiz, a leading adult industry publication, told Las Vegas Weekly that content distribution is one of the biggest challenges facing adult-oriented companies.

“I think companies are faced with a pivotal question: With DVDs being the lion’s share of their profit, how are they going to use the Internet to monetize their content? A lot of them have figured it out, some are slowly coming around,” Javors said.

But switching from DVDs to digital and Web-distributed videos has created a whole other set of challenges for the industry: pirating.

Adult film producer and actor John Stagliano, who also owns adult film company Evil Angel, said he’ll still have a booth at the Adult Entertainment Expo, albeit one that’s a little smaller this year because he said he’s “worrying about expenses more than I did before.” Blame it partly on the economy and pirated content.

While preparing for the adult expo Wednesday afternoon at the Sands Expo Center, Stagliano said sluggish DVD sales had left the industry reeling even before the economy turned sour. He said the Internet will continue to play an increasing role in getting adult content to the consumer.

"The Internet delivery method is getting better with high-definition,” he said. “The Internet also gives you access to people all throughout the world. The Internet may be the only delivery system in the future."

Stagliano was charged by the U.S. government last year for adult-to-adult obscenity. His trial takes place early this year. (Another adult expo regular, Max Hardcore, whose real name is Paul Little, was convicted and sentenced in 2007.)

John Stagliano’s wife, Karen, said Wednesday that 90 percent of Evil Angel’s revenue comes from DVD sales. And like many other adult content producers, she said the company is often the victim of pirating.

“We do feel that it is a threat. If there is pirated content of anyone’s up there that people can use as a substitute for something they have to pay for, I do think you are going to see some of the money that can be translated into sales not be there,” she said.

Karen Stagliano said Evil Angel won’t be abandoning DVD sales but will be looking into other markets, such as toys and Web site interactivity. She said Evil Angel will be looking to other companies and colleagues at the Las Vegas expo for new distribution ideas.

Karen Stagliano said adult entertainment companies are no different than others in at least one way: They have to think outside the box to attract and keep their clientele.

“Because of the downfall of the economy, it’s going to be that much more important to catch people’s attention,” she said. “We’ve been very comfortable for our market base thus far but now we have to find ways to reach out to people who are just a little bit curious or haven’t been a big part in purchasing adult entertainment.

“Even if people are just browsing, that’s fine with us.”

Sun reporter Melissa Arseniuk contributed to this report.