Cheaper and more socially acceptable substitutes, like adult internet services, mean trouble for the Sexual Services industry
Melbourne, Australia (PRWEB) May 27, 2012
Sexual services have widely been viewed as resistant to economic slowdowns. Despite falling incomes, clients of prostitutes have been regarded as loyal, and will regularly abandon other discretionary spending before their spending on the Sexual Services industry. In 2008-09, as unemployment began to rise, consumers panicked over their financial futures. The results of the short-term cyclical effects of the global financial crisis have since passed. Nevertheless, the industry has faced a markedly different environment. An increasingly regulated industry has raised fees across the board (excluding illegal providers), while other threats to the industry have emerged, such as internet matchmaking sites and easy access to online pornography. According to IBISWorld industry analyst Craig Shulman, “potential clients now have the capacity, for the minimal cost of registering to a site, of accessing a pool of like-minded individuals looking for sexual meetings without payment or can satisfying their fantasies through easy access to online media”.
The propensity to shift to lower cost workers is also hampering revenue growth. As economic conditions ease after moving out of a perceived economic downturn, the Sexual Services industry will experience a 6.6% rise in revenue in 2011-12 to $33.8 million. However over the past five years the industry will decline an annualised 3.4%, as alternatives such as websites, pornography and other cheaper substitutes gain popularity and negatively affect the industry. Shulman adds, “in the longer term, the threat of online meeting sites presents a substantial challenge to growth”. The one bright spot for the industry is the exotic dancing and strip clubs segment, which is gaining acceptance in society to a certain degree. As a small segment of industry revenue, strip clubs are unlikely to trigger a surge in growth, no matter how well they perform. Thus, the industry is expected to experience slow growth over the next five years.
Market share concentration is low and the only major player is Planet Platinum Limited. The main reason for the industry's fragmented nature is nearly every company operates on a small scale - chains are very rare in the industry. In Victoria, small, owner-operated brothels are exempt from licensing regulations and can operate within planning requirements of local authorities. The lower level of regulation for smaller industry participants represents low barriers to industry entry, which is generally conducive to low concentration, as small players take up a substantial proportion of establishments, along with dominating the industry's illegal trade. The high level of regulation for larger players in the industry restricts several establishments from growing to the point where they may attract a larger market share.
For more information, visit IBISWorld’s Sexual Services report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry comprises the sexual services offered by brothels, prostitutes, escorts, strippers and erotic dancers. The report measures legal transactions for actual sexual services and also attempts to estimate illegal sexual transactions. This industry does not include adult internet services (such as dating, or the display of pornography), telephone sex chat lines, the making and retailing of adult video entertainment, or the manufacture and retailing of sexual aids.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.