Page 52 - AVN April 2017

FEATURE
FEATURE | By Dan Miller
CHANGING CHANNELS
Online or brick-and-mortar? Digital delivery or DVD? To stay on top,
these veterans say, the answer is all of the above.
Arcade Fire
One new company that’s betting on brick-on-mortar is US Arcades, an adult video arcade one-stop
operation that was previously owned by legendary retailer Eddie Wedelstedt.
David Joseph acquired the network of viewing booths about a year ago with the purchase of
International Amusements from the man known as Eddie W., who also owned Goalie Entertainment and
M&M Sales. Joseph is the former owner of gonzo porn powerhouse Red Light District, known for selling
some of the biggest celebrity sex tapes of all time, including One Night in Paris, One Night in Chyna and Amy
Fisher Caught on Tape.
US Arcades facilitates 900 arcade booths in more than 50 adult stores in 21 states and counting.
“When you hear the term adult arcade, most people think of the dirty peep rooms that take quarters,”
Joseph explains. “We’re taking that room’s technology into the 21st century. We hired a top engineer and
redesigned our system with proprietary, patent-pending software.”
Some of the upgrades include booths that can hold up to 1,200 movies; easy-to-navigate touch-screen
menus with fast-forward, rewind and pause functions; and the ability to jump to any point in a movie
with one touch.
US Arcades also has teamed with live-chat pioneer Flirt4Free for a soon-to-launch channel that will
bring live cams into video arcades for the first time in adult entertainment history.
“This was made possible because of the relationship between David and [Flirt4Free] president Greg
Clayman,” says Lewis Adams, vice president of sales for US Arcades.
In another first, US Arcades is launching a national voyeur network where a customer can see another
customer live in any booth in any store that has US Arcades by using the bluetooth technology in his
phone to interface with the arcade.
Philip Del Rio went from selling premium blue jeans to
high-tech vibrators, watching dozens of retail trends come
and go during the past decade.
Now as vice president of retail operations for the Hustler
Hollywood store chain, Del Rio predicts the forecast for the
future calls for a smarter mix of online and brick-and-mortar
sales and marketing.
“Right now it’s all about integration between brick-and-
mortar and online and really establishing a consistency
across both channels as well as a digital marketing program
that again also enhances both channels,” Del Rio tells AVN.
Now established as one of the models for 21st-century
adult shopping, Larry Flynt’s retail division has added nine
boutiques since the summer of 2015. Most recently they
opened for business in West Palm Beach, Florida, in January.
“Last year we did six stores, which was fairly aggressive
for us to go from 13 to 22 in a year and a half,” Del Rio says.
“Those have been identified locations for a very long time.
Our next round probably will not be as aggressive but we’ve
definitely learned a lot from opening the last nine locations.
We’re absolutely still growing.”
The company is eyeing two more locations later this year
and according to Del Rio it will “probably do three or four
locations per year over the next few years.”
Based on a successful expansion to Northern California
with stores in San Jose and Bakersfield, Del Rio says his
team has been scouting properties in Sacramento and
Fresno, while Atlanta is also on the radar.
“We opened our first store in Texas last year in July, which
is doing very well,” Del Rio says.
If Hustler Hollywood’s commitment to the in-store
experience is any indicator, adult entertainment consumers
continue to demand options when it comes to picking up
the latest pleasure product or porn DVD. While mainstream
retail giants such as Target, Macy’s, JC Penney and Sears
have been reporting softer sales—and announcing numerous
store closures in the past year—as consumers increase their
spending with sites like Amazon, adult retailers show signs
of confidence headed into the spring.
“I’ve held a lot of different positions in adult entertainment—from movie production to media and
novelty sales to private label—and I can honestly say that what we are doing with arcades really excites
me,” Adams continues. “If you have a location where you can operate an adult arcade, you’re holding a
golden ticket and I’d love to talk to you. We can retrofit into any system out there.”
The US Arcade business model is simple: there are zero upfront costs to the store and they pay for
installation of the equipment—physical booths need to be built by the store. US Arcades allows the store
to collect the money from the booths and bills the store every two weeks.
“There are no additional charges for upgrades; we have 24-hour system monitoring, new movies and
national marketing,” Adams says.
Lance Bacigalupo, a 20-year veteran of the arcade industry and director of operations for US Arcades,
tells AVN, “This is by far the most advanced system available today and I know them all.”
Adams says the advantages of going to a video arcade to watch porn (or a webcam) rather than doing it
at home come down to human interaction.
“There are a few reasons why people visit arcades,” he explains. “One is that there is no privacy in
their own home. Either they have a roommate or family living there and there is no time to take care of
business.
“Another reason that I feel is the biggest is the social factor. Today you don’t have to leave the privacy
of your own home to do anything. You can buy groceries and pretty much everything else online. You
can work from home. All things are on social media. However, we are social creatures and do enjoy the
company of fellow humans. Whether you are going to meet a friend or possibly make a new friend, the
arcade is the place where like-minded people can meet.”
Eddie W., who has more than 50 years in adult entertainment, tells AVN the arcade business in the old
days “was an automatic goldmine.”
“A movie would come out and the only way to get it immediately was to visit a store,” Eddie says. “It’s
not like that anymore and arcades took a hit. The only way to compete and earn that money again today is
to be up to date with the newest technology. You’re competing against an iPhone.
“Today I’ll go into a store and I’ll see the arcade is neglected and offering the same old movies from
10 years ago. The customer wants a better experience today. They want to be comfortable and be able to
browse easily. You see that in all walks of retail.
“The legend Reuben Sturman used to say you would install an arcade and make your money back in 26
weeks. Today, you’re lucky if you make it back in two-plus years. My good friend Michael Moran of Lion’s
Den confirmed the fact that there was a time when 52 cents of every dollar in the store came from a form
of video (arcades, rentals, sell-thru). Today, stores are seeing about 18 cents of every dollar spent on
media. You have to be very smart today and the only way is to stay ahead of the curve technologically.”
Hustler Hollywood’s Del Rio agrees, noting his company is already taking steps to streamline its
service.
“We’re working on brick-and-click integration and looking at opportunities like in-store pick-up, same-
day delivery to customers in the area and creating the omni-channel experience like everybody else is
doing,” Del Rio says.
Omni-channel retailing refers to creating synergy between a variety of channels in a customer’s
shopping experience.
SALES TALK Philip Del Rio of Hustler Hollywood. Photo by Chris King/@ReelSeduction
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