The Ray Kroc of Adult Video

How Ganari Takahashi plans to turn Soft on Demand into the "McDonald's" of adult entertainment.

Ganari Takahashi is the telegenic president of Soft on Demand, one of Japan's fastest growing porn companies. Now in its eighth year of business, SOD has grown from a company with six employees to a staff of 180 and profits of JPY1.5 billion on sales of JPY7.8 billion. SOD currently releases 1,000 titles on DVD and video a year. You might think Takahashi would be happy, but far from it. Takahashi wants to destroy the competition, transform adult entertainment in Japan into a mainstream business, open up the market for women and become the "McDonald's of adult entertainment."

JI: How's business?

GT: Great. We're aiming for market share by dropping prices, increasing our titles and smashing our rivals -- it's the McDonald's formula. Years ago there were about 400 car markers in Japan. Now all that's left is Honda, Toyota, Nissan, Mitsubishi and Mazda. There are currently about 1,000 adult-film companies. I'd like to make this into 100. The remaining 900 release garbage and fool customers.

We should be aiming higher in this industry. Look at Titanic. It cost $2 billion, but you could buy the video for JPY3,000. Why should adult videos, which are much cheaper to make, cost JPY4,000! We aim to make high-quality products and sell to a much bigger market, allowing us to cut costs and still make expensive products. Even after paying taxes we're still left with over JPY700 or JPY800 million in profits -- that gives us the power to remove the small makers and sellers. That's our strategy.

Japanese women don't think for
themselves; they change their opinions
based on what everyone around
them is thinking

JI: Those are ambitious plans. How will you achieve them?

GT: We want to create a relationship of trust between adult entertainment and its customers. Right now, guys buy three videos in the hope that one will be good. I want to become the Sony of adult entertainment, a byword for quality. People should rely on us.

I also want to sell to women. We need to create outlets where women won't feel embarrassed about buying porn. If we create an industry like Universal Pictures with big stars, women will definitely buy.

We have to create an industry where people are not just viewing adult material furtively in their rooms but where customers, women included, regularly buy our products. We should sell in convenience stores. If we stay hidden we'll never become part of mainstream culture, but if we make it a cool industry with attractive stars all out in the open, women will come to us. Japanese women don't think for themselves; they change their opinions based on what everyone around them is thinking.

JI: How about investment?

GT: I want to list the firm, but the nature of our business causes problems. The stock market authorities wanted us to cut our adult products to under 20 percent. They eventually agreed to 50 percent, but I don't think there's anything wrong with adult entertainment so I told them no and that's where it stands. We're now thinking of the Nasdaq. Within two or three years, I think we'll have a good chance of listing.

JI: Has the recession had an impact on business?

GT: We're like Eskimos. In Hawaii, if the temperature drops 10 degrees people complain that the weather is freezing. But native Alaskans are used to the cold. In this industry, we've always been out in the cold, so we have no expectations that the economy is going to get better or worse, or that the government is going to help us out.

People who would never think of doing something like this if the economy were good are coming into the business -- I know because I'm one of them. If I had succeeded elsewhere, I wouldn't have started making adult videos.

That said, the recession and the rush of people into the business are helping to slash prices. Seven years ago the retail price of an average adult video was about JPY10,000. Now it's down to about JPY2,500. The cost of making a video seven years ago was about JPY2 million, now it's about JPY5.5 million. JI: Is it easy to find "talent" for your products?

GT: Yes, and it's getting easier, because the morals of Japanese women are falling. There used to be an education system here that taught women that this sort of thing was wrong.

JI: Do you take any responsibility for this?

GT: We're all to blame, yes. Parents are teaching their children the wrong values. We lost the war to America and now we are losing to American values. Have fun whatever else you do -- that idea comes from America, and that's why the number of hedonists is on the rise in this country. I would like to return Japan to its Bushido past, when people worked not for themselves but for their country, their firm, their family and parents. That was the Bushido idea.

JI: Do you have plans to sell abroad?

GT: We're already started to sell in the US. We set up a company there three years ago and we're sending two people over there this year as staffers. Americans are used to straight intercourse -- just like their steaks, big and bland. I want to sell them high-quality Kobe Beef. American porn goes straight from the screen to the crotch. We stimulate the imagination. This may not work in Texas, but we'll start in white collar areas like San Francisco and New York.

JI: What has been the impact of technology on this business?

GT: The best thing about the last five years is Digital Video Discs. DVD currently accounts for about 70 or 80 percent of our products. In two years VHS will be gone. DVD is cheaper to mass produce. A 180-minute VHS tape that used to cost JPY500 can be made on DVD for about JPY250 and even JPY200. The discs are smaller than tapes so you can store them, they're better quality, and you can put lots of extras on them. The viewer can become the director, so men with fetishes will be able to focus on breasts or other parts of the body.

So far, the Internet has had little impact on us because the quality is bad. You can see naked women all over the place now, so people are searching for quality sex products. But it will become important, there's no doubt about that. We're looking now at the costs of broadband. We reckon we can deliver adult movies directly to homes for JPY2,500 a pop.

JI: What do you say to people who hate this industry?

GT: I think we have to make people trust this industry. People who work in adult video have very loose morals, to tell you the truth. They have affairs, multiple sex partners. I don't. I'm married with kids. None of my managers interfere with the women. If we show people we're serious like this we'll be accepted. And if we make money we'll give some of it away to charities.

We also have to pay taxes, lots of taxes! This will be our biggest contribution, I think. The problem is people in this industry are afraid of the authorities, which is why they stay in the shadows. If the cops stop us, this industry will go back to the dark ages. @