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November 30, 1999 06:00am
Private Media Group Announces 178% Increase in Internet Sales from 3Q 1998 to 3Q 1999
Source: PRNewswire
by: Company Press Release

(BARCELONA, Spain) -- Private Media Group Inc. (Nasdaq: PRVT - news), a leader in premium-quality adult entertainment products and services since 1965 and the first such company trading on the Nasdaq National Market, today announced that Total Internet Sales revenues from its Internet services have increased by 178% in the third quarter 1999 compared to the third quarter 1998. The Company also announced that its Internet Operating Profit Margin is currently increasing at a rate of 23% per month and that sales revenues from its Internet services have increased 431% since the implementation of its in-house Internet division in 1997.

Described by Forbes magazine as the "MGM archive" of the adult entertainment industry, Private Media Group Inc. sources and owns the worldwide copyrights to its entire catalogue stretching back to the company's inception in 1965 while continually adding new material. Private Media Group heavily cross-promotes its Internet sites through its publications and movie productions and, in a new innovation, the Company's DVD products are 'Internet Activated' whereby purchasers of this latest movie technology can link directly in real time to Private's websites. All of the Company's products, including DVDs, videos, magazines and books, the Private Circle range of urban street wear, as well as those of its licensees -- including the Private Collection range of adult products -- are available on Mail Order through its websites with global fulfillment from local warehouses.

The results show that:

-- In the third quarter 1999, Total Internet Sales amounted to $538,000. This compares with Total Internet Sales in the third quarter 1998 of $193,000, an increase of 178.75%.

-- Total Internet Sales, including subscription sign-ups, mail order and royalty income from licensed sites amounted to $1,194,000 for the first nine months of 1999 compared to $472,000 for the first nine months of 1998, an increase of 153%.

-- Since the inception of the in-house Internet division, Total Internet Sales have increased from $225,000 in the first nine months of 1997 to the aforementioned $1,194,000 in the first nine months of 1999, an increase of 431%.

-- Total Internet Sales increased at a compounded average rate of 12% per month within the third quarter 1999.

As CEO, Berth Milton, stresses in his comments (below), the implementation of the Private Media Group in-house Internet division in 1997 has grown the Company's potential sales universe beyond the traditional consumer of adult material. For a variety of personal reasons, a substantial number of people worldwide had not previously purchased adult entertainment products from traditional shopping outlets. The Internet has enabled such people to view Private Media Group websites in privacy and become subscribing members, and they are also creating new Mail Order Sales because of discreet packaging and reliable shipping of products.

-- Operating Profit Margin increased from 25% in the month of June, at the end of the second quarter 1999, to 30% in July, 37% in August and 47% in September. Therefore, Operating Profit Margin is increasing at an average rate of 23% per month, giving a projected Operating Profit Margin by the end of 1999 of 67% per month.

As Private Media Group sources and owns the worldwide legal copyrights to its 35 year back catalogue of adult content, and this archive is growing constantly with new material, the Company is able to utilize such content for its publications and movie productions in the first instance and then upload it to the Internet. As a result, Costs of Sales are significantly reduced to a negligible level, therefore giving Private Media Group unparalleled profitability in contrast to other adult industry websites -- and all Internet websites generally -- which need to acquire content from third parties.

-- Subscription/ membership sign-ups alone increased to 5,166 for the first nine months of 1999 compared to 2,080 for the first nine months of 1998, an increase of 148%. This rate is increasingly rapidly with the announcement that subscription/ membership sign-ups increased to 2,885 in the third quarter 1999 compared to 810 in the third quarter 1998, an increase of 256%. The current annual subscription sign-up fee to www.private.com is $149.00 per member.

-- Mail Order Sales from the Company's proprietary websites for the first nine months of 1999 amounted to $228,016 compared to $97,375 for the same period in 1998, and increase of 134%. Mail Order Sales from the Company's proprietary websites in the third quarter of 1999 were $96,286 compared to $43,935 for the third quarter 1998, an increase of 119%.

Mail Order Sales from the Company's proprietary websites, http://shop.private.com, www.privateinternetshop.com and www.prvtshops.com exclude sales from independent Internet shopping sites which sell Private products through their own Internet sites. Such sites are not included as they order Private products directly from local distributors before then selling them through the Internet. These sales are therefore included in the Company's non-Internet sales figures.

-- Total Royalty Income from licensed sites amounted to $468,200 in the first nine months of 1999 compared to $136,200 for the same period in 1998, an increase of 244%. Total Royalty Income increased to $179,000 in the third quarter 1999 compared to $59,900 in the third quarter 1998, an increase of 199%.

Total Royalty Income includes revenue from the three licensed sites www. privategold.com, http://sexclub.sex.se and http://www.privatechannels.com. This upward trend is set to continue and to be even more pronounced in view of recently announced agreements and joint ventures.

-- In September 1999, the flagship www. private.com had 86,000,000 Requested Pages, compared to 25,000,000 in September 1998. This represents an increase of 244%.

-- During September 1999, the total number of Visitors to websites operated by the Company and those operated under licensing agreements was 5,800,000. In September 1998, there were 2,100,000 Visitors. This is an increase of 176%.

-- The Company has also received more than 195,000 e-mail addresses since the implementation of the Internet division in 1997 and is currently exceeding 1,500 new addresses per day as non-paying members.

-- There are currently 21 (twenty-one) people employed in Private Media Group's in-house Internet division.

"Private Media Group now has the most comprehensive package of adult entertainment websites in the whole industry," says CEO, Berth Milton, "and this concentration on the Internet since we set-up our in-house division in 1997 is rapidly growing the Company's sales universe beyond its traditional markets. While we are hugely encouraged by the dramatic increases in all aspects of our Internet business, we are also confident that our Mail Order product range is the best in the adult industry and is establishing itself as the One-Stop Shop of choice for adult entertainment consumers. It is now clear that, back in 1997, the Company's decision to commit itself to the Internet as part of long-term commercial strategy has been the correct one in the light of these Internet figures and, especially, the announced growth rates.

"These increases are only the beginning," added Mr. Milton. "Private Media Group's development will continue apace with further diversification of our product and service portfolio. In particular, we are looking to Broadband Internet and television broadcasting being yet more highly profitable channels for the utilization of our huge, constantly updated adult entertainment archive. I ask you this: is there any other adult entertainment company in the world that can claim to have a total adult lifestyle portfolio of products and services available through so many channels of communication, from the traditional to those of the 21st century? The answer is clear: No. Private Media Group is the face of adult entertainment for the new millennium."

Private Media Group Inc. commenced operations in 1965. Its primary business activities today include the creation, refinement and delivery of proprietary Internet sites and the licensing of its library content and brand name for Internet sites and broadcasting transmission; the acquisition, refinement and delivery of adult feature products, including unrated and adult feature DVDs, magazines, videos, and CD-ROMs; the distribution and licensing of Private's total proprietary product range on the Internet, including DVDs, magazines, videos, interactive services and the Private Circle fashion line; the licensing of its internationally reputable brand name for product lines, including adult novelty product ranges such as Private Collection; the production and control of distribution rights to its Private Dynamite energy drink; and TV Home Shopping for Private's proprietary and licensed products.

For more information visit the Company's corporate website at www. prvt.com.

This release contains, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company's current judgments of those issues. However, because those statements are forward-looking and apply to future events, they are subject to such risks and uncertainties, which could lead to results materially different than anticipated by the Company.

SOURCE: Private Media Group Inc.

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