Strip clubs torn over adding tech as revenues drop, millennials stay away

'The Baby Boomers are retiring. They were for 20 years an amazing customer base'

The $8 billion dollar live adult entertainment business is fighting against changing times, but it may have to go high-tech to generate higher revenues.

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“You won’t find too many social media pages for adult entertainment clubs, especially some of the higher-end ones around here,” a dancer/bartender at Satin Dolls in Times Square told FOX Business Wednesday, who asked not to be identified. “Most of the owners and the girls want to be discreet."

Seemingly an industry-wide resistance to social media and technology may have hurt. Annual revenue growth at strip clubs across the country -- which number between 3,900 and 4,000 -- was 4.9 percent between 2012 and 2017 but it slowed to 1.9 percent from 2013 to 2018 and is projected to fall to 1.7% by 2023, according to IBISWorld.

TickerSecurityLastChangeChange %
RICKRCI HOSPITALITY HLDGS INC18.76+0.08+0.43%

RCI Hospitality Holdings, which boasts such adult entertainment venues in its portfolio as Rick's in New York and Scarlett's in Miami has seen its stock fall more than 10 percent year to date.

There is a growing sentiment in the live adult entertainment business that those revenue numbers will not improve if the industry does not adapt.

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A ‘PRIVATE’ INDUSTRY IN A SOCIAL WORLD

Strip clubs are one of the few establishments that don’t allow patrons to use a camera or your phone to take pictures, and for good reason.

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While nearly every other type of business benefits from free publicity of social media such as in restaurants where customers take pictures of food and post to Facebook, Instagram or Twitter, the strip club industry does not encourage social usage with its customers.

Many adult entertainment establishments, especially higher-end outlets do not utilize any social media pages. Instagram and Facebook consider nudity to be inappropriate content “that may not meet Instagram's community guidelines,” according to Instagram, but even for platforms that allow it such as Twitter, for a simple reason, “We wouldn’t want to have the goods exposed online for everyone to see,” said the Satin Dolls dancer/bartender. “That’s something you gotta come in and see (and pay for) yourself.”

However, while social media has been largely eschewed by the adult entertainment club management, as a dancer, the concept offers the potential for larger opportunities.

The girls who perform on stage often have grander ambitions within the entertainment industry, with several strip club performers making the jump to mainstream success due to their use of social media in promoting themselves.

Cardi B performs Dec. 21, 2018, in San Juan, Puerto Rico. (Photo by Gladys Vega/Getty Images)

“Strictly from an entrepreneurial standpoint, take a look at Cardi B,” the Satin Dolls dancer and bartender told FOX Business. “She managed to parlay a career as a dancer at an adult club and used social media to promote herself, her body, her personality. That benefits the girls more than it benefits the club, which is namely why there are never any cameras or pictures allowed in the club.”

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TECHNOLOGY ADVANCEMENTS IN A STUBBORN, OUTDATED BUSINESS

The biggest changes to the industry have been almost entirely aesthetic, as strip clubs look to shed their seedy, dodgy reputations for a more upscale, high-end look.

“Proprietors within the Strip Clubs industry (have) distanced themselves from the seedy past image associated with clubs,” IBISWorld’s "Strip Clubs Industry in the US - Market Research Report"’ states. “Instead, they marketed their establishments as high-class gentlemen's clubs and cocktail lounges that offer adult entertainment.”

American-style strip clubs began to appear shortly after World War II and have remained almost entirely unchanged technology-wise since then outside of aesthetic alterations.

Dave Manack, editor of the industry trade publication Exotic Dancer Magazine, says there’s a very good reason behind strip club owners’ rationale, saying that owners “probably figured, ‘hey if it ain’t broke, don’t fix it,’” according to a recent Mashable report.

But younger generations are largely eschewing strip clubs and company-expensed strip club business meetings are a thing of the past due to workplace changes. Recently, sportswear maker Under Armour told employees they could no longer write off expenses for strip club visits, with the Wall Street Journal reporting employees being told that "strip-club visits were symptomatic of practices women at Under Armour found demeaning."

The lack of millennials may face a bigger challenge for adult entertainment outlets. "The Baby Boomers are retiring. They were for 20 years an amazing customer base," Alan Markovitz who operates gentlemen's clubs in four states recently told the BBC. "The millennials are not coming to the strip clubs that much. That's the issue."

The Houston-based club Vivid advises potential customers on a budget -- and it can be a costly "night out." Vivid's website says to "plan at least for a $15 cover, $7 per (average) cocktail, $20 (plus tip) for a one-song lap dance, and enough cash to tip the array of employees who serve you – from coat check to bathroom attendants. Our ladies appreciate a considerate guest, and enthusiastically repay the kindness of generous patrons."

With the average millennial borrower owing $34,504 alone in student debt, according to Experian, going to a costly adult club may not be in the budget. “My millennial boyfriend would never walk into a strip club,” Tasha Reign, a porn star and former feature dancer told Mashable.

TECHNOLOGICAL STRIP TEASE?

When FOX Business visited another New York club, FlashDancers, on Wednesday, the doorman who asked not to have his name used was asked about the impact of tech at his club. "New technology? Here? Maybe new surveillance cameras maybe, but that’s about it. I can’t think of any other new tech we would need.”

But that Luddite approach may be giving way given the audience challenges and industry attention is being paid to virtual reality (VR) and augmented reality (AR).

Media and tech company Voactiv reported that in 2016, San Francisco’s Gold Club partnered with Vixen VR to create a virtual strip club experience. A year later at the Gentlemen’s Club Expo (a strip club industry trade show) and one VR system vendor booth had a line wrap through the hall "and people never wait in line to go to a trade show booth,” trade magazine editor Marnack told Mashable.

Andreas Hronopoulos of Naughty America, a pornography company which launched its VR program in 2016 believes there is a big opportunity for the industry with the new technologies. “We settled on holograms in a strip club for AR, with volumetric video captures instead of computer graphics,” Hronopoulos said in an interview with VentureBeat. “Viewers can bring a stripper into their living room on a pole in their home, as a private strip club. This is consumer-ready, and included in your Naughty America strip club.”

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