SL tier prices and economic hard times keep hitting hard, even those who are hard: To wit, Hard Alley, a notorious Second Life virtual porn sim that has been popular for years (I recall reading scandalized reports about it as far back as 2006), is in danger of going out of business, Mark "Pixeleen Mistral" McCahill reports on the Alphaville Herald. The owner cites high sim tier ($295 a month) and a decline of renters to defray those costs, problems that are universally hitting the SL economy on all varieties of sims. I doubt it represents a decline in interest for hardcore porn in SL -- about a third of the most popular sims by traffic are Adult-rated.
So what's happening here? Without investigating too deeply (and I'm not hugely het up to have a hard look at Hard Alley) my initial guess is this:
The decline of the retail renters' market is the culprit. In a recent NWN survey, 50% of respondents said they shop in-world less, and use the e-Bay style web-based SL Marketplace more instead. This shift in consumer habits would probably impact sex-themed retailers more than others. In real life, most people aren't comfortable with walking right into a sex shop to buy adult toys (unless it's a place like Good Vibrations), and given an alternative, I bet they'd feel the same discomfort sending their avatars into a virtual sex shop, and instead go shopping on the web.