It is but puritanical forces hold it back massively. If that wasn't a factor a high budget pornographic game could easily be one of the biggest sellers of a given year.

Places like dlsite has been running on porn games since its inception so yes, it is very viable. Probably the main reason Valve allowed it and never looked back even if Valve is sometimes very stingy about their level of censorship they allow in their store. While people are quick to blame Valve, various credit card processing companies to put a lot of pressure on them to be very stingy for certain content and not others. If I remember correctly, DLsite which is primarily porn games content had a situation where Paypal and other companies no longer wanted to do business with them because of the fact that they sell porn content. So DLSite had to essentially form a new site where users can buy points using PayPal which then they can use to buy games and porn stuff from the main website. As Credit Cards are key to Valves success, it is one of the reasons why they make questionable decisions.

I do think Kagura games have figured out the best way to make things work with Steam where they release censored versions on Steam but you can download free uncensored patch from their website.

Aokana has that too.

Lets sue the credit card companies for infringing our rights to educate ourselves since sex education at school was a joke, I went to an all boys high school and sex education was handled by the librarian she was young and while she may or may not have been trained in sex, she certainly wasn't trained in sex ed, in her own words when asked she said it was lumped on her, so she started off by showing us what is a mandatory feature of any sex ed class an anatomy film that had to be stolen from some hospital in the 1920's and somehow spread faster and further than the clap, leading to the present day situation where every youth in the entire western world has watched/ endured it.

With some time left to fill out the lesson, the librarian then went through the entire library to find suitable material and came back with some book that had John Lennon and Yoko Ono standing in the nude and that concluded our sex education.

Now that I have set up our pitiful case, here comes the bad news I'm broke so you will have to finance the lawsuit by selling some of your collection of sex toys.

Never, they don't make them like they used to anymore.

If people are horny enough

Just make some cheap knock offs dip them in fish waste and sign them with forged or as I like to say replica signatures of some of your favourite Porn stars.

Holy shit, what am I reading? HAHAHA!

For the same reason that porno will never mix with big budget movies, no. Games based on pornography will never make the big time.

From my time playing Treasure of Nadia, they were apparently selling some sort of link with a company that makes toys.  I never checked it out, but my guess is that there is already some interactivity applications out there lol

???  Nintendo doesn't allow "porn" games, they only allow sexually suggestive themes the same PlayStation allows it, too.  It's a common misconception that nudity is "porn", or that implied sex scenes are "porn".  Those are not, which is why I always get that chuckle out of drama queens (dudes) that say Twitch is "basically porn" or "softcore porn".  No, a girl nearly naked sitting in a hot tub isn't porn, nor is licking a mic like it's a penis.  Sexually suggestive or sexual themed, sure, but porn is actually rather distinct.

I mean, I did mention that: it's a highly unregulated arena, so there's a LOT of garbage hahaha

Ehhhh, I partially agree with this.  For the same reason we wouldn't show or encourage violent TV shows/games to kids, a similar limitation exists on porn.  However, in terms of adult content, then I'd have to agree: it seems that once you get into the adult section, the primarily western world of media happily pushes extreme violence, gore, etc. but shuns away from sex.  This naturally extends to the avoidance of porn or pornographic scenes.

I'd actually find the balance to be better if, say, a horror movie had literal pornographic sex scenes along with its also horror.  We always use "sex sells" in horror movies, but then only use the tip (usually boobs).  Flip that into the gaming industry, and we imply sex for romance, but I think if a game is already at that maturity level, showing actual sex should just be the case (and have a toggle for turning that OFF if the viewer wishes to).

"So, 100% of the time?"

- Everyone

I mean, here's the problem with that: I don't think that's true.  Per the reply above, I think there are forces in play that wish to control it simply because they don't agree with it or want to see it.  Why?  Because tabloids.  Notice how THE biggest news for celebrities is who they shacked up with?  If anything, porn draws clicks HARD (he he), and both Pamela and Kim's sex tapes proves that without the forces that be who restrict these things, porn VERY easily would make it big time.  VERY easily, right up there next to our most violent action movies and most CG heavy movies.  The media circus around celebrity sex tapes is simple proof that the demand is there, it's just hidden away the (current) best it can be.