Last modified: March 19, 1998 4:00 AM PST
Playboy pins hopes on Net
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Until now, however, Playboy's approach to the Net can perhaps best be described as low-key. Unlike other media moguls at such dynasties as Time Warner, Hefner wanted to make sure she could make money before hiring a huge staff and throwing resources at the Web.
"It has been a business that has been managed very carefully in terms of investment during the period of the last several years where we tried to explore whether we really had the potential to generate revenues from advertising, subscription, pay-per-view and e-commerce," Hefner said. "We've completed a six-month strategic review with an outside group that has led us to conclude that there is very significant potential, and we're going to start investing more significantly to realize that potential."
Others have looked to Playboy as proof that ad-supported Web sites can make money. Some analysts attribute much of this market popularity to the allure of adult content, but Hefner points out that nude pictorials account for only 20 percent of Playboy.com's pages.
"They are one of few Internet players that are making money. So far they seem to be getting a decent number of Cyber Club subscribers without doing much marketing," McAlpine said. "Given the number of hits they get, clearly everybody knows what the name means."
At the same time, he takes note of Playboy's conservative approach to its Web business. "It's going to have to pay for itself," McAlpine said. "But Net revenues are not growing as much as people think. When you've got a $300 million base like Playboy, this is just an adjunct to what they are doing."
 Christie Hefner on expanding the brand online |
No longer a stepchild of the publishing empire, the New Media division will now have to carry its weight alongside the television, cable, products, catalog and gaming operations. Revenue made by the division, which includes CD-ROMs and Net sites, will be separated from the rest of the company in earning reports. More employees will be added too; since April of last year, the staff has gone from 10 to 30.
Just last week, Buford Smith of Reuters America was appointed president of Playboy New Media. With a chief commander in place, Playboy is now ready to carve out its longer-term online strategy.
The Internet is a new way to bolster its profitable catalog business as well. The lion's share of Playboy's $4 million in online profits last year were generated by the Playboy Store, the online version of the company's videos, apparel and pin-ups. Sales also were boosted by last year's launch of CCVideo and CCMusic.
Moreover, the antipornography movement that once threatened the magazine hasn't hindered the Net business to the same degree. There has been a diligent campaign to limit children's access to online adult-oriented material, but for the most part, only child pornography laws are being enforced. Playboy checks ID for entry to most parts of its site where full frontal nudity is shown--except for some pages in its digital catalog.
As always, Playboy will try to sell itself into the "lifestyle" category to stave off associations with hardcore pornographers and the opposition they often attract. "It's about not segregating it as a sex site. [For example] we wouldn't want a 'playboy.xxx' domain," said Rebecca Theim, the company's director of corporate communications.
Yet lifestyle vs. pornography is really not the issue for Playboy anymore. The secret is to enter the market in the right place at the right time, Hefner says, just as the company did with television.
"It's the strength of the brand and the promise of the brand that is the great, leveraging asset," she added. "And then the key is, can you create the original content that delivers on that expectation."
As it branches out, Playboy will not abandon its original print business. The magazine will still cater to Baby Boomers, who remain fascinated with the history of Hugh Hefner--his storied days of lounging in silk pajamas, cavorting with Playmates prancing the grounds of the Playboy Mansion, reflecting on everything from the sexual revolution to international politics.
For the younger crowd, Playboy intends to continue building on that legend through virtual stimulation.
"They are experiencing Playmates as celebrities--not like a passive 900 sex-number experience," said Rodger Brown, editor of Playboy Online. "The big goal is to create online membership because that is where Playboy is going to come alive again."
