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Hugh Heffner started Playboy with a $1000 loan from his mother and turned it into a publishing empire.  However, as Mr. Heffner prepares to take Playboy private, one has to ask whether Playboy’s business model is broken?

Today, Playboy’s total revenue is around $350 million. In the late 1970’s, Playboy’s revenue was $175 million.  During this same period, the overall adult entertainment industry grew from an estimated $50 million to over $10 billion in the US alone. 

The print magazine continues to lose market share (down 22% year over year) and lose money.  Print and digital content revenues were down 26%, and licensing revenues were down 11%.  Competitive magazine Maxim has grown from zero circulation ten years ago to the same circulation as Playboy.

By the same token, Playboy is the 22nd most popular magazine in the U.S., right behind Newsweek.  The magazine still has significant distribution.  It just can’t turn a profit.  Nothing Playboy does seems to turn a profit.  Is this because Playboy isn’t really a business model, it’s a personal extension of Heffner?

Playboy must reinvigorate its brand to turn around its business model.  When Playboy was new, the brand was fresh, unique, and a direct-bull’s-eye hit for certain prospects.  Today, the brand has been eroded on one end by adult films and on the other end by Victoria’s Secret and Maxim.  Playboy can either get squeezed to death or reinvigorate its brand and business model.

Here are a some options:

  • Bye bye Heff.  Sure, men love Heff.  However, how many men in the target demographic identify with an 80-something bachelor?  Transitioning a new face for Playboy could reinvigorate the business model
  • Sell the mansion.  The Playboy mansion is no longer critical for the brand.  It is simply an $80 million toy for Heffner’s personal use.  Millions per year are drained from the company for this toy.
  • Crush or buy Maxim.  If Playboy has learned anything from Maxim, it is that almost nude celebrities beat nude no-names.  Playboy should create a second brand such as “Bunny.”  This would effectively be a Playboy-lite brand.  This brand could be licensed to Victoria’s Secret as well as others.
  • Ditch the magazine.  It’s only a matter of time before print magazines are gone.  Leap ahead and create an iPad/Tablet version of the magazine.
  • License, license, license.  It’s astounding that Playboy generates only $37 million in annual licensing revenue.  The bunny ears are one of the world’s most recognizable brands.  A good case can be made to jettison all divisions of the business except licensing and grow it significantly.
  • Better leverage the mansion.  Heffner has made the Playboy mansion his personal amusement park.  Why not change the business model and literally make it an amusement park.  Imagine how many men might pay $1000 to attend a Playboy party?

Consider this a call to action for the Playboy franchise. It is undeniable that Playboy is a powerhouse global brand; however, there is also indisputable evidence that the company’s business model is broken. It’s time for the multi-million dollar company to re-strategize and throw on their thinking caps… or bunny ears.