Playboy stretches the Bunny brand

By Helen Soteriou
Holmby Hills, Los Angeles

The mansion is both a home and part of the corporate image

The long drive up to the picture-perfect Playboy Mansion belies both its relatively modest size and its homely atmosphere.

The walls are adorned with 20th century art masterpieces by Dali, Matisse and Pollock, the shelves crammed with books about films.

Hugh Hefner, the 82-year-old founder of one of the world's most recognisable brands, shuffles about in his slippers, accompanied by Littlefoot, an ageing dog.

But whereas Mr Hefner looks comfortable, Playboy Enterprises has aged less well.

The company's share price has nosedived from its peak in 1999, when it was trading close to $35. Currently, the stock is trading at about $10 - and it has not traded above $20 since the turn of the century.

Structured life

While at home, Mr Hefner insists he leads an extremely structured life.

During the day he is heavily involved with day-to-day editorial issues and the evenings are filled with activities that run as regular as clockwork, including film nights with friends in his custom-built movie theatre.

Platinum blondes no longer sell magazines the way they used to

When it was launched in 1953, Playboy was marketed as the "handbook for the urban male", and the bow-tie wearing rabbit - with its sexual connotation and a hint of sophistication - was chosen as its logo.

Sales soon soared and after a year Playboy was outselling Esquire, the magazine where Mr Hefner first worked.

But the buxom platinum blond image that has done so well in the past has faded, and sales of the magazine - faced with both internet rivals and non-pornographic lifestyle magazines - are falling.

Change of direction

It is now up to Mr Hefner's daughter from his first marriage, Playboy chief executive Christie Hefner, to sort it out.

Under her watch, more than 40% of Playboy's senior executives are female, and the company is making a determined effort to appeal to new female customers through its licensing division, and is also expanding into other areas like gambling.

Outside the established Playboy brand and Playmates, there is little to distinguish the offering from other gambling websites Screen Digest analyst Ed Barton

But although the company is making progress, she is facing a tough task.

During the second quarter of this year, Playboy edged back into a profit of just $1.9m, compared to losses of $3.3m in the same period last year.

But the publishing group saw its losses rise to $2.3m after the magazine's circulation fell 8%.

According to Ms Hefner "the issues facing the domestic magazine business are not improving".

But profits from Playboy's licensing business rose 36% to $5.5m.

Selling to women

The Playboy Bunny has become a global brand

The division first emerged during the 1980s in response to an underground club culture, where people were literally taking the covers off the magazines and silk-screening them onto t-shirts.

The company soon got in on the act, selling Bunny-branded lingerie and gadgets in more than 150 countries - thus reaching a lot more people than the magazine which is published in just 21 countries.

The target audience is young and trendy, and 80% of them are women.

To them, insists Markus Grindel, Playboy's European brand officer in charge of global licensing, "Playboy represents the good life".

This is a reflection of "the brand's sexiness, glamour, and unique style", he insists, adding that "on a deeper level, Playboy stands for freedom of choice and self-expression".

Playboy's merchandise is sold in different ways, either through its own stores - it is opening a new, four-storey shop on Oxford Street in London in September - or in department stores, including Harvey Nichols and Selfridges.

Gambling bid

Playboy is also returning to the world of gambling, where the Bunny logo is well known - not least because of the Playboy Club, a gambling club that has operated in London's Park Lane since 1966.

These days, Playboy operates both bricks-and-mortar and virtual gambling operations.

Mr Hefner is preparing to open clubs around the world

A new Playboy club opened last October in the "Fantasy Tower" at the Palms resort in Las Vegas , which includes a casino offering black-jack, roulette and playboy slot-machines.

But there are no guarantees Playboy will make it, according to Screen Digest analyst Ed Barton.

"Outside the established Playboy brand and Playmates, there is little to distinguish the offering from other gambling websites," he says.

"This is not to say that Playboy is incapable of succeeding in the marketplace," he adds - but it will need more investment in this highly competitive market.

"Playboy bunnies," Mr Barton points out, "can only hop so far."