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The rise of the rabbit

Focus : Playboy

With Marilyn Monroe as your first cover girl, you know your magazine is destined for greatness. And that's just what Playboy has been since Hugh Hefner launched it in 1953. But Suzy Bibko learns that it's his daughter, Christie, who has taken the company to new heights – including, most recently, building a 30-foot rabbit head towering over Las Vegas.

Suzy Bibko is editor of Families in Business.

Sex sells. It may be a cliché, but it has proven true time and time again. Nowhere is this more evident than at Playboy Enterprises.

Despite some very real challenges throughout the company's history, including opposition by the US government and the arrival of numerous competitors, Playboy has endured as few magazines and entertainment companies have. In fact, the company seems to be stronger than ever, and like its iconic bunny, it has been multiplying across new markets by leaps and bounds.

The person behind this expansion is Hugh Hefner's daughter, Christie. She's been with the company for the past 30 years and has been chairman and CEO for the past 20 – although this wasn't her original plan. In 1975, Christie joined the company as a special assistant to learn about the firm and spend some quality time with her father (her parents divorced when she was a child and she did not grow up living with him). Christie and her father both thought she'd stay for just a few years before going on to law school, but that plan quickly changed.

"I got seduced by how interesting the people were and how much I enjoyed the variety of challenges, on the one hand, of being in a creative business, being in a world of ideas, meeting and working with intellectually curious and bright people, and at the same time the analytical challenges of trying to solve problems," recalls Christie. "And I really liked the values of the company and the people in the company that grew out of the editorial of the magazine in terms of the political interests, equal rights and social justice."

Mainstream Media
These values are a big part of Playboy's success, especially in today's world where attitudes are, overall, less conservative than when the company started in the 50s. While some people may still only recognise Playboy for its centrefolds, that's only a part of what the company is about. Playboy, the number-one men's magazine on the US market with some three million subscribers, has a strong political inclination and has been a powerful and pioneering advocate for social rights.

"It's a magazine that was the first publication to lobby for and then file lawsuits on behalf of legalised contraception and abortion; it's been a pioneer in advocating gay rights; a pioneer in advocating for the equal rights amendment; and the Playboy Foundation gave the seed grant that set up the women's rights project of the ACLU (American Civil Liberties Union)," explains Christie.

By embracing and supporting these values, as well as expanding itself into an entertainment empire, Playboy has seen its audience expand. Once only targeting men, consumers of Playboy products now include women, and the notion of it being a firm that demeans women by publishing nude photos is now seen as outdated and old-fashioned. Christie is adamant that selling a sexy lifestyle doesn't equal female exploitation.

"I think you have to start with the premise that only if you believe that the sexy side of life is demeaning to women would you find Playboy demeaning to women. I don't think most women feel that way. I think most women and most men, frankly, want to be attractive to the opposite sex or the same sex depending on their sexuality. And I can't think of any images in the pop culture that are more romantic and tasteful in terms of images for straight men than the images in Playboy. So, I think that point of view is, candidly, a dated point of view."

Indeed, if you look at Playboy's sales figures, you can see that women are in agreement: in 2006, Playboy achieved $750 million in retail sales of Playboy merchandise; 80% of that amount related to fashion, accessories and jewellery products sold to and worn by women. 

The retail merchandising is just one example of how the company has expanded into new territory in recent years. When looking for growth opportunities, many publishing companies expand only through launching other titles. But Playboy decided to look outside its core business and see what opportunities were available.

Today, Playboy is an international multimedia company that has two operating units: one centres around the extension of the Playboy brand and style of content, mainly across electronic platforms; the other focuses on leveraging the brand through licensing of consumer products.

"I think we were fortunate and I was fortunate in that when I took over the company originally as president (in 1982), it was a time of technological innovation," explains Christie of Playboy's expansion into the electronic arena. "So, the growth of VCRs, home video and cable and satellite television coincided with our own analysis of how we should grow the company. We're the only magazine that extended into television and we have Playboy networks around the world. That is our biggest profit centre and we did that in 1982.

"We were also the first magazine to go on the internet (in 1994) and is now our fastest-growing profit centre. We were also an early believer in the opportunities to extend the content and our brand to mobile devices, which is quite a large business in Europe, but still very young in the US. We are also launching our online gaming, Playboy poker and Playboy casino games, out of Europe (in April 2007). So, we really believe in the idea that if you're a content creation company, an entertainment company, you want to deliver that entertainment in different formats."

One of those formats involves consumer licensing, as mentioned above. On the heels of its success in the US, Playboy will be opening a flagship retail store in London in 2007 (indeed, the signage is already up for the store on Oxford Street, at the north end of the well-known Soho area). This follows eight stores that have already opened in places such as Las Vegas, Tokyo and Hong Kong, and three more a year are planned for the next several years.

Betting on the Bunny
But the real buzz surrounds the opening of Playboy's new club in Las Vegas. While it might not seem like anything new for the company – they used to have nightclubs in various US cities some 25 years ago – the concept is much different and more sustainable, and much more entertaining for a wider audience. "The Playboy Clubs had been extremely successful for more than a decade, which is a pretty long life when you think about nightclubs," says Christie. "But they were just nightclubs. What we've done in Las Vegas and what we hope to do in other markets, like Macau and London and elsewhere, is to integrate a multi-dimensional entertainment complex that is of a much greater scale and is hosted by local partners, frequently with a hotel component. So, there is a nightclub, a lounge, gaming, private party space, retail space, but it's all integrated. And that, I think, is a more profitable business, but also a more sustainable business. If you think about it, it's hard in most cities for just a nightclub to stay popular. By definition, if you're trendy and hot today, you're not going to be trendy and hot in three years."

It seems a natural extension of the brand, and Las Vegas, known as "Sin City," certainly seems the obvious location. So, why the 25-year wait? "We took the time to think it through as to how it would work and how we wanted to do it," reveals Christie. "Pretty early on, both I and Playboy's board of directors felt that the ideal place to do the first club was Las Vegas. But because Las Vegas is the biggest market (for clubs), we had an extensive process of talking to all the potential partners, looking at all the potential locations. Frankly, we were close to doing something in 2001, and then 9/11 happened. Then there was great concern that Las Vegas would be a target and therefore companies we might have partnered with were hesitant to make large investments to build new projects. But we finally came to the point where we were sure we had the right partner and they were ready to spend $150 million to build a new (hotel) tower that has a 30-foot rabbit head on it. And we opened at The Palms in October 2006."

A contemporary brand
Like the rabbit head rising above the desert, Playboy seems to be reaching new heights and garnering much positive media attention of late. But stock prices are down (the Hefner family floated the company in 1971, with Hugh Hefner retaining control of about 70% of the company), making one wonder if investors know something consumers don't. Is Playboy's newfound trendiness just a passing fad rather than a long-term strategy?

"I agree that the brand is hotter than ever," says Christie. "I think a little bit of that is retro and if you see images from the Vegas property, you see that we have embraced our heritage in terms of photography of celebrities bunnies and my dad in the early days, and images from the magazine that are classic images. But I also think our success has come from building a bridge from that heritage to that which is contemporary because otherwise it's just sort of a passing thing. The fact that The Girls Next Door (a reality show about Hugh Hefner's girlfriends who live at his Los Angeles mansion) is the highest-rated show on the E! (Entertainment) channel, the fact that the coolest property in Las Vegas, The Palms, where they filmed MTV's Real World and Celebrity Poker, and where Britney Spears got married for 72 hours, wanted to invest in working with our brand, the fact that is one of the most visited sites on the internet, means that we are relevant in today's world."

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