Playboy Online, which has been turning industry heads with its popular Web site, is taking some of its operations to Los Angeles.
“This move is to better work with Playboy’s television unit and the Playboy Mansion’s activities out there in Los Angeles,” said Buford Smith, president of Playboy Online, a division of Chicago-based Playboy Enterprises Inc. “Both are significant assets for the new-media division, and we are repositioning our staff to better and more practically support them.”
As early as January, several of the roughly 60 current Playboy Online employees will relocate from Chicago to Los Angeles and up to 20 new employees will be hired locally. While the numbers are not large, they point up L.A.’s growing importance in multimedia.
Playboy Online’s Los Angeles office will include creative and editorial positions, as well as West Coast sales representatives. Smith expects the new-media office to be housed in Playboy’s existing building in Beverly Hills. However, the company may look around for additional space.
The 10-month-old division of Playboy has been boosted by an extensive billboard and print advertising campaign. The free Playboy.com Web site attracts almost 60 million page views a month, and is ranked by some research companies as one of the Web’s 50 most frequented locales.
Piece by piece, the company is building a comprehensive site the adult equivalent of what Disney Online has created for children. It not only offers traditional Playboy fare, but headline news, stock quotes and extensive e-commerce offerings ranging from mainstream books and magazines to Playboy products.
Playboy Online also runs a membership-only Cyber Club, which boasts about 30,000 subscribers and provides access to archived articles, photos and special online Playmate events.
“Playboy is wisely using the Internet to reach young males, revitalize its market and rebuild its brand name,” said Patrick Keane, an analyst with Jupiter Communications. “Their very aggressive online division is already starting to see this happen.”
Although a longtime publishing icon, Playboy suffered large losses in its magazine circulation in the 1970s and has been striving to update its image and broaden its appeal ever since.
Christie Hefner, Playboy’s chairwoman and chief executive, has repeatedly stated that the company’s online business will help turn Playboy into a $1 billion market-cap company. Its current market capitalization is around $330 million.
But like most Internet ventures, Playboy Online is not yet profitable. For its most-recent reported quarter, ended June 30, it posted a net loss of $1.5 million on revenues of $1.6 million. Company executives attributed the second-quarter loss to heavy investments in staff and content.
Over the last few weeks, Playboy Online has announced a series of high-profile deals far afield from its traditional adult fare.
On Nov. 3, it formed a partnership with Minneapolis-based K-tel International Inc. to create a music store on the Playboy.com site. Executives from both companies believe their joint online retail music project will rival leading services such as CDNow Inc. and Amazon.com Inc.
It also announced a partnership with Atlanta-based Internet service provider MindSpring Enterprises Inc. Starting in December, the companies will offer a co-branded Internet access service. Playboy will receive a bounty payment from MindSpring for each subscription.
