STRATEGIES: Playboy’s Web play

With its initial public offering of – which includes the adult-entertainment Playboy catalog and the racier Spice catalog – set for the first half of 2000, Playboy Enterprises is banking on the Web to transform it into a vibrant new media player.

And as if to underscore its preference for new media over old, in February, the $317.6 million publisher/marketer put its Critics’ Choice music catalog and Collectors’ Choice video catalog, along with their affiliated Websites, on the selling block.

But the company denies that it is getting out of cataloging altogether. “The Playboy and Spice print catalogs will continue to drive customers online,” says spokeswoman Martha Lindeman. “The primary focus of is online, but we will continue to mail a catalog.”

Playboy’s catalog division has suffered from declining revenue over the past few years. Fourth quarter sales, for instance, fell 30%, to $16.5 million from $23.6 million in 1998. Bob Terry, senior vice president/chief operating officer of the catalog group, blames the flagging sales in part on a slowdown in new releases of classic movies and music from the major studios and labels.

As it waits to unload Collectors’ Choice and Critics’ Choice, “circulation for this year has been reduced, mostly among prospects,” says Terry, who has been running the division since former president Herb Laney left in March. “We’re focusing on customers and migrating business to our online sites. By reducing prospecting, we are maximizing profitability and promoting the heck out of the sites.” Terry won’t give specific circulation figures, but the catalogs’ target customers are relatively affluent 45-55 year olds. Most Collectors’ Choice customers are men, while Critics’ Choice buyers are more evenly split between the genders.

Playboy hopes to gain revenue by fulfilling for e-commerce marketers, just as Hanover Direct and Spiegel are doing. “We are talking to a number of potential clients, one of which is countercyclical to our business,” which is strongest during the fourth quarter, Terry says. “Our goal is to have two clients signed by July.”

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