Playboy Enterprises reported a Q1 net loss of $3.1 million, or $0.09 per basic and diluted share, compared to net income of $5.1 million last year. Revenues were also down, dropping 8 percent to $78.5 million.

(…)

Even online revenues, typically a bright spot for most publishers, performed poorly, falling 3 percent to $15.2 million, as gains in e-commerce, advertising and mobile revenues could not offset lower pay site revenues.

That’s pathetic.  Playboy has wonderful advertiser relationships but it will continue to underperform in online ad revenues so long as it keeps a paid site model strategy.  Given the nudity factor, they have no choice.  This is why I never, ever understood why Playboy did not buy my old company AskMen.

AskMen was a free, ad-supported site that otherwise matched the content quite well.  I wrote a lot of content in lifestyle, entertainment and business, but the site’s core categories were dating and sexuality.

So apart from having no nudity, it was pretty much in the same vein with regards to producing lad mag content interested in T&A.

AskMen was a carbon copy of Maxim, but while Maxim made every wrong move imaginable initially, it eventually decided to give online a go.  Of course, by the time they tried to correct the ship, it was too late.  But Maxim could at least say “we’ll compete with AskMen and put in resources in a free site”, Playboy, by remaining a largely paid site, seems to have dropped the ball altogether when it comes to the digital opportunity.

Had Playboy bought AskMen, then it could have embraced a dual strategy for the ages:

- keep the more risque and admittedly adult stuff behind paid walls at Playboy.com, generating consistent subscription revenues.
- maintain a less risque and free, ad-supported site at AskMen.co, to generate advertising revenue.

Incidentally, AskMen was third in the 18-24 age segment, following IGN and Gamespy, both owned by IGN Entertainment.

There’s a reason why traditional media is lagging online, they a) don’t get it or b) are too slow.

IGN, founded by Mark Jung, got the importance of locking up the men’s 18-24 demo.  So unlike Playboy that thought it was too good for us at AskMen, IGN engaged us and sought to acquire us.
Incidentally, my CEO at AskMen was low-balled by IGN CEO Mark Jung and we ultimately accepted the $13.5M deal, which is peanuts when you realize that in the men’s lifestyle space, AskMen at one time had more reach than Maxim, Esquire, GQ and Playboy combined!

In a financial engineering case study I will never forget: IGN paid a whopping 12x EBITDA (yet itself sold IGN for 40 times EBITDA to News Corp. just six months later)…

So bottom line: Playboy could have had AskMen for a mere $15M.  By my estimates, leveraging the IGN/Fox Interactive Media world class sales machine, AskMen today makes $10M-$20M per annum.  That might not be enormous to News Corp. who is gunning for $1B in annual revenues from digital assets, but if you are Playboy and 2007 financials are as follows:

- total revenues are $350M,
- EBITDA of $20M
- but you have a market cap of $250M…

You have to wonder how many other balls they have dropped.

Fantastic brand, fantastic company… not sure they have a place in the 21st century.  After all, you might have noticed, there’s no shortage of eye candy online.