Playboy is in the news today, but not because this month’s edition includes a particularly risqué photo spread. The news today: Hugh Hefner has offered to buy the company’s outstanding shares and take it private.
The surprising thing in the deal is the price. Hefner’s bid values Playboy at just $185 million. This is not a lot of money. Several years ago Bacardi bought the Grey Goose brand for about $2 billion. Just last week P&G acquired the Ambi Pur brand for about $380 million.
Based on today’s bid the Playboy brand is worth less than 10% of the Grey Goose brand, and less than 50% of Ambi Pur.
Hefner isn’t undervaluing Playboy, either. Over the past five years Playboy has seen its revenue fall from $338 million to $240 million. The company lost more than $50 million in 2009 alone. Playboy is a troubled company and a troubled brand.
There is an important learning point in the collapse of Playboy: brands have to evolve.
Playboy at one point stood for something distinct; it was a unique voice in the industry. According to Wikipedia, in 1972 the magazine had circulation of over 7 million copies.
Over time, however, the Playboy brand lost its way. The core problem is that the brand got caught in the middle. Today people looking for hard-core pornography have many more exciting options; they are not looking at Playboy. Men looking for funny articles about the male life can read more dynamic publications such as Maxim and Esquire without being accused of looking at porn.
Playboy needed to change as the competitive set shifted, but it didn’t.
So what precisely is Playboy today? It isn’t clear. It isn’t porn, it isn’t new and it isn’t fresh. I suppose it is old, an iconic and faded brand.
It is a brand with great awareness but little value.