In the 1960s and 70s, the London Playboy club was the hottest place in town. Sean Connery, Muhammad Ali, and Sammy Davis Jr were all patrons. It closed in 1981, but reopens its doors on Saturday, complete with bunny croupiers and waitresses. But while Playboy Enterprises sets out the rules of the operation, it is not the owner. The club belongs to a casino operator, London Clubs International.
Playboy’s approach to licensing is a part of chief executive Scott Flanders’ strategy to make it a brand management company. The company needs a new direction. Shareholders turned a negative 10 per cent total return in the two decades before Playboy’s shares were delisted earlier this year (when founder and chief creative officer Hugh Hefner took the $200m company private).
Competition from the internet and rival publications has led to dwindling circulation at the company’s eponymous magazine, so new revenue streams are critical. In the company’s favour, the Playboy name has more mainstream appeal than most other adult brands, even among those who do not read the magazine or watch its programming. And attaching its brand to stuff is profitable – the licensing business contributes only about 15 per cent of revenues, but two-thirds of profits before corporate overheads.
The tough part is to find the right balance between taking advantage of the brand and milking it dry. In the past, the bunny-eared logo was slapped on everything from umbrellas to energy drinks, but the focus has since moved upmarket. This is where the new London club comes in. Of course, such a big ticket project carries significant reputational risk (not to mention third party operator risk), but Mr Flanders’ underlying logic appears sound. Besides, he has no choice. Playboy’s brand is its one and only trump card.
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