Playboy TV’s message to cable operators couldn’t be simpler: What your customers want is to be able to call up “Naughty Amateur Homevideos” and “Sexcetera” on demand, at the click of a remote.
Jim Griffiths, president of the Playboy Entertainment Group, says the people who gravitate to the most popular VOD service, HBO on Demand, are much likelier to skip “The Sopranos” and “Deadwood” in favor of “Real Sex” and other nudity-packed series and movies.
Forget HBO, Griffiths says: The beauty of Playboy on Demand is that it offers 30 hours of nothing but sexually oriented programming every month, offered as a supplement to Playboy’s 24/7 pay TV network.
Dangling these 30 hours as on-demand bait, Playboy has landed the biggest fish in the cable stream. Comcast has begun rolling out Playboy’s on-demand service to its 9 million digital subscribers (out of 21.5 million, which is more than any other operator or satcaster), and Wall Street is taking notice.
Bank of America’s Michael Savner has upgraded his recommendation of Playboy from neutral to buy, convinced that the Comcast deal could funnel an extra 25% to Playboy TV’s operating income by the end of the decade. The reason the Comcast deal is “incredibly important,” says Robert Routh, an analyst with Jefferies & Co., is that “Playboy’s first-quarter numbers were bad in domestic TV, which is a big revenue-driver for the company.”
Most cable systems deliver Playboy TV to customers not through its monthly pay service or video on demand, but via pay per view.
Playboy wants to change that blueprint because the PPV service is much more unpredictable in harvesting revenue; customers are not locked into a monthly subscription fee but buy programming each time they want it.
Playboy also faces serious competition in pay per view.
In the spring, Playboy took a financial hit when DirecTV dropped two of its five pay-per-view channels, handing the dial positions over to New Frontier’s TEN Networks. .
Griffiths says he’s disappointed but adds that Playboy has a big advantage over TEN.
“We have a lifestyle brand,” he says, “that encompasses the magazine, our online business, mobile devices and the Palms Casino Resort in Las Vegas.”
A 30-foot-tall rabbit-head dominates the exterior of the Palms, and Griffiths says the casino is building a Playboy-branded nightclub on its top floor. Once the Palms opens in September, Playboy will pocket an annual license fee of $5 million, according to Savner, who adds that its success could lead to casinos in Singapore, London and other cities.
More publicity for the brand couldn’t hurt in Griffiths’ drive to persuade other cable operators to follow Comcast’s lead and take the dual package: Playboy TV and Playboy on Demand.
Chuck Dolan’s Cablevision has carried the on-demand service since 2002.
However, some cable operators may hesitate because they like the Playboy deal they have now. These ops rake in 90 cents of every dollar ponied up by a subscriber to Playboy’s pay-per-view service.
On Time Warner Cable in New York City, for example, a four-hour block of programming on Playboy TV costs $7.95. TW doesn’t give any indication that its customers can buy a monthly Playboy subscription for $11, probably because the op keeps only 70% of that fee.
For example, Comcast collects only 70% of the monthly fee for Playboy TV and its on-demand sibling. That subscription fee ranges from $15.99 to $19.99, depending on the Comcast system. Playboy entices a better deal for its core network/VOD combo by emphasizing original programming. It spent $33 million on programming last year, producing most of the shows inhouse at its Glendale, Calif., studio.
By contrast, Playboy’s pay-per-view offerings, under the Spice logo, are pretty much nonstop movies that the company leases for lowball dollars from outside suppliers. These will continue as separate PPV channels.Playboy TV’s original shows include “The Bang,” a magazine series about the porn business; “Adult Stars Close Up,” an interview show; and “Tour Girls,” a reality series that follows strippers as they travel the country in an RV.
Griffiths says Playboy is also delivering mainstream product, citing “The Girls Next Door,” a half-hour series that E! Entertainment has renewed for a second cycle. “Girls,” which follows four Playmates on a journey through Europe, is not so much a revenue generator for Playboy as a promotional vehicle for the company.
And, Griffiths says, Cameron Diaz’s production shingle, through 20th Century Fox and Alta Loma, is working on a biopic about Danelle Folta, a Playboy Playmate who became captain of Playboy’s X-treme team, leading it to victory during a 2003 Eco-Challenge in the Fiji Islands. (Alta Loma is Playboy’s production company.)
But Griffiths may be most fervent about — get this — the radio network Playboy produces for Sirius Satellite Radio.
“In just three months,” he says , “Playboy Radio has grabbed 1 million subscribers.”
Who needs pictures?