Playboy Shows Vegas How It's Done

Naturally, Nevada's casino operators appear to be in the best position to dip into the pot of gold in America, but there's certainly something to be said for the heavyweights of non-gambling entertainment industries as well, and there's probably no one better equipped to say it than Playboy Enterprises Chairman and CEO Christie Hefner.

Gaming and technology professionals gathered this week at the inaugural Interactive Gaming Expo & Conference in Las Vegas to get the scoop on Nevada casinos' inevitable assault on the Internet, but Hefner reminded delegates Thursday that it was Playboy that thrust itself onto the scene as Net betting's first universally recognized all-American brand.

With the exception of MGM Mirage, which last week received an online casino license from the Isle of Man, Nevada's operators have been extremely tentative about getting involved in Internet gambling because they don't want to jeopardize their good standing in the States. So it has instead been the likes of Disney (via its venture into the "games of skill" arena) and Microsoft (via its partnership with Harrods’ online and Gaming Internet plc) that have established corporate America's presence.

But neither Disney nor Microsoft have tapped into the online gambling market to the extent that Playboy has. And even though gambling represents only a portion of Playboy's online entertainment package, Hefner, who referred to gambling as "the killer app for the online consumer space," said it will play a huge roll in the company's success on the Internet.

Playboy went online in 1994, a little more than a decade after boldly expanding its distribution to cable TV. Hefner said Playboy's first day online saw 10,000 visitors from 30 countries. Now 4.4 million unique visitors based in 103 countries visit Playboy.com each month.

The last thing Playboy wanted to do was publish a static version of its magazine on the Internet and draw money from advertising. Instead it sought interactivity. "We wanted to combine all the entertainment properties of a virtual world with the ability to interact with customers and customers with each other," Hefner explained.

Playboy's approach, she said, was finding out what the consumer wants to do online and delivering it. And that's why the company broke into online gambling, first with PlayboySportsbook.com, then with PlayboyRacingUSA.com and most recently with PlayBoyCasino.com.

The three gaming sites are integrated into Playboy's Internet portal, at which 100,000 subscribers pay $60 per year to be in the Playboy Cyber Club. That's twice as many subscribers as last year, and Hefner expects the number to double next year. Playboy's largest source of revenue online, however, continues to be its branded merchandise.

Hefner stressed though that Playboy’s gambling, which wasn't available online until the launch of PlayboySportsbook.com in May 2001, will become a much more significant part of the mix. She also indicated that Playboy wants to venture into additional interactive media, including wireless communications and interactive TV, as well as pay-to-play skill-based games.

As an entertainment company--not a gambling company--Playboy will not limit itself to drawing money from casino-type games. "The ultimate gaming site," she said, "isn't going to stop at taking gaming available in bricks-and-mortar facilities and putting it online." There's a tremendous amount of opportunity, she said, in taking games such as "Who Wants to Be a Millionaire?" and making them available through interactive media.

Ultimately, she said, an Internet strategy should lie in building and maintaining brand equity and trust. Playboy has done that, and the company's success online serves as a fine model for Las Vegas's Internet-bound gaming operators.