In an Anti-Internet Climate, Two Publishers Pursue Broadband Initiatives

Folio: The Magazine for Magazine Management, May, 2001 by Cindy Gillis, Lindsay Morris

As many media companies reconsider their roles on the Internet and wrestle with a workable business model, at least two publishers are launching counter-intuitive moves and pursuing interactive and broadband Web ventures. In April, Hachette Filipacchi Magazines and Playboy Enterprises Inc. both announced major Internet initiatives designed to expand their online offerings.

Playboy.com and Penn National Gaming Inc. are partnering to launch PlayboyRacingUSA.com, an online parimutuel-wagering site for horse racing, in the third quarter of this year. Penn National will handle development, day-to-day operation, management and customer support. Playboy will provide marketing, branding, design and content.

The site will offer racing and wagering on nearly 30 North American racetracks, and an interactive component with a Playboy hostess offering tips and betting instructions.

"We've always believed that you've got to have multiple revenue streams," says Larry Lux, president of Playboy.com. Lux says online gaming is expected to account for 5 to 10 percent of the Web site's revenues this year. In 2000, the site generated roughly $25.2 million in revenue. Playboy.com has yet to show a profit, but is expected to break even in the first quarter of 2002, Lux says. Playboy.com offers a free, advertiser-supported site, but it also has a subscription component with 83,000 members and e-commerce ventures.

In April, Playboy.com announced a five-year pact with ACTV Inc. to support its Web- and TV-based interactive content. The plan includes the development of online games, e-commerce tie-ins with programming, new offerings on the subscription site and interactive programming for the online gambling sites. A number of the initiatives may be available to those with broadband capabilities as well as those with dial-up Internet connections. "We're firm believers that the broadband market will open up over time, although not as fast as we wish," Lux says.

Preparing for tomorrow

Hachette Filipacchi is another publisher that is moving forward rather than retrenching in terms of its online businesses. In late April, the company was poised to announce a major online distribution partner, according to Benjamin K. Tatta, COO of Lagardere Active North America, a division of Hachette Filipacchi Media.

Meanwhile, the division, which launched in February, is planning its first broadband application. A "virtual showroom" on Car and Driver's Web site will be available in August. Using QuickTime virtual-reality software, the showroom will allow viewers to access a buyer's guide, inspect the interior and exterior of cars, and take a virtual test drive.

Although Tatta acknowledges that most users will not be able to access broadband services immediately, he says the company is laying the pipelines today, in preparation for tomorrow. "Without question, our goal is to move rapidly into this space. We're seeing how big the concept is in Europe, and while broadband may be a couple years away, we realize we have to be prepared."