What's up guys welcome back to wall street millennial on this channel, we cover everything related to stocks and investing today we're doing a video about the rise fall and resurrection of playboy founded by hugh hefner playboy came to dominate popular culture from the 1960s through the 1980s. At its peak in 1971, they had a circulation rate in excess of 7 million, with over a quarter of male college students in the united states subscribing they opened up playboy clubs across the country and licensed the brand for clothing and other consumer goods. The eye-popping success of playboy up until the 80s enriched hugh hefner to the tune of hundreds of millions of dollars. He used this money to fund a lavish lifestyle, even buying a private jet featuring the iconic playboy bunny logo, but the success was short-lived.

After peaking, in 1972, circulation fell precipitously falling to a pitiful 200 000. In 2018. The print version of the magazine was suspended in early 2020 and the once popular playboy clubs have long since been shut down in this video we'll go over how hugh hefner built playboy into the world's most successful adult entertainment empire and how it all came crumbling down. In 1952, a young man by the name of hugh hefner, quit his dead-end job as a low-level copywriter for a squire magazine to start his own business.

By taking out a loan and raising money from friends and family, he managed to cobble together eight thousand dollars for his new idea. Playboy magazine his vision was to create an adult magazine featuring revealing pictures of attractive women. You have to remember that in the 1950s the us still had a very conservative culture. Making an adult magazine was a revolutionary idea for his first magazine.

He found some nude photo shoots of actress marilyn monroe, which she did under a pseudonym. She never contended to have her photos being used, nor did she receive any compensation from playboy. Nonetheless, the first magazine was an immediate success, selling over 50 000 copies. They designed the iconic playboy logo of a bunny dressed in a tuxedo.

The playboy bunny eventually became an aspirational symbol for young men across the world. In each magazine they would name one model as a playmate of the month featuring adult photos, including a full body picture in the center fold of the magazine. Every year they chose one model to be the bunny of the year. This became a highly prestigious recognition within the modeling industry.

In addition to publishing pictures of models, they also published articles giving social and political commentary hefner was very progressive for his time. He allowed homosexual fiction stories to be published in magazines when they were rejected by the more mainstream. Publications. Playboy also played a part in the civil rights movement by featuring interviews with martin luther king jr in the 1960s, as the brand grew hefner expanded it.

Beyond the magazine. He opened up playboy clubs, the club served food and alcohol with waitresses, dressed in revealing bunny costumes. Hefner's empire peaked in the 1970s when the magazine was circulating at 7 million copies per month and generated 12 million dollars of annual profits. This translates to more than 60 million dollars today, adjusted for inflation.

It seemed that hefner had created a revolution and now so the pinnacle of the adult entertainment industry. However, all good things must come to an end. In the late 70s, a second wave feminist movement was starting to gain steam across the u.s. Many women looked unfavorably on the playboy clubs, forcing their waitresses to wear revealing bunny costumes.

They viewed this as objectifying women. Some feminists even went so far as to protest at playboy bunny interview locations. These protests caused sentiment to turn negative, decreasing viewership of playboy magazine. They also decreased interest in the playboy clubs, as many people didn't want to be associated with playboy anymore, for fears of being labeled misogynistic.

At the same time that the adult magazine market was facing headwinds, new entrants into the market made things even worse. Throughout the 50s and 60s playboy was a near monopoly and dominated the market as a first mover, but by the 70s credible competitors, including penthouse magazine, started. Taking chair by the early 2000s playboy's circulation was almost cut in half to just 3 million copies per month, but the worst was still yet to come. The feminist movement did not represent an existential threat to the industry, and new competition is something every successful.

Business should expect, but playboy was about to face a much more serious threat which would bring the once great empire to the brink of bankruptcy with the rise of the internet. Many people realize that online video streaming is a much preferable way to distribute adult content platforms. Such as the hub invested heavily in developing talent and offered a far superior value proposition to consumers, there's an almost unlimited supply of free adult content online. So there's really no need to pay for playboy magazines, similar to how netflix made blockbuster obsolete online adult sites made.

Playboy obsolete in 2005, there was still scraping by selling about 3 million copies per month, but the great recession was a final nail in the coffin with people's home equity, evaporating stock portfolios, free-falling and job security diminished. They looked for ways to cut back on their discretionary spending. In many people's personal budgets, their playboy magazine subscription was the first item on the chopping block. They were completely discretionary as their young male reader base could easily switch to free adult content online by 2010.

Circulation was again cut in half to 1.6 million. Creating magazines is mostly a fixed cost business. It costs very little to print each magazine, but it costs a lot to hire the models for the photoshoots and the journalists to write the articles. This means that, as circulation decreases, the business can turn from making profits to making losses very quickly, and this is exactly what happened to playboy.

As the value of playboy decreased, hefner was forced to cut back on his luxurious lifestyle. He sold his english style mansion in la for 18 million dollars in an effort to cut costs. They reduced the number of issues published from 12 per year to 10 per year, but this did nothing to reverse the fundamental decline of the print magazine industry in 2011. Playboy was bought out by a private equity fund who installed a new ceo, scott flanders.

Flanders was a traditional ceo and saw that playboy would have to completely change his business model if he wanted to survive. One of the biggest changes that he made was removing full frontal nudity from the magazines. This was not the result of any moral objections, but purely a business decision, with free online, adult content being so prevalent. By this point, nobody was reading playboy for the nudity anymore.

Despite the declines of the print magazine, playboys still had an iconic brand. They shifted their focus towards licensing deals whereby clothing manufacturers would pay royalties to use the bunny logo. Playboy branded clothing became surprisingly popular in china, despite the fact that the magazine is not allowed to circulate there. Many consumers view it as an aspirational brand which allows their branded merchandise to sell for a premium.

The decision to end nudity was in large part motivated by predicting the chinese licensing business, which made up roughly 40 of the company's revenue. At the time, china has strict regulations banning adult print and video content, removing playboy's association with nudity reduced the risk of regulatory issues. In the country in march of 2020, playboy officially ended circulation of their print magazine, but this did not mark the end of their business. They still make tens of millions of dollars per year from brand licensing royalties.

In early 2021, they went public via a spec and currently have a market capitalization within striking distance of one billion dollars over the years, playboy has accumulated millions of pieces of art. In addition to the magazine covers and model photo shoots. They also have art pieces made by the likes of pablo picasso and andy warhol. They plan to monetize this art collection by selling them as digital non-fungible tokens or nfts.

Here's playboy's current ceo john cone, explaining the company's new nft strategy on probably on most people's minds, which is what kind of art are you looking at putting into these nfts? Are they the naked women yeah? It goes well beyond that. We have a catalog that has over 10 million pieces in it, it's from some of the most phenomenal photography over the last 70 years to interviews with steve jobs, mlk malcolm x, jimmy carter, to unbelievable editorial. And on top of that we have a 5 000 piece. Art collection, war, hall, leroy, neiman, salvador, dali's, matisses, and so we're really excited about the opportunity, both on a global basis as well as domestically.

I mean really it's such a transformation for for you and for for the company from what we used to think of clearly from what i referenced, but also just as a magazine company, which you no longer are. You went public via spac, recently uh after being taken private by pe. What what? What is your your mission now? How does this nft thing fit into your overall goal into your new business strategy? Well, look. We, i believe, we've always been the lifestyle brand uh.

This company was in casinos, it was in nightclubs, the first product the company ever came out with was a pair of cufflinks. Today, consumers spend over three billion dollars buying our products in over 180 countries, and so nfts represent a really interesting opportunity for us to create a long-lasting new revenue stream, not only monetizing the initial sale but monetizing every subsequent sale. Thereafter. And when you look at the war halls and the other valuable pieces that we have that, historically, maybe only a few people could afford through nfts and through tokenization.

We can create a much larger universe to collect these with a much larger revenue stream. Long term participating in every subsequent transaction. Nfts are digital products which are sold and verified, usually on the ethereum blockchain. The idea is that, if you own the rights to the nft, this can be verified such that you can claim to be the sole owner of the piece of artwork or whatever is attached to the nft.

They plan to make a new revenue stream by selling their art catalog to the public in the form of nfts. According to coinranking.com, the total trading volume of all nft tokens was 72 million dollars. In the month of august, once playboy starts selling its nfts, it's possible that they could expand the market. How much demand there will be for their nfts is difficult to predict.

It could be a huge revenue generating opportunity for them, but it could also be a massive flop, we'll just have to wait and see once they start trading, regardless of how the nfts do. Playboy is still an iconic brand, and consumers across the globe spend billions of dollars on playboy branded products every year, even though the magazine has been discontinued, hugh hefner's legacy, as america's greatest playboy will be with us for decades. Alright guys that wraps it up for this video, what do you think about playboy's new nft strategy? Is it just a gimmick, or does it have a real chance of success? Let us know in the comments section below, as always. Thank you so much for watching and we'll see in the next one wall, street millennial, signing.

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