Adult Licensing: The Cream Rises to the Top

The growth of online and digital media over the past five to 10 years has lead to a proliferation of competition in the adult category. This shift has lead consumers away from tangible products such as magazines and DVDs toward digital options. The thing is, the brands that established themselves before the digital age have a depth in the marketplace and in consumers’ minds that is virtually unattainable to the upstarts in the category.

“There are a couple of core brands in adult that everybody knows,” says Robert Interlandi, marketing and licensing director at Arrow Productions, which owns the rights to a stable of classic adult films including Deep Throat and Debbie Does Dallas. “Everything else is the same muck.”

Sure, there have been a few companies to emerge from this muck, but the majority of these companies act as noise in the crowded adult content and adult licensed products industries.

“There are something like 47,000 adult toys on the market now and a couple hundred companies that produce adult content,” says Amanda Byrd, director of licensing at Penthouse. “It has forced a lot of adult companies, which had been making money hand over fist, to reevaluate their business models. They are so much more mainstream in their approach nowadays.”

For instance, Penthouse has a large online presence including a range of websites as well as social networking opportunities. At this point, Playboy, which didn’t return requests for an interview, is a brand management company. All of the magazine’s operations beside editorial have been outsourced. In addition, Playboy Enterprises has outsourced its licensing in Asia to IMG Licensing Worldwide. (It does seem that there are growth opportunities for adult licensing internationally; Penthouse has been having a successful 2010 licensing internationally.)

The licensing segment of Playboy Enterprises has remained highly profitable, posting 35 percent growth in the second quarter of 2010. While Playboy has experienced steady growth of its licensing program, it has faced a lot of competition.

“Licensing within the adult industry specifically saw a short but very successful increase in growth of many different kinds of consumer products,” says Jason Haughey, vice-president of Hustler Apparel and head of creative design, “but we feel that perhaps there was an oversaturation of product too early in the game for some brands.”

The companies that have emerged successfully from that period of oversaturation are the classic brands like Playboy, Penthouse, and Hustler, as well as the classic Arrow titles. While these companies have all had to rethink how they offer their content, the strength of the brands and the pull of nostalgia have offered them the opportunity for success in the licensing world.

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Arrow Productions

The Deep Throat Sex Scandal, a play by David Bertolino, debuted on September 17 in New York City’s 45 Bleecker Theater.