Hard times? Penthouse bets an IPO that companionship will pay in 2009
The company, which had been well known for explicit adult images, has shifted to softer photo-spreads, which have attracted a wider readership. On top of this the publishing giant has snapped up several dating and adult hookup sites, further expanding its reach and income. The company is so confident in its market niche that it is scheduled to go public in 2009.
How is it succeeding? Well it seems that economic woes are sending more people in search of companionship; the FriendFinder Network has more than 270 million members across a wide demographic. The conglomerate's reach includes AdultFriendfinder.com, a site designed exclusively to help adults find adults for "adult activities" to the less risqué Bigchurch.com, which helps Christian singles find others of like mind, presumably for other "adult activities." Like Scrabble, maybe.
Just having members isn't enough to go public, especially in a faltering economy; but when a company can boast an average monthly revenue of $19 per subscriber as well as a large portfolio of advertisers, suddenly that company becomes a sought-after investment opportunity.Still, lots of sexy numbers don't promise eternal good times. Just as the porn industry became a lagging indicator of the economy's well being back in July, companionship websites could fall victim to the same market turmoil. After all the health of the company depends on two things; companies with advertising budgets and individuals willing to pay for companionship.
As more and more companies tighten their belts, advertising dollars may dry up, which would put a dent in the profitability of Penthouse. Additionally, the pay-for-play model of companionship-seeking could run into trouble. At some point the economic woes which drove people to these networks looking for companionship will become a bigger problem as they face economic pressures in more important areas of life. Sure sex is important, but try doing without food or shelter for a few weeks.