Today, the publisher of adult magazine Penthouse intends to buy a daily deals site. What do they have up their sleeve?
FriendFinder Networks will pay $65 million in stocks and warrants for JigoCity in an effort to expand into the social networking arena that is currently booming in China and throughout east Asia. While all of that makes sense (somewhat) why would they not just build their own, expand on their current properties, or buy something more in line with their core product?
JigoCity is a daily deals site similar to Groupon and LivingSocial. Its focus is the lifestyle space and is popular in Australia, Brazil, China, Hong Kong, Singapore, and Taiwan. The company is growing, but it does not appear to be a fit for the company that runs several adult social networks. Why would they have an interest?
The answer is in the industry.
Online porn, once considered the fastest buck on the internet, has taken a hit over recent years due to scandals, increased competition driving down prices, and availability of free porn. Since going public in May, FriendFinder shares have fallen 65%. Is the online porn industry dying? Is there a need to branch out into other revenue-generating arenas?
We’ll know more once the deal is complete and changes are either announced or made, but it is likely that other than adding adult-oriented products to the daily deals mix, that nothing major will change. It’s very possible that the company can’t make money the old-fashioned way, so they have to embrace something else. Why not social media?