Hits & Misses

GlaxoSmithKline learns that honesty is the best marketing policy, Netflix's plans suffer a harrowing plot twist, Barbie starts beating the Bratz at their own game, and a site devoted to movie nudity gets some profitable... exposure.

By David Jacobson, Business 2.0 Magazine

(Business 2.0 Magazine) -- Despite the obesity epidemic, U.S. sales of Roche's weight-loss aid Xenical have slimmed by 30 percent since 2002, in part because the drug - which blocks the absorption of fats from rich foods - counts among its side effects "an inability to control bowel movements." But after licensing rights from Roche to sell a lower-dosage, over-the-counter variant, GlaxoSmithKline has gotten fat by marketing its version, Alli, with brutal honesty, flatly stating that taking it without dietary changes could lead to "treatment effects" that "might help you think twice about eating questionable fat."

Such candor has led to more than 2 billion media impressions for the drug, including a bit on Saturday Night Live. But poopy-pants jokes have done nothing to sully sales, which hit $150 million within five weeks of Alli's launch, helping to fuel record quarterly growth of 18 percent in Glaxo's consumer health-care business.

Plot twist

It's long been assumed that the biggest threat to Netflix would be advancements such as high-definition downloads and video-on-demand. But in July, when the company reported its first-ever subscriber decline and lowered its 2007 profit projections, the culprit was not a high-tech rival but the low-tech company it originally set out to supplant: Blockbuster. Late last year the brick-and-mortar giant launched a new program called Total Access that allows online renters to exchange their DVDs at Blockbuster stores rather than waiting for new videos to arrive by mail.

As a result, Blockbuster has signed up three times more new customers than Netflix this year. Netflix countered with three price cuts since January and an increased outlay for phone-based customer service, moves that cut into its margins and drove its stock to a two-year low. So why aren't we billing this as a "hit" for Blockbuster? Costs associated with implementing its new strategy led to losses of $82 million for the first half of '07.

Barbie 2.0

Though Mattel made headlines for its recall of millions of Chinese toys, not all the recent news has been bad. Lost in the hubbub was word that the company's most important global franchise, Barbie, has reversed years of stagnation and posted its fourth consecutive quarter of sales growth. Ironically, key to the 48-year-old icon's turnaround has been beating its arch rival - MGA Entertainment's sassier Bratz line - to the punch in tapping the latest youth marketing trends.

Mattel launched its virtual world, BarbieGirls.com, three months earlier than a similar Bratz site and claimed about 4 million registered users by the time MGA's version was out of the gate. And in August, Mattel rolled out a $60 Barbie Girls device that's simultaneously a customizable mini-doll, an MP3 player, and a USB key that unlocks additional sections of the site. The gadget should expand Barbie's reach into electronics stores and, if just half of the site's users shell out for it, could bring in another $100 million in revenue by the end of the year.

Bare market

In the hit summer comedy Knocked Up, the film's slacker protagonist believes his road to riches lies in building a website to review nude scenes in movies - until he learns that such a site, MrSkin.com, already exists. And in fact, it's cavorting around quite nicely: thanks in part to the shout-out, visitors to the site's homepage doubled in June and July over the prior two months. Last year the eight-year-old site booked $5.3 million in revenue, mostly from $30-a-month subscriptions to its exhaustively "skindexed" collection of 175,000 still frames and video clips.

Far from suffering YouTube-style copyright hassles, Mr. Skin gets advance DVD copies for its prurient perusal from more than 75 studios and is even paid by some to highlight their films' nude scenes. Next, founder and CEO Jim McBride hopes to cash in on the Knocked Up exposure through deals with more mainstream advertisers and increased sales of his just-released book, Mr. Skin's Skintastic Video Guide.  Top of page

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