DVD market stagnation is hitting Playboy which is closing down its DVD division to concentrate on producing content for online viewing instead.

The adult entertainment company says it seeks to reduce its cost structure by some $12 million annually, "20 percent more than its previous estimate of $10 million, in light of current economic and media conditions," it said in an filing with the Securities and Exchange Commission. As part of this restructuring, it will eliminate about 80 positions in the company.

"We will continue to deliver more of our content digitally, using our assets across multiple distribution platforms and adding more a la carte offerings," CEO Christie Hefner wrote in a memo to employees. "Given the declines in the DVD market, we will exit that business in phases over a few months to concentrate on selling that content online."

“It is always unsettling when market or industry conditions require recalibrating a business model, especially when people's lives are affected,” Hefner writes. “It is, however, the reality of today's business climate. We will go forward, knowing that as a global, brand-driven content and lifestyle company we have great opportunities.

The company’s goal is to return to “solid profitability” in 2009.

Story filed 20.10.08