Habbo plans post-scandal reinvention, but that means cutting jobs

Sulake, the company behind the scandal-hit Habbo Hotel, is to lay off up to two-thirds of its workforce in Finland as it tries to reinvent itself as a gaming and entertainment platform.

Back in June, a TV investigation in the UK revealed how the Habbo Hotel virtual world was being used by sexual predators to groom kids for abuse. Investors fled and retailers wasted no time in pulling Habbo Hotel gift cards from their shelves. Sulake was in big trouble.

Then, a month ago, the company released the Habbo API, which it said would allow developers to launch their socially-enabled games on what was to become a platform in its own right. The API is still only available to Finnish developers – it will open globally in November – but a blog post on Monday from Sulake CEO Paul LaFontaine showed the platform approach was going to be the only way forward for the firm:

“Habbo is going back to its roots. It has always been a place to meet and enjoy time with friends. We are going to focus specifically on the features and services that makes finding new friends and sharing with old friends enjoyable. This means new features, fresh themed entertainment and a variety of games […] The Sulake organization will be restructured to better serve the community needs.”

Sulake employs around 130 people around the world – 90 of them are based in Finland, and up to 60 of those people are now for the chop. Redundancy consultations have begun, and may take up to six weeks.

According to LaFontaine, the move is necessary in order for Habbo to focus on its new core strengths.

“We have to become more lean and transition the business into what it’s really good at; that is, the friendship features inside Habbo and the moderation features for keeping it safe,” he told me.

Hopeful reinvention

As I recall, it was a lack of effective moderation that led to Habbo Hotel’s downfall in the first place, allowing the service to be used for highly age-inappropriate communications and worse. But anyway, LaFontaine reckons this is the type of core service that Habbo will be able to offer third-party developers who want to target the 13-19-year-old age bracket.

Specifically, Sulake will manage the apps’ social features, virtual currencies and discovery.

“We’re now able to give a really good launch platform for games and other entertainment applications,” he said. “Last week we launched a game – one third of users of the site trialled the game on the weekend. When you can deliver that to a developer, that’s a great partnership. A small developer can launch on Habbo and be live in 12 countries and have global monetization capabilities right out of the box.”

Four games are apparently already running on the platform. As for expansion, LaFontaine said Habbo would not be a platform that’s “flooded with hundreds of games”, but would rather stick with what proves to be successful.

“We’ll bring a game in, giving it great initial traffic and then rotate it in or out based on merit,” he said.