Sulake, the Finnish creator of the Habbo, has announced it is starting a cooperation procedure – a Finnish legal procedure that must be followed after a large round of layoffs. Sulake currently has around 90 employees, and the potential layoffs will affect a “maximum of 60 people.” Negotiations with employees will begin November 5th.
“The 12 language versions of Habbo Hotel will continue running as usual, but there will be considerable changes in the business operations” Sulake CEO Paul LaFontaine states.
“The competition in the market is fierce, and to keep the Habbo Hotel service running, it is necessary for us to make savings. Habbo Hotel returns to its roots and we will continue to entertain the millions of monthly users visiting the service. Sulake will also carry on developing the recently launched Habbo gaming platform, as the platform allows us to offer the Habbo users new, high quality content.”
Sulake has had a rough year. This summer the company received extremely bad press on Channel 4 for the company’s failure to police their platform. Habbo is targeted at pre-teens and teenagers, but pornographic and violent messages were apparently rampant, leading to some news sites calling it a “paedophile haven.”
Before the piece on Habbo Hotel aired, Balderton Capital exited their 13% investment in the business at zero value. Later that June, 3i, the largest investor in Sulake, also exited their 16% share. Sulkake has raised over $35 million to date. The main shareholders in Sulake include Taivas Group, Elisa Group and the company’s founders Sampo Karjalainen and Aapo Kyrölä.
But Habbo has seen some sort of rebirth in recent months at the company level with their new API, allowing third party developers to create games for the platform. Their goal is to leverage their existing userbase to become almost like a mixture of Steam and Facebook’s gaming platforms, complete with in-game purchases, achievements, and social features. Sulake would then take 20% share of the games’ profits, beating the industry’s average 70/30 split with developers.
Edit: Read our follow up interview with Sulake CEO Paul LaFontaine.