Sulake has just announced that will initiate negotiations to lay off up to 20% of its workforce in Helsinki. Sulake is the Finnish company behind the successful teenage web service Habbo Hotel. Just yesterday we wrote that they have managed to create a one million euro profit with their 50 million euro revenue.
I actually talked about this yesterday with some net savy entrepreneurs and we all had only one question in mind. Where does the 50 million euros go to when you’re operating an internet service? A Finnish entrepreneur, of French origin, Ramine Darabiha did a very non-scientific analysis into this in his blog post last March. It may not seem a big thing, but once you break the numbers down – a lot of money is going somewhere.
Sulake employees have also tweeted about the layoffs. Sad to hear things are heading this way, but if there is effciency to be gained it’s somewhat understandable, although layoffs are never a nice thing in the first place.
Update (15.02 EET, 6.10.2009): According to Kauppalehti, the layoffs will account for 40 people. Worldwide, Sulake employes some 300 people so the layoffs are dramatic.
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I have absolutely no idea where Sulake is spending their money, but overall I would guess that marketing is a big portion of it. The user acquisition costs can be quite high, and in a way they should be as high as you can afford at least until you reach a saturation point in the market.
It is probably going to be a lot more than the 40 reported at HQ. Each ‘property’ has moderators.
For example. Habbo.ca has Canadian based paid part-time staff who help to keep the hotel safe. They watch for bad language, lewd behaviour, attempted luring of kids by adults, etc. So do Habbo.com, Habbo.co.uk, etc. Usually the ‘mods’ live in the country in which they work, although there is sometimes cross-over.
Generally there 1 or 2 persons in such a role per 4 hour shift, and on a few busy sites, there are 2 or 3. Many of the habbo sites are open 24 hours, so that’s 6 shifts. Over the past few years, Sulake has been cutting back on mod staff, including making 1 person do the work of 2, or 2 people do the work of 4. I know because I used to work at Habbo.ca so I saw it first hand.
Now, almost all the moderation jobs are being outsourced and will be done from one country, not in North America. Either Singapore or the Philipines. It’s uncertain how foreign language hotel moderation will be handled from such locations.