Sulake To Lay Off 20% Of Helsinki Employees

Sulake Corporation logoSulake 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.

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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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Habbo Hotel owners to lay off 40 staff – so where’s €50m headed now?, October 06, 2009

[...] online. However some sites are asking where the company’s revenue is actually ending up. According to Arctic Startup Sulake managed to create a one million Euro profit with their €50 million revenue last year. Some [...]

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Jani Penttinen October 07, 2009

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.

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Habbo Owner Sulake to Lay Off 40 Employees, October 08, 2009

[...] Last year, the company made 50.1 million Euros in revenue in 2008, with profits of only 1 million Euros, according to Arctic Startup. That would have been revenue of $70 million, going by the exchange rate at the end of last year, with profits of around $1.4 million. Those are not great margins. So, the Finnish company plans to lay off 40 employees out of its 300 total, the publication reports. [...]

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Bizzmodels.com » Blog Archive » Habbo Hotel Parent Company Sulake Lays Off 40 Staff, October 18, 2009

[...] lay off 40 staff, according to tweets from affected employees and reports in the Finnish media (via Arctic Startup).  Sulake will shed about 20 percent of its global staff, with whom redundancy negotiations [...]

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Tari Akpodiete, October 27, 2009

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.