Wednesday, September 3, 2008

Sulake Needs A Subscription Model for HABBO (if it wants to make money!)

PaymentGuy loves the philosophy behind discretionary spending caps to limit abuse but he cannot help thinking that this is the main reason why HABBO, despite attracting 100,000,000+ registrations, has not made any money. It is way long over due that Sulake follow Club Penguin and all the rest and offer a monthly subscription. This is a proven profitable business model where parents allow their credit card sto be billed at a reasonable monthly recurring rate of less than $10 - DUHHHHHHHHHHH! Do you get it now? Woooot!

If Sulake does not offer a monthly subscription model and persists with limiting spending on micro-payment end-user revenue it will never make any money (i.e. be profitable) - guaranteed! And relying on advertising to help pad the turnover is a pipe dream. Profitable Kiddie Virtual Worlds like Penguin and WebKinz realized long ago that chasing advertising dollars is not where it is at. Rather, it is monthly recurring end-user revenue in the form of monthly subscriptions or purchases of retail based interactive toy merchandise that makes the business profitable and sustainable.

PaymentGuy is not saying Sulake must ditch the micro-payment per transaction model with HABBO. Rather, Sulake must supplement this proven revenue generating model with the proven profit-generator of offering monthly subscriptions for premium access to the Hotel by employing their vast array of payment menthods throughout its unmatched international payment network.

And pssssst... while your at it Sulake, make HABBO credits / coins / talers cross-Hotel-redeemable and simplify currency and furni pricing for good-ness sakes!

By the way, PaymentGuy would love to see proof that "... 10% (HABBO's), spend between $17 to $18 a month to decorate their virtual cribs and characters." according to HABBO's "President of North America". But of course that is not true otherwise HABBO would be profitable. And how would these HABBO's get to spend $17 - $18 a month with spending limits anyway?

Mr. President HABBO goes on to say 2/3rds of HABBO users are aged 13-16?

WHATEVER! Of course you can get away with saying whatever you want when you are on the management team of a privately held company with no transparency and public accountability. He should clearly spend more time in the office and less time at the beach.

Anyway, here is the article in the LA Times;

The policy to limit spending, which has been in place since Habbo launched in 2001, stems from a desire to protect younger players. About two-thirds of its users are between 13 and 16 years old. Habbo Room "When teenagers get into things, they sometimes spend too much," said Teemu Huuhtanen, president of the North American unit of Sulake, the Helsinki, Finland-based company that runs Habbo. "We didn't want a situation where teens were raiding their parents' credit cards to be able to play."

The vast majority of its users don't spend any money to play on the site, which is free to use. The rest, about 10%, spend between $17 to $18 a month to decorate their virtual cribs and characters. That's ideal," he said in an interview today at the Virtual Worlds Conference at the Los Angeles Convention Center. "We really don't want teenagers to spend more than the price of two movie tickets a month on Habbo." If turning down money seems un-American, it is. Sulake's Scandinavian origins meant it grew up in a market that heavily favors consumers' rights. In October, the company will also reward members for being good virtual citizens. Users will be able to accumulate "activity points" for doing good deeds, such as welcoming new players or helping out newbies find their way around.

NOTE: By the way, PG may as well say at first glance these activity points seem to be a very dumb idea. Especially in light of the above. How do free points for busy-HABBO's make money for Sulake anyway? Weird.


J. said...

maybe, just maybe, payment guy is wrong this time...

PaymentGuy said...

Can't follow the link broken link J. So resend if you want PG to check it out. But loving HABBO as much as he does, PaymentGuy would love it if Sulake finally made HABBO profitable.

PaymentGuy said...

Got the link. But NO, there is absolutely no doubt here. PG is still totally right. Sulake needs both transaction based and subscription based revenue models fo HABBO. It should also use its M&L division to launch interactive toys like Mr. Ganz and Co. are doing with Webkinz. Some free advice - think designer toy high-end collectable HABBO figures( maybe even designed by cool trendy artists like rockstars, movie stars, celebrities etc... .