Friday, October 9, 2009

Card Fraud Up 40% in Finland

Can't blame it all on the Estonians ...
Interestingly, PG finds that these days the Estonians are more Finnish than the Finns being a)often more honest and trust-worthy, b) often more hardworking, c) often more reliable, d) often more sober, and e) often blonder ;)

(Woot Carmen!)

The Right Payment Method Mix

PG gets asked this question a lot: "What payment methods do I need?" So Dear Readers, be advised any and every successful payment network requires at least 3 payment methods from the following categories;

1. Online - e.g. credit cards;

2. Offline - e.g. prepaid cards; and

3. Telco - e.g. premium sms.

The Facebook Payment Guy - Part Deux

So what has Gareth Davis (or is it Davies?) been up to tapping into this massive payment opportunity since PG last outed him and since and since
and since
Not a whole lot that PG can tell. Anyone know anything?

Wither Twitter Pay?

We all know, well at least those 5% of the population able to take care of themselves as Governator opines, Twitter makes you stupid Not only that, but PG has noticed the massive popularity of Twitter has dramatically reduced the number, scope and amount of blogs, blog posts and all things blogging. This is a good thing. Most of those who used to blog about all and any thing mundane, trivial or specifically captivating to their own lives are now Twittering.
Famous Twits like Peter and Jordon, or Ashton and Demi now no longer have to blog from their PC with their agents - they can now Twit away anywhere and about anything via their mobile (this is Bruce's boat by the way ... believe it - he always seems to be straining himself with some macho man physical exertions while Ashton seems chill contented and totally relaxed, wonder why??? ;) Truly HOLLYWEIRD!).

PG for one would love it if Oprah herself and her Cult would move exclusively from TV to Twitter. Only true visionary experts should blog, like PG. The rest should Twitter. So what does Twitter have to do with payments? That is the point of this post. Twitter could have the worlds largest mobile commerce infrastructure within days All it needs is X.Y.Z. Farber is onto something here But Twitter itself does not seem to realize the enormous potential it has to become the largest micropayment network on EARTH. All it needs are 3 things;

1. A virtual currency (let's call them TWIT's shall we?)

2. A virtual currency exchange system (where the users can trade, cash in, exchange or convert) Twitter's virtual currency; and

3. A mobile payment application to do this via secure text sms.

VOILA! Now why has some smart Twitter/Hi5/MySpace/Facebook/Payment application provider not done this yet? Why has OBOPAY not partnered with Twitter ? Or why has Twitter not copied OBOPAY?

PG: PS TWITTERPAY.COM is already take by a shrewd Dutch guy who may or may not have Twitter Micropayment Platform plans or who may or may not be just a good domain hunter and squatter
Johannes Verhulstraat 60
Amsterdam, NH 1053HJ

Registrar: 000DOM
Created on: 02-JUL-08
Expires on: 02-JUL-10
Last Updated on: 02-JUL-08

Thursday, October 8, 2009

Why Sulake Loses Money

Since Sulake, publishers of HABBO and developers of IRC Galleria announced its modest profit of approx 1 million euro followed by its dramatic layoffs of 20% of its workforce, many pundits have speculated where all the cash and VC funds are going
So what the hell is up with this seemingly booming virtual world success story?

Well, to cut to the chase, Sulake, with HABBO alone or its brand extensions (mobile, merchandise, TV, animation etc...) and new products (IRC Galleria) has never made money in its history. This is old news to PG So it should come as no surprise to my Dear Readers Sulake has always, ALWAYS lost money.

Here is why:

1. Fat Operations - HABBO launches most of its hotels in foreign countries the old fashioned way meaning it actually rents offices and hires expensive teams of people to run the local "Hotel". This results in large and excessive operational costs which could be avoided through regional or HQ operational consolidation;

2. Expensive Marketing - Sulake normally partners with a local media concern in international markets (e.g.; Sulake and TTG Group JV in The Netherlands and failed partnerships in Russia, Japan and South Korea for example). This means the "local partner" takes about 50% of the revenue generated from the local Habbo Hotel. Some of these deals were so lopsided they actually share revenue (not profits / EBITA based) without deducting expenses so the local partner turns a profit while Sulake Group eats a loss;

3. Failed Advertising - Sulake has for many many years believed in the money making power of online advertising but through inept Advertising deals and "partnerships", despite innovative campaigns (there are many has not realized the advertising power of such a large community of Teens, Tweens and young kiddies world wide;

4. Freemium HABBO is a Loser - Despite what its long-term CEO says, HABBO's freemium model bites and loses money year after year Sulake has never been able to boost its member buying % through a compelling subscription based membership / premium membership plan ala Club Penguin etc... They even know this The % of HABBOs that actually spend money in HABBO Hotel is less than 3% globally according to inside sources. It needs a subscription model asap;

5. Payment Commissions - Sulake with HABBO and IRC suffers crushing payment commissions. Sulake has to eat huge losses from its over reliance on micro-billing / telco (i.e. premium SMS) billing fees. Despite generating 75 million+ micro payment transactions, its average profit margin is less than 60% Sulake's inability to move to card, prepaid and other is FATAL (think interactive toys ala Webkinz)

6. Mediocre Management - Sulake has an insular "veteran team" of homogeneous managers (read "all Finns") running the business which has grown and expanded But after a decade of losing money and delayed IPO's they need new blood. HABBO was and still is a Golden Goose. But it needs new leadership and better faster execution of an adaptive strategy if it will ever realize its potential. Why fire all these employees without a management change?