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Habbo’s future is bleak as child sex scandal explodes

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Things are looking bad for Habbo, the Finnish virtual world for teens, as explosive revelations about the site continue to ripple through the industry.

Earlier this week a report by the U.K’s Channel 4 News alleged that Habbo — a cute, blocky isometric environment which lets young users chat to each other — had become a haven for pedophiles, pornographic chat and inappropriate content. It also accused the site of knowing about the sort of activity that was taking place but failing to do anything to stop it: an image totally at odds with the site’s family-friendly style.

That led to venture capital Balderton, which had been an investor in Habbo’s parent company Sulake since 2005, to return its shares in the company and shut the door on the business. And now the company’s largest shareholder, 3i, has followed suit.

The Daily Telegraph reports that 3i will be cutting the cord:

3i, which has a 16 per cent stake in Habbo, said the revelations were “challenging” and announced it would be resigning from the site’s Finnish parent company Sulake.

In a statement, 3i said: “3i has actively supported the Sulake board in determining the right course of action in these very challenging circumstances.

“Following a board meeting today, we have resigned our board position and will cease to be a shareholder in the company.”

That boils down to nearly 30 percent of shares being ditched by investors, although it’s not entirely clear whether 3i and Balderton had effectively given up on the investment already, since Habbo has been struggling to make money for some time. Given that 3i gave up on venture capital entirely in 2010, the investment is unlikely to have had many defenders inside the company.

It seems that the decision by Sulake CEO Paul LaFontaine to mute all conversations across the site — effectively turning off all chat and putting the world on life support — was not enough.

No doubt 3i’s decision was also influence by the fact that a troika of British retailers have also taken a stance against Habbo, with chains Tesco, WH Smith and Game all deciding to pull the company’s gift cards from the shelves. Although it may not entirely kill off the company’s user base, it’s starting to look like it could have dealt a crippling blow to the business.

3 Responses to “Habbo’s future is bleak as child sex scandal explodes”

  1. Wow, you guys are acting like this is some sort of child brothel?
    what happens when kids become teens? most get curious about sex. seriously, how many pedophiles do you think were on habbo? I’ve been playing for 8 years and can tell you, the sexual acts are made by young, curious, immature kids.
    The only thing habbo has failed at is properly moderating chats. But child sex scandal is too harsh. you act as if Sulake mandated Habbos to participate in some sort of child sex slave trade for in game currency.
    What “horrific” sights you see is due to the children in the first place. Sure, Sulake shouldn’t have cut moderator funding, but it’s not easy controlling these kind of things.
    you close one “beds” room and another one crops up with the same activity. It happens in all chat based sites like habbo.
    I am glad habbo will be changing to limit the sexual content, but I think the Investors dumping the stocks is just too rediculous for what was really going on. they must had been wanting a way out for a while and decided this was a good excuse.

  2. bananaboats

    You people act like this is new… how the heck are a hand full of people supposed to monitor +3000 people in 5minutes? Instead of sniffing out something obvious like um I don’t know… it’s the internet! Since we are deciding to write a story about this, let’s give some info on these porn sites you said 8 years holds were getting on! If you people think it was tough snuffing out Habbo, you’re in for a showdown when you try to take down these peoples “retros” lesson#Write NEWS not this obvious crap even a dummy already knew about….

  3. Facebook, Twitter, youtube and many more sites are in the extremely same situation, this isnt a new thing. The dangers are there, its the users of habbo’s choice to enter the rooms and put themselves in the position of being in danger of pedophiles. Channel 4 make it sound like nothing like this has ever happened before. Habbo have always been banning suspisous players, and you cant always expect them to put on top of cases like this, there are other issues to deal with. When entering the internet you need to make yourself aware of what you are engaging with.