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The new year brings mixed feelings for many, but one company that will definitely be glad to see the back of 2012 is Sulake, the Finnish owner of youth-centered virtual world Habbo Hotel.
After a year in which the site was embroiled in a huge child protection scandal, lost many of its users and laid off staff, it chose the turn of the calendar as its moment to announce that CEO Paul LaFontaine was stepping down.
LaFontaine had only been in the job for a year or so, but in a blog post, LaFontaine bade a kind farewell to the community, referring obliquely to the abuse scandal and outlining the site’s biggest problem: low engagement.
The voice of the community is the strength of the community. Proof of this was clear in the summer. The community weathered a tremendous storm together, and Habbos stood strong. The way you reacted with one strong voice was inspiring. You will be left in good hands. Our new Community Team will lead Staff in the Hotel to serve you. Engagement will increase, and the spirit of Old Habbo will rise again.
But his message hardly reflects the extent of the scandal — which led investors to drop the company — or the depth of the challenge facing the site.
Around half of Habbo’s active user base appears to have departed in the last year, causing a dramatic reaction inside the business. In the fall, Habbo decided to reposition itself as a platform for games, laying off 60 staff in the process. Changes were long overdue, but in the wake of the scandal they felt like panic. However, at least under LaFontaine it had some strategic experience in the field — he had come to Habbo from running ops and distribution at Playdom, the online game developer bought by Disney (s DIS) for $763 million in 2010.
LaFontaine’s post is being taken, for the time being, by Markku Ignatius (he’s the one on the right) — a long-time employee who was previously the company’s head of legal affairs and corporate communications. He will have had a busy 12 months, no doubt, but the jury is out on whether his experience will help Habbo navigate its transition to the tricky world of games.
But turning to Ignatius does not mean that the site’s owners are simply turning to old Habbo hands for guidance. He’s only acting CEO, and if it were simply that Sulake wanted to turn the clock back it would not have also lost CTO Markus Halttunen, an eight-year veteran, also appears to have departed, along with other staff who go back more than a decade. These changes are perhaps not a surprise, as the company was cutting a huge percentage of jobs, but it does show that the axe is falling on new staff and old.
The thing is, a shakeup may be the only way to try and save this situation — because all of Habbo’s problems are of its own making. Its woeful moderation allowed sexual predators to roam free around a site intended for kids and teens, and the product failed to change as the online world altered radically over the past few years. It may look at 2012 as its annus horribilis, but right now the question must be whether 2013 can really be any better.