Habbo bets on open platform, iPhone app for growth

HELSINKI Fri May 25, 2012 2:03pm IST

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HELSINKI (Reuters) - Finnish internet company Sulake, the operator of Habbo Hotel teen networking sites, hopes to reignite its stalled growth by launching a long-awaited iPhone app next month and inviting external developers to its site.

Habbo Hotel was one of the front-runners of the social networking boom, and its use of avatars instead of profile pictures gained a strong teenage following after its launch ten years ago.

But its strict monitoring policy, while reassuring parents, has turned off many teenagers who prefer the freedom of sites like Facebook (FB.O).

Its layout, reminiscent of classic videogames, hasn't helped growth either, and the number of monthly active users has been unchanged at around 8 million for the last five years.

U.S. research firm Business Insider last year valued the company at $300 million, compared with the $1.25 billion valuation it gave the firm three years earlier.

Sulake Chief Executive Paul LaFontaine said an iPhone app was due within a month, and a version for Google's (GOOG.O) Android would follow.

LaFontaine, who joined the company last year, also said Habbo's first game d eveloped by an external gaming firm was due to be launched by British studio Remode in July.

Partnerships with gaming studios like Remode were the main focus of a new strategy as they helped to create new, attractive content for the service for little additional cost for Habbo, he said in an interview.

"Through this we can offer more content to a demographic that loves content," he said.

Sulake generates revenues from small payments via credit cards and mobile phone text messages for items such as virtual furniture, but the core service is free.

LaFontaine said lower costs would enable the company to open new local services in Turkey, Poland and Indonesia in coming months.

Sulake's owners include Finnish advertising agency Taivas, which is partly owned by Britain's WPP (WPP.L), as well as venture capitalists, telecom operator Elisa (ELI1V.HE) and Japan's Movida Group.

Sulake was looking at going public before the financial crisis, but has recently said it would take years to reach that goal.

Before joining Sulake LaFontaine was responsible for publishing Disney's (DIS.N) Playdom games on global social networks and has held senior manager roles at eSolar and Ticketmaster.

(Editing by Mark Potter)

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