Convincing people to pay for nothing, or rather for things with zero marginal cost to produce, is a great business model—in theory. In practice, there are so few examples to point to, and most of them are overseas, such as Helsinki-based teen virtual world Habbo. The virtual world’s parent company, Sulake, today reported some selective financial and user data for Habbo. In 2008, Habbo’s revenues rose 20 percent to $74 million (50 million Euros), and posted positive operating cash flow (EBITDA) of $7 million (4.8 million Euros). It was even slightly profitable on a net income basis as well, however the company chose not to disclose that exact amount.
Perhaps the bulk of revenues are being plowed back into global expansion or to pay the salaries of Habbo’s 300 employees (yes, 300). But its sub-10% margins so far are underwhelming. And Habbo is supposed to be one of the shining examples of a real business based on a virtual economy. It also makes money from advertising, but the vast majority of its revenues comes from in-world gifting and virtual vanity items. → Read More
EA-Land, the service previously known as The Sims Online will shut August 1, despite a much hyped revamp announced late February. The Sims Online was generally regarded to be a failure for EA, with the company unable to turn the success of The Sims franchise into an online hit. The service wasn’t helped by a complete lack of customizable features (outside of the usual Sims customization tools) and EA charged for access. The new (but now never to be launched) EA-Land was to be EA’s second shot of success, and promised Second Life style customization and land ownership, with a free client and free to use service. EA didn’t provide a full explanation for the shutdown, only saying that “The lifetime of the game has drawn to an end, and now we will be focusing on new ideas and other innovative concepts in the games arena.” Paying users of the Sims Online are being offered a $15 gift voucher and three months premium access to Pogo. The Sims Online/ EA-Land joins the TechCrunch Deadpool. → Read More
EA is relaunching The Sims Online as a free service with a new name and new features, including UGC, commerce and land ownership. EA-Land is the new, free Sims Online (TSO). The 12 different cities from TSO are being moved to EA-Land and the game area is being expanded to be “100 times bigger than the previous size of any city.” Existing TSO users will be able to purchase land in EA-Land before the new (reincarnated) world is open to the public with paying TSO users becoming “EA-Land subscribers” in a similar fashion to the way Linden Lab charges for land in Second Life. Users of EA-Land will have the ability to upload custom content and (more importantly) buy these customizations from other players. Sounding a lot like Second Life? It gets better: We heard from the community that the economy was broken in TSO. That was true, too many users were billionaires, and the goal of the game was mostly about extracting money from Maxis. I can now say with satisfaction that we have fixed the economy on EA-Land. This took many features, from establishing a real estate market, where users can easily buy or sell lots to one another, and a dynamic object pricing market where the prices of objects purchased from maxis is based on supply and demand, enabling stores and entrepreneurs to earn a living. We also enabled users to buy simoleans directly from Maxis. While there is no need for users to do so in the game (we give subscribers simoleans every week), it can help new users build their dream house faster with a simple paypal transaction secured by us. There is one significant difference though to Second Life: EA-Land won’t become the wild west as EA will be “approving all of the content [so] this user content is safe to be viewed by everyone.” Second Life fans will point out that TSO/ EA-Land has a lot of difference to Second Life in terms of capabilities, and that is true. And yet really basic 2D service such as Club Penguin and Habbo Hotel have millions of users compared to Second Life’s 100-200,000 regular users over a 60 day period. As much as I hate the name, free is a great selling point and EA-Land has the potential of catering to users who want something more from their online words than the basic services, without → Read More
Habbo Hotel, a Helsinki, Finland virtual world/social network startup, announced a 6 million Euro round of financing today (parent company is Sulake) from Movida Group (a joint venture by SoftBank BB Corp. and Asian Groove). Previous investors include Taivas Group, 3i Group plc, Elisa Group and Benchmark Capital. This most recent round was a “substantial valuation increase” from the previous round, according to an insider. The site features rudimentary graphics, and appeals to a very young demographic. The basic idea is a user registers and is given a “room” in the hotel. They can purchase decorations for the room (chairs, etc.) for very small fees in the range of $0.20 per item. Other users visit them in their rooms and chat. All of these small transaction fees add up – Habbo Hotel had $30 million in revenue last year. 53 million Habbo characters have been created and close to 7 million unique users worldwide visit Habbo each month (source: Nielsen Netratings, June 2006). The service is available in 18 countries. These revenue numbers are nothing compared to what the huge MMOG’s like World of Warcraft are doing. But they aren’t trivial, either. As they evolve, becoming faster, more reactive and more interesting, they will attract a larger audience. Look for Hive7 to do interesting things in this space, too. More on Habbo Hotel here from MobileCrunch. → Read More
