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INTERVIEW-UPDATE 1-Habbo Hotel owner eyes mobile to boost growth

Published 08/20/2009, 05:34 AM
Updated 08/20/2009, 05:39 AM
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* To launch new mobile virtual world for iPhone in Sept

* New chairman says looking for next story beyond Habbo

* CEO says economy has hurt growth, still profitable

* CEO says long way to IPO

(Recasts, adds chairman comments, details)

By Tarmo Virki, European technology correspondent

HELSINKI, Aug 20 (Reuters) - Finnish Internet company Sulake, known for its teen networking site Habbo Hotel, is looking for a growth boost from the September launch of a new mobile virtual world, its chairman said on Thursday.

Sulake's virtual world Habbo Hotel (http://www.habbo.com/) has around 13 million monthly visitors and about 10 percent pay for services, but growth has suffered from the economic crisis.

Small payments via credit cards and mobile phones for items like virtual room furniture mean the revenue stream at Sulake, founded in 2000, has still continued to grow, but the firm has been almost purely focusing on Habbo so far.

To find new businesses Sulake named Mika Salmi, former global digital media president at Viacom Inc's MTV Networks, as its new chairman last month.

"Habbo is doing well, my task is to find the next story, to help Sulake to find the next step in the global scene," Salmi told Reuters in an interview. The next step could be Bobba (http://www.bobba.com/), the new mobile virtual world the company opened for public testing earlier this year, but this cannot be the only bet, Salmi said.

Sulake plans to launch Bobba next month when it aims to roll out a version for Apple's iPhone and iPod Touch. The public testing version can be accessed from phones running Nokia's Symbian operating system.

Sulake said to its knowledge Bobba is going to be the first virtual world which can be accessed directly from the iPhone or iPod Touch, either via a wireless connection or an operator's network.

The new world has some visual similarity to Habbo, which has graphics like videogames from the 1980s, but is targeted at visitors 16 years and older.

"Bobba is still very much in the early development phase ... Our aim is to build a virtual world, which is virtually platform free -- it can be accessed practically anywhere, with all kinds of devices," Timo Soininen, chief executive of Sulake said.

Sulake has for some three years run a Habbo-like wireless research and development project called Mini Friday (http://minifriday.com), which has been a successful mobile virtual world with total users topping one million.

CRISIS HURTS TEENS SPENDING

Sulake said the economic crisis has cut disposable income of many of its teenage customers but the slump in advertising has hurt the firm less than many of its rivals because advertising has generated less than 20 percent of its total income.

"We have continued to grow this year and are profitable, but growth has not been as fast as we would have hoped," Soininen said.

Sulake's 2008 sales were up 19 percent to 50.1 million euros ($70.8 million), with earnings before interest, tax, depreciation and amortisation reaching 4.8 million compared with a slight loss in 2007.

The company has been looking at going public before the financial crisis, but Soininen now said that would take time.

"It's at the end of the road, but we have a long way to go. We have to build a long, sustainable track record," he said.

Before the financial crisis hit stocks and valuations, Silicon Alley Insider last year valued Sulake at $1.26 billion, just above career networking site LinkedIn.

Sulake's owners include Finnish advertising agency Taivas, which is partly owned by Britain's WPP, venture capitalists, telecom operator Elisa and Japan's Movida Group. (Editing by Gilbert Kreijger) ($1=.7074 Euro)

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