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That was sudden

A scene from Habbo. Several avatars cluster around a table containing stylised foods, while one person holds a giant sparkling carrotJust last night, UK’s Channel 4 aired an investigative piece about Sulake’s Habbo Hotel (or just “Habbo”), the social virtual environment for kids.

The investigation alleges (among other things) that sexual predators are using the service to groom children for sex, despite Habbo’s couple of hundred live moderators – and it isn’t the first time these sorts of allegations have been made about Habbo, or about a number of other virtual environments.

Another UK channel (that I won’t name) went so far as to fabricate a scandal involving Second Life a few years ago.

What strikes me about the Habbo incident is how sudden it has been.

Now, if you watch a lot of super-late-night television in Australia, it’s hard not to be at least aware of Habbo. Its slightly sexy adverts exhort attractive adults in their 20’s or so to come to Habbo for fun and socialising. The ads were (when I saw them) sandwiched in between the usual dross of phone-sex service ads. I always thought that was a bit odd, since (as far as I know) Habbo’s marketed very differently everywhere else in the world.

Until I actually went to work for AOL (at Second Life Insider, and later at Massively) I had no idea that Habbo was supposed to be for kids. Golly, was I ever surprised!

Anyway, digressions aside, back to the story. In the few hours since Channel 4’s segment went to air, the retailers Tesco, GAME, and WH Smith have all announced that they’re dropping sales of the Habbo game cards, Venture capital firm Balderton has pulled out of Sulake, Sulake’s CEO has attempted damage control with a blog post, and then Sulake has simply switched off the ability for Habbo’s quarter of a billion users to even talk to each-other… until further notice.

Whoa, that was fast. Frighteningly fast. Everything’s gone from business as usual to… well, Habbo seems to be reeling, and about to fall out of the ring.

I’d give Sulake/Habbo two chances in five of folding at this point. That’s how dizzying the pace of this has been. Obviously 225 live moderators isn’t nearly enough. Can Sulake even afford to dig itself out of this hole and sustain a business?

And if not, where do all those people go? And who might the next environment be to fall?

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