Timo Soininen is the CEO of
, the Finnish digital media group that owns virtual world Habbo Hotel, as well as other online games and social networks.
We asked him about the risks and rewards for brands targeting online communities, as well as the company’s plans for the future.
Where has Habbo got to in terms of active users?
We’ve reached around 6.5m unique monthly users on all the Habbo sites. Around 80m player accounts have been created since the beginning, which was seven years ago now but feels like an eternity.
The biggest markets for us are North America, the UK, France, Spain and Latin America. We have a presence in 33 markets, where we have payment systems and localised sites, and the service is available in 11 languages.
What’s behind that ratio between unique users and accounts? Is that level of churn typical in virtual worlds, and social networks for that matter?
I think a lot of the virtual worlds differ from social networking services because in virtual worlds, people typically have characters.
We are an anonymous service. We don’t allow people to share their real-life data at all – for security reasons, obviously. The dynamics are different. Some users create multiple characters – a single user could easily have created two or three different characters.
Presumably a lot of people also experiment with the service and decide they don’t want to continue.
Yes. What also often happens is you hear about the service, you go on it to check it out and create a character, but decide later on that you want to start again once you have the hang of it. I’m sure that happens with social networks as well, but I’m not an expert on that.
You’ve had a lot of success attracting brands to the environment. What are the main things they need to watch out for?
The starting point is that we have to think about the users – it is their place. Advertisers have to come in in a way that is respectful.
Just flashing banners at them will not work – you have to go in deep and understand the dynamics of the service. The key purpose is to get the brand involved and become a topic inside the community – something people talk about and share.
One of the main problems in Second Life is what I call the iceberg model. The real bit is below the surface. In the visible bit, ‘Brand X’ will create a virtual venue, but you can only fit a certain amount of people into a virtual venue.
What can be very scaleable, and what persuades brands to do repeat activities with us, is when you go deep into the community and become part of the users’ rooms and activities, sponsoring a game or arranging a quest.
They become a topic inside the environment and really add value to the user. That, in a nutshell, is what you need to do.
Can you give a recent example of a successful campaign?
We recently ran a very successful campaign in one market for Unilever’s Rexona brand. We worked very closely with our producers and their brand team to choose elements that really fit in with the brand. It became huge.
We tailored the campaign to the brand and there was a really interesting debate about it between boys and girls. They added some very cool stuff to the environment.
What metrics do you provide to advertisers?
The good thing about these worlds is that everything is measurable – you can track how many unique users you have reached, page views, friend recommendations, game plays and so on.
Unlike Second Life, we also have the magic thing called reach. We have a lot of users that are very responsive to this type of thing, if you do it well.
People are interested in the traditional metrics and how their brands have been affected, and we can deliver standard reports. You can also tweak the campaign as you go, if needed.
What do you think is needed to drive more adoption of payments in virtual worlds?
The important thing is, up until now, buying stuff online has been relatively cumbersome.
We have been using a multitude of payment systems, from premium SMS – which is very popular with teenagers but has very high commission levels from the operators – to e-banking, credit cards and physical scratchcards in kiosks. We have more than 160 payment channels.
What will inevitably happen is that in terms of mobile payments, as the IP world hits the market, we will see more mass adoption and it will become more convenient and secure for people to impulse-buy on the web.
We are also working with big players like Paypal in various markets, although it hasn’t been massively successful with teenagers, at least for us.
It’s a surprisingly underdeveloped area, but we believe that you have to offer users as many payment options as possible in order to maximise revenue. You shouldn’t force people into one form of payment – it limits your business.
What are your thoughts on Facebook’s open source strategy? Are you ultimately looking at offering a similar platform to outside developers?
There is some interesting stuff happening in the virtual world space. Raph Koster is building an open source-based platform for virtual worlds, and I think that’s an interesting approach.
But if you want to have a visually cohesive world, it’s not easy. If you think about computer games like World of Warcraft, people create their own stuff, but there’s a good chance the magic will be destroyed unless the tools are really elaborate and whatever is created can fit in with the environment.
We have been using very simplified pixel graphics, and have never been big fans of creating replicas of the real world as that basically destroys the illusion inside your head.
Our approach, from the beginning, has been to give some props and tools to allow users to express themselves, and they have used them to create mash-ups. There is some pretty exciting stuff.
Third parties – not just users – will be able to create stuff, but it will be a mash-up of using web technologies and client technologies as well.
We are launching game tools that users can create themselves using props and functional items, and eventually even will allow them to create some of the props inside the environment. But you have to have very good quality control and moderation of what goes inside the environment. We’ve always been strict on the moderation angle.
Can you give us an overview of the reasons behind your purchase of [social networking service] IRC-Galleria earlier this year, and when we might see that coming to the UK?
It’s extremely successful and is one of the few social networking sites that earns a big chunk of its revenue from end-users, which gives us synergies and the potential to leverage their operational infrastructure quite easily.
Facebook has been a gigantic success and continues to be, but we believe segmentation will start to happen more and more with social networking sites. There are a hell of a lot of sites out there, but we believe we will come to the market with a different angle from other players.
Can you give us an update on your move into mobile?
We have had a product for Habbo working on mobile for a long time, but we have not yet decided to implement it.
The data pricing from the operators, especially for younger users, has been very expensive. Also, the higher-end devices that you need for a meaningful experience have not yet been available en masse.
That is changing rapidly now. We also have recently launched what I think is one of the few virtual mobile worlds out there, called minifriday.com, and we have around 110,000 registered users in it already.
Check it out. It’s pretty cool. We will probably use the technology for another couple of projects.
Timo will be speaking at the
Virtual Worlds Forum
in London, which is on between October 23 and 26.