Neopets has always been a metaverse, says Dominic Law, CEO of The World of Neopia. If you were born prior to the 2000s, you’ll remember how much Neopets took the internet world by storm. By 2011, Neopets had 35M unique users, amassed 1 trillion page views, and was responsible for compelling an entire generation of children to internet proficiency and adoption. Not only that, but Neopets was free to play (before free to play), UGC (before UGC), web3-esque (before the blockchain), and a product placement paradise containing immersive ads all the way back in 2005. The rise and fall (and hopeful rise again) of Neopets contains a treasure trove of knowledge around community management, social gaming adoption, digital identity, user generated content, and the life cycle of products and businesses. As Neopets approaches its 25 Year Anniversary, join your host, Alexandra Takei, Director at Ruckus Games, as she speaks with Dominic about the parallels between Neopets and Roblox today, the history of multiple management teams over the course 25 years, and what Neopets is doing to rebuild a long lost IP. 

We’d also like to thank Nexus for making this episode possible! Nexus’s creator program in-a-box makes it easy for game devs to build and manage a world-class creator program, driving significant growth in conversion, ARPPU, retention, and LTV. To learn more, go to http://nexus.gg/naavik 

This transcript is machine-generated, and we apologize for any errors.

Alexandra: What's up everyone. And welcome to the Naavik gaming podcast. I'm your host Alex Takei. And this of course is the interview and insight segment. We study history so that we can learn from the past. And when we do, we always find parallels with the then and the now, and we study businesses for the same reason.

What did companies struggle with? How did they succeed? How did they fail? So we can learn and hopefully not repeat the same mistakes. And so today we'll be talking about a franchise that's admittedly a long way away from its peak from the early internet era, Neopets. Almost everyone before in 2005 has heard of it.

A children's virtual pet website launched in 1999 by Adam Powell and Donna Williams that allows you to care for virtual pets in the queer world of Neopia. Neopets was one of the stickiest sites in the early 2000s, competing with Tamagotchi, which many people just called glorified pet feeding. It actually contained a variety of games, worlds, activities, a fascinating economy that some might recognize today as Web3 esque with a currency called Neocash, which actually had real world value.

Web page personalization that some might call UGC and shockingly immersive ads. Something our industry in the console and Roblox space are actively thinking about introducing as if it's something new and revolutionary. Neopets at one point had 35 million unique users and by 2011, Neopets had amassed 1 trillion page views since its creation.

But today we don't hear about Neopets quite so often. So what happened and what does the future look like for the franchise? Can digital pets compete for attention in a modern gaming world or find a sustainable and profitable audience rooted in nostalgia? Today, I'm exciting to walk through a journey of company pivots, multiple acquisitions, product lines, and rebuilding a long lost IP.

So luckily, of course, I do not have to answer all these questions. To help me tell the story today, I'm joined by Dominic Law, who is a The CEO of Neopets, Dominic restructured the Neopets IP itself into an independent entity called the world of Neopia last July, I believe. And since then, Neopets has experienced a big turnaround, a major increase in monthly active users and a significant revenue jump.

So Dominic, it's my pleasure to welcome you to the podcast.

Dominic: Thanks for having me. And hello, everyone. Alex, nice to be here and happy to share more about

Alexandra: Neopets. That's awesome. Yeah. And so actually, this is perfect. I'd love to have you tell us a little bit about your background and how you came to lead the Neopets franchise.

Dominic: Sure. I've always played Neopets when I was a kid and it's a big part of my childhood. But before I get into that, like more recently my professional training has always been in more kind of like the traditional route. When I graduated, I joined a management consulting firm, and then I moved on to become a, an investor at a private equity firm, and then I went on to do my MBA degree, and that's when I started to catch on the startup entrepreneurial bug and started my own company.

Read it for a few years and exited it. And it's at that time, I was like, I was thinking that I want to be an enter, like a serial entrepreneur, but I don't really have an idea in mind. I really want to pursue. So I went back to finish my degree. And then after that, I actually joined this gaming company called NetDragon.

It was a listed mid cap gaming company and listed in Hong Kong. And one of the reasons I joined, because the person that wrote my recommendation letter for my MBA program actually works there and he's a mentor of mine. And. It's very exciting that the mandate I had back then is to help NetDragon restructure the education technology department.

And the interesting part is because under that it's the education gaming department, and one of the IPs and games that they own is actually Neopets, the game that I've played when I was a kid and is a big part of my childhood. So it definitely sparked my interest. And my mandate was to help them restructure the education tech business and help them with a secondary spin off and listing.

As part of that process, I realized that there's still a lot of untapped potential of Neopets. And during that process, I helped looking at the business potential and came up with a business plan for Neopets. And in that process, I spearheaded like a side project for it and get to work with the community and get to work with the team that is actually leading up like Neopets, and that's when I started to get the conviction that maybe there's a lot more that could be done, and I persuaded my bosses and NetDragon to allow some of the team members to work with me to broker a management buyout deal and eventually that happened in July last year, where we Officially spun off Neopets from NetDragon so that we can become an independent entity so that we have a lot more flexibility, we can run a lot faster and we can do a lot of the kind of changes that we've been identifying some low hanging fruits that we can crack and really breathe some new air into this Neopets IP.

So it's very exciting that we've it's a very early on the journey, but we've been achieving a lot of growth. So very excited to be here to share more about it.

Alexandra: Awesome. Yeah. And before I, I've got a bunch of questions in there specifically about the structure and how big Neo world of Neopets is today, but very important question.

What is your favorite Neopet and why?

Dominic: So my favorite has always been a Shoru. It was my first pet. It's like the pet that I cared for the most. And yeah, still my favorite now.

Alexandra: Nice. Yeah, it's always really fun. Cause they're Pokemon, not exactly. So I always like to ask because they're cute.

But it sounds like, so you had this incredible serendipitous journey where you played this game as a kid, and then you happened to find yourself at this middle market gaming company that also had something to do with education games. They happened to own, that exact precise IP that you had played and was beloved by you as a child.

And it's actually really interesting because, a lot of MBAs talk about the search model of, looking for wanting to be an entrepreneur, wanting to run a company, but, not necessarily saying, Hey, it needs to be something brand new, right? I'm super happy to refurbish something that You know, had either had clout before or need some tuning.

And so it's a very cool success story, I think, from the the business side of taking over a company and spinning it off into its own its own entity. And so just to ground us in what does the structure of a Neo, world of Neopets look like right now? How big is your company? In terms of employees, et cetera.

And what is, what are the products that Neopets has that are the live games that they have today?

Dominic: Yeah, sure. So basically the leadership team that took over the Neopets project basically acquired and inherited most of the like asset that Neopets originally own like all of its IP and related games and including the team that's working on it.

So we kept all every team member and then of course we integrated with the new leadership team and some of the outsource team that has been helping us to build some Neopets games. So the structure is basically quite global now. Our headquarters based in Hong Kong. The original Neopets team has always been based more in the greater LA.

And also like across the U. S. And we also have a decently sized team in Vancouver as well. So these are like the three major hubs we have. But then we also been hiring like new team members in markets where Neopets used to have like a decent presence, including UK, Australia, Singapore, Hong Kong.

10 markets for us outside of North America. And in terms of the corporate structure Although we did a management buyout to acquire this asset from Jumpstart, which is a subsidiary of NetDragon. NetDragon is still a very significant like a minority shareholder of us. So they gave us a blessing.

They gave us the IP and they also invested in us and gave us the seed funding to make this happen. And of course, the leadership team also put in our own money and our sweat equity to, to leave our comfortable, Catholic jobs at NetDragon and to lead this venture. Also, all of us, most of us have a lot of conviction and we've all loved this brand and IP so much that we believe that this is the right moment to take the leap of faith and to turn things around.

So we have around I think 50 something full time employees. And we also have outsourced team members helping us on developing some of the new games. The size of the outsourced team fluctuates depending on the needs of what we're developing. So we try to be very lean and also hire fast and then, and learn fast and push out more products, do more updates, yeah.

Alexandra: And your so your team is relatively small, though?

Dominic: Yep. Yep. Core team is relatively small.

Alexandra: Sorry, continue.

Dominic: I think your other question is about the product that we have. So majority of the team are actually working on fixing the classic site. So the original neopets. com, we call it the classic game, has been around for 25 years.

Very astonishing that it's been around for so long and the server never So it's been one game the first kind of like digital native virtual pet game that has survived for 25 years. And we're actually putting in the most resources to revamp that and continue to upgrade and fix bugs and like really fixing the foundation of this Neopets like core business.

And then the kind of like 80 20 rule. The other resources we've been investing into revamping some of the games that has been developed by either net Dragon developed by net Neo Pets kind of other teams. One is used to be called island Builder and the other one is called Ferry Hope.

So these are two side mobile games that we're revamping. So we're very excited that we'll be revamp we'll be launching both of them again. Relaunching both of them later this year, and that is like the main game that we hope to help us acquire like a more mobile first generation of new players, and also to attract a lot of the LAPS users that have left Neopets because they might not want to play a game on the PC anymore, or they might not be that assess that desktop browser might not be as accessible to them anymore.

So these are like the tools that we're building out in terms of the product.

Alexandra: Got it. Okay. So the core game, the classic version, like Neopets Web HTML5, is still up and running which is actually quite incredible. And you have the core team of the 50 people that you have assembled are working mostly on Neopets Classic.

And then you have a couple of other products that you're looking to expand out to and refurbish in the mobile market and the outsourcing teams work on this. Is that basically a good way to describe the structure? Yeah that's awesome. Okay. Yeah. Just helpful to get some grounding cause it's such a big franchise that has had such a huge history.

of different product lines, different games, different experiences, CPG there's a lot kind of going on, so trying to make the pictures clear for our audience before we dive in. And I want to obviously talk about where Neopets is today, but I think one of the most important things to do is talk about the history of Neopets and how it got to where it is.

And it has, as we've mentioned, such a long lifespan. And there's a couple of eras, right? It's initial foundation from 1999 to 2005 when it was an independent entity. It's era under Viacom and Nickelodeon from 2005 to 2014. It's time at jumpstart games between 2014 and 2021. A slight detour into the Metaverse and NFTs, I think, in 2021.

And then under NetDragon in 2023, and then today with your buyout to be the world of Neopia. And so I think each of these is particularly interesting, not only because it's changed managerial hands, but also from the outside looking in, some of the core, business strategy shifts. There's immersive ads, there's banner ads, there's in house coding, there's pet trading, there's NFTs, there's many games and platforms.

And so I think this is an awesome opportunity to kind of showcase that Neopets was doing a lot of really cool modern things, but back in the early 2000s. And so I would love to walk through all these eras, right? So the first era being again, the independent entity and the initial foundation. I think then Players were averaging around 117 minutes per week, which was very crazy.

This is like back in the early two thousands. There's 4 billion wave webpage views per month. And this is in 2005. So could you tell me the original founding story and tell me a little bit about the primary experience that people were doing and who was doing that experience?

Dominic: Yeah. So let me start with I guess how it all started.

It started as like a dream between the founders. And then it's how can we bring the virtual pet experience into the gaming world? And I think it all started as like a school project while they're still in college, actually. But it grew really quickly from there and it definitely blew out.

And I think the interesting part is because it's a very innovative idea, and it's at the very early stage of internet, when everyone is still exploring the world of internet in different ways, and being the first kind of like, Digital native, like we can say that it's like a virtual pet game. It's also like a MMORPG as it's very early stage.

So a lot of kids play Neopets as being like the first way to open their doors to the internet. So a lot of kids actually play Neopets and think that, Oh, they're actually the cool kids and they're ahead of the curve. And Neopets at that time is basically at the forefront of technology in terms of the gaming industry leveraging the early stage of internet connecting like using mini games, using like how you can I guess it's like Tamagotchi, but it's even on even more steroids, you're feeding the pet, you're doing a lot of things that you can I'm like it's like, it's also like how like social media as its early form, because Neopets back then predates like MySpace, Facebook and all these social media platforms.

And a lot of kids actually have Like active discussions and they connect with their friends in in, in Calvin in the game. And I think that's like the early Catholic formation of the company and why it became so big. I believe there's a few major factors like the growth of the early internet for sure.

And they're like this innovation of bringing a new game genre that. The world has never seen and also being like the first to really I bring a lot of these young gamers together to open a whole new world to them and like just put things into perspective.

Neopets back then is probably as popular or even more popular than Roblox nowadays, like every one and two kids in the US played Neopets and. Friends all play Neopets together and that was at the early day of the internet when they don't spend that much screen time Compared to like how like gamers in nowadays So they're basically spending their hundred percent of their screen time on one game or even close to a hundred percent on one game And it's Neopets.

So if you put that into perspective, it's actually quite a phenomena back then But true. Yeah, but that's like the early formation days. And I think Valcom see the, that's like a potential, like huge gold mine. And that's why they went in and acquire it. But even during the early formation days that has been very early on investors came in and they took majority ownership.

And then move the company from UK to LA and et cetera. And then Viacom come in at 2005. And I think that's like the new era and Viacom continue to invest a lot into Neopets and I think one of the major changes is that there's been a lot more focused to turn Neopets into.

A broader entertainment IP, and they try to make it as a more like a mass IP instead of just like online game type of business. But I think something that has Definitely some missteps is that Neopets definitely missed out on the whole kind of like mobile trend. We maintained to be an online browsing game.

When the mobile trend started to take off like in the late 2000s, like 10 or 11, 12 and like how like iPhones took over and then the app store opened up and then like mobile, the mobile game era, which is driving the growth for the whole gaming industry for the past decade. Neopets basically lost out on that.

We didn't participate in any parts of it until like more recently we tried to make our browser more mobile friendly and mobile responsive. And even now half of the game is non mobile responsive, and we're still working on it. So I think that's one of the main reason for the downfall.

Is that as, it's That's one of the factors, but other factors like most of the kids that play Neopets started to grow up and for all the good reasons, they probably graduated from the game and they moved on to play other types of games as they become like more like older and more mature.

But of course I would say a lot of. Users that are still playing Neopets now actually played 20 years. There's a lot of reasons. There's a huge emotional attachment to, to, to their pets. It's a form of kind of like virtual companionship, and then they take their pets very seriously, and it's kind of like family to them.

So a lot of users also play Neopets because of the escapism, the friendship that that kept them there, the community. So those are all the reasons that kept our players still playing. But most people left because like they probably started to see that there's not enough innovation in the game.

There's less like less plot development, less updates, and some of the some of the bugs are just not being fixed. And they're like just the whole game, the whole experience is just getting worse and worse for most people. And it's that's why most people left.

Alexandra: Yeah, that's, it's so fascinating. It's it's the parallels to Roblox are actually like, so much more visible and transparent then. I guess maybe initially thought, right? It's here it is where you have a young generation of people that are learning to use the internet for the first time and in a very similar way you have a young generation of users who are incredibly in tune with the internet but are engaging with the internet in a significant creation way.

Like the ability to code, create their own experiences, right? And the thing that Roblox will potentially struggle with is the fact that everybody will, could potentially grow out of the experience and so you need to create this experience. What Neopets did was it obviously didn't latch on to the mobile phase.

It stuck with its one cohort, right? The people that joined in the early 2000s, and then you said played for 15 years, but it didn't do new user acquisition of another generation of youth, which is, again, what Roblox is trying to basically usher in new eight year olds every year which is, it's just so fascinating.

And we talked a little bit about how things You know, Viacom came in, I think they sold for 160 million in 2005, right? And then, missed out on this mobile trend, and But I guess a question there is, still, who are the people that are playing? Do you think that the players were consistent between the first era and the second era?

And, demographically, who are that? Who are they? Obviously now, NetDragon is a Chinese entity, but are the players truly global? Are they more concentrated in the United States or in London? And typically, when they started playing, How old were they? My instinct tells me that most of these players are female, but I could be totally wrong.

So tell me a little bit more about the player base and how that shifted between the independent era and the Viacom era.

Dominic: Sure. So I can probably talk more to the data that I know that's like the existing user base. Also, the existing user base, the core demographic is like age 25 to 35. It's like more than I would say, like around half of our existing user bases around that core demographic.

And it's, and you're right that it's a slightly skewed more towards female. So around 65 percent of our user base is female. And also they're a lot more concentrated in North America. So U. S. and Canada to combine is 70 percent of our user base. And the next three markets are it's like next five markets around two to 3 percent each.

They're like Brazil, Mexico UK, Australia, Hong Kong, and Singapore. So that's like the more English speaking. Countries and also back then when internet has better penetration it's that's why there's some of these global presence that we have.

Yeah, so it's quite exciting to see that we're still relatively global, but a lot more concentrated on the North American side. But in terms of the early generation is the demographic exactly the same? I'll probably say back then that it's peak is probably a little bit more. Global than it is now, because as I mentioned, what kept the community together is basically the tight knit bond and the friendship.

And I think for some of the countries where we have like smaller presence probably most of the users would Eventually like graduate and move away from the game, but for kind of a US and Canada where there's like a kind of I would say like a core demographic where is this like more influence and there's like more like resonance yeah, our players can resonate with each other better, or there's like more community involvement.

So that's why this core player base is more prominent. But I think back then it's a little bit more global, but it's always been skewed a little bit more towards female. I think in the back in the days, we probably have more male players as well, because a big part of Neopets has been like battle domes.

But I would say as a game slowly dies down. Like most of the male players are like, they move on sooner to play other genres, like genres of games maybe a first person shooter or they're like being more, more like console serious gamers. So more female players stayed with us than male players.

Alexandra: Yeah. Got it. Got it. Yeah. And I asked this question mostly to ground ourselves because, you talked about the the, The franchise begins to decline in the 2011s, 2012s, 2013s, right when the mobile uptick is happening. And again, like you said, Neopets misses the train.

And then they get acquired by Jumpstart Games, which is an educational platform. And I'm curious as to, what you feel The value proposition was to jumpstart, why acquire the Neopets IP, which, has maybe a audience that's somewhere between now in their, they're probably now in their twenties, right?

And they're skewing towards female, they're in their twenties. Why does a education platform buy this IP in 2015?

Dominic: I guess if I have to guess so Education has always been like a byproduct for Neopets. As you pointed out, like a lot of our users learned about the way of internet, they learn about coding, they learn about like artistic drawing or like digital ownership and things like that through Neopets or even game design.

Game balancing, game economy, inflation, trading, et cetera. So there's like the Neopia, the world of Neopia is so fast and it's so intricate that a lot of our players probably learn very different things from it. Scalepass has always been like somewhat of an education product as a by product.

I think for Jumpstart to acquire it, that's probably one of the pieces that there's always been like that tie to education. And I think the second part is probably like knowing that a lot of our users are still with us, but they've grown with us. And some of them are become like young parents that will introduce this Neopets game to their potentially to their next generation.

So that's maybe the other thesis that we have in mind. Because in the past, we do see that like we have some inflow of really young gamers and we've never really done. active marketing for user acquisition for the past, I don't know, five years or 10 years. So a lot of these users actually came in because their parents played Neopets and introduced this game to them.

Alexandra: I see. Got it. But that doesn't happen really as much. Like it sounds like from this era was the, was probably the most rough for the Neopets era. Where maybe a lot of those theses did not basically become true. Yeah. I, from my understanding it the franchise basically takes a big decline.

It drops down to a hundred K users. And it's just, it's not as active. It becomes like, it's like on the downward slope.

Dominic: Yeah. And I think one of the most recent missteps apart from missing the boat on the mobile trend, It's actually the discontinuation of flash. Most of Neopets website is actually built on flash.

And then back then when Adobe announced that, like they will discontinue the support on this. I think we didn't really plan ahead for that. And to be honest at like December, 2020, I believe, like overnight. 80 percent of the site becomes broken and unplayable. And then and then even in the past two, three years before this new leadership change less I would say around like 10 to 20 percent of the site has been successfully converted.

So there's a lot of work for us but that's also one of the biggest like missteps probably in, in the recent kind of era, I would say.

Alexandra: Makes sense. Yeah. And that, but that's true. I think it's uh, when you have such an old technology like that, I think. My World of Warcraft suffered from a lot of the same problems of being such an old and beloved franchise, but built in the early, built in the 90s and in the 2000s.

And we there's jokes that, WoW, WoW is built on a toaster, right? It is not necessarily like a modern video game, but you have to keep up with it because and if you don't then things will break. So really interesting and like lessons to be learned about upgrading your tech debt over time.

And so want to wrap up on the history 101 of Neopets. We take a small detour into the metaverse in 2021. I think that the, I don't want to speak for you, but I think my inclination would probably be, hey, digital ownership synthesizes pretty well with digital pets.

And we actually see a lot of web three companies pursuing that. Today right where like I will care about this thing for a very long time and want to own it Can you briefly walk me through whether a that thesis is correct and then be why did that not stick?

Dominic: Yeah. So I can speak to it on multiple fronts. So when I was with net dragon, looking at neopets and looking at exploring the different business opportunities so this whole Web3 idea came to NetDragon and they spearheaded this kind of a, an NFT sale back then. So the sale itself went pretty decent.

We sold like over 4, 000 NFTs and raised like 2 to 3 million U. S. dollars. And then, but we received, also received a huge kind of like backlash from the community. And that's when I was like tasked to explore more and why why is that? And why like the core community of Neopets really just like this whole idea of Web3 and like this whole idea of token and everything.

So that's when I took over and lead the kind of like Web3 side of the project as a kind of like a side project independent of the whole core Neopets team. But as I mentioned that's when I started to get to work a lot closer with the community and also work closer with the core original Neopets team.

From the kind of like from the jumpstart days. So that's when I also get to understand, oh, there's actually a lot of potential that we do things right. So one of the reason why it didn't actually, let me start with what the hypothesis that we always had is that Neopets has always been like a.

Like has always originated as a metaverse, even before this whole term metaverse becomes so popular because of what three in the past few years. So metaverse has this term actually always existed, like in the gaming industry for so long and Neopets has always been a metaverse. Like it's a very fast how like world there's a fast world view.

There's more than like 18 lands and in the world of in the Neopia there's a lot of Game assets exchange. There's like a, the neocash, which is essentially you can call it like a token and back in the days, and there's a huge economy inside the game. And that's the biggest part of the game is like trading of items, upgrading your pet and buying the the most prized asset that you want for your pet to decorate your pet and also like.

Literally what we dream and then the avatar is basically how you represent your digital identity and then the avatar itself is also like the one of the most prized collectors item and you can showcase it in the in game forum and it makes you look cool and you have the bragging rights when you have like really cool items and you have the bragging rights when you have a great avatar collection or a great stamp collection.

So everything that happened in Web3 gaming in the past two, three years, the existing, it existed in Neopets like 15, 20 years ago. And that's when we started to believe that maybe like doing a kind of like a Neopets for Web3 would probably make a lot of sense. But what we missed is that we didn't listen to our community.

And as I mentioned Neopets, the core classic game, there hasn't been any upgrade, and it's been decaying for the past decade. And most core community members who played the game for the past 15 20 years are very heartbroken that they're not seeing the investment and the resources that it's bringing.

Being is not being poured into the game that they belove the most and even those like the huge collectors have collected so much They really had this emotional bonding with their Neopets and with the game and with the community They actually worried that the classic game might die one day because like they're just like it's just so broken and they're not seeing that the company investing much into Kind of like upgrading it.

We're like having an air maintenance mode. There's a lot of infrastructure costs to just keep the game going. So it's still a huge investment, but we're not really upgrading it. And we're not really fixing a lot of the bugs that, that's like that's crumbling.

Alexandra: Exactly. And instead you're doing NFTs.

Dominic: Exactly. So like I was like, Oh, we sold NFTs and there's Oh, you got two, 3 million, try to build a new game. I try to build like things in the blockchain, but neglecting the core. I think that's the biggest mismatch. So there's a huge PR crisis, to be honest.

Our community like fought back. They're very united, but that's also when we realized that. This community is so unique and it's so it's so interesting. It's so tight knit that they all came back together for the first time in maybe five, six, like 10 years that they're actually, they care so much about the brand that we realized that actually means a lot to them and we should.

Probably do the right thing and listen to them. And so in the latest era, like under our new leadership team, one thing that we care a lot more is like improving our transparency. We communicate a lot more with our community Catholic members, listen to them and try to really focus on what can we do to make Neopets better.

And for the for our community and also making Neopets a very sustainable game that could be played on for many more 25 years to come.

Alexandra: Yeah, that makes, I mean, that makes a lot of sense. And I think, the reason why I asked this question is because I think. From the Web3 side, this game is perfect to be Web3, and yet it completely didn't work, and actually may have been, in a way it's a loss because, here's a strategy, you invested money in it, it didn't work, but there's nothing like rallying around the enemy that is Web3 and the blockchain to get your community back together.

And so maybe this was infuriated all of your prior community and they like are all like surging forward that are excited about Neopets and and what the future could be. And so this is a great time to, now that we've wrapped through the whole history of Neopets to talk about, who is this community today?

And what is Neopets today? And so you clearly have had some increase in users and traction. So congratulations. Since you guys have spun out the company, I believe you guys have launched a new game called the Tales of Decartia. And so tell me a little bit about, what has changed since the management switch over?

Obviously besides the people, right? But what are you guys doing in the product to re engage your core users? And what game are you specifically growing? Is it the mobile side or is it the initial original website, the HTML5?

Dominic: Yeah. So on the classic side, as I mentioned, we're pouring most of the Resources and investment into that.

So I think what changed apart from the from we actually increased the team size significantly compared to the previous management team like leveraging on the investment that we received and from the management buyout and the prior fundraising activities and we've been able like we've been listening a lot more closer to the community.

And as part of that, we Yeah. Need to prioritize all the things that we need to fix. There's like a more than like 100 things that's on our to do list in terms of what we can do to the product to improve it, to upgrade it or to make it better. So we're like going through being very focused on churning out updates and being a lot more transparent with our community, giving them regular like roadmaps and updates on what we're working on.

And we're also engaging the community a lot more. So we actually launched a program, a community ambassador program to really help us collect feedback from different parts of the community. And most of these community ambassadors are they have their own influence among our community members.

Some of them are like runs our largest fan site. Some of them helps run our social like side defense group on Reddit and on Twitter. And on Discord, so they have their channels to really help us gather a lot of these feedback and provide us with a long list of to dos and also help us prioritize what makes sense and what should we focus on.

So we basically try to go back to business 101 focusing on a core, fixing the crumbling foundation and make sure that the classic game itself is going to be sustainable and it's going to be healthy and we can build new things on top. And the new things on top that we're building includes this Tales of Carthage is actually formerly called Island Builders.

So we're basically revamped the game and some of the things that we changed is basically tying in the classic game with these new game experiences that we're building. In the past, these games has been built in silos. The plot doesn't change. There's no connection whatever you do in this game does connect with that game.

But what we're actually doing with the new Neopets kind of ecosystem is that all the new games that we're building, eventually there's some sorts of connection with the classic game. So one thing that we do is that we introduce like an infrastructure layer. We're calling it the Neopass. On the surface is like a single sign on making it easier for users to sign in.

And also improving your security so that we don't have to rely on the old, like a login and user based system and on, but more one level deeper than that, it actually connects it, Neopets ecosystem together. So some of the, your your progress and how have the new games could help you earn like Neopoints and Neocache or like items that you can use in your classic game.

And that's one of the things that our community members always cared the most. Even back in the days when when they buy like our merchandise, they want to redeem a code. There's a code for them to redeem an item inside the game, like a first generation digital products.

Basically, all these things happened in the past, and we're just trying to make sure that we have a better way to modernize it and connect the game experiences together. So I think that's the second part, connectivity among the ecosystem. And I guess the third part is really figuring out the longer term vision and how we work towards that as a company and as a brand.

And as as a kind of like during this whole revitalization, I think in the past, there's a lack of focus and there's the, even the team itself, they're very passionate. Most of our team members, they're passionate Neopets fans. They've all played Neopets in the past, but it's just that they're so passionate, they're working on it, but sometimes they don't really see the bigger vision of Neopets.

What can actually be done to save this kind of like sinking ship. And I think that's having a much more clear strategic goal for the company. It's also what really glues the teams together and like work towards a much brighter future for Neopets.

Alexandra: Got it. Yeah, so it sounds like there's a lot of like, this teching up, you're mod you're, modernizing the retro elements of the game, whether or not that's just because it's an old style, but also the the technology and the brokenness behind the main game, you're exploring you were saying, this multiverse esque transversal of different experiences and how they all plug into the original base game.

And then, you're trying to get some line of sight on the focus of the long term goal. And so before we talk about the long term goal, I do want to spend some more time talking around the conviction in the core experience, which seems to revolve around taking care of pets in an online metaverse esque way.

World. And, I think from my perspective there's a lot of other modern experiences today that might be similar to that, like an axie infinity or a pediverse, right? And, we talked a little bit about in our kickoff about virtual pets and wellness. What gives you conviction that this is something that can grow?

beyond the core demographic of users of the people that are playing for nostalgia. And perhaps the goal is for it to not grow and just service the core community first. But I'm wondering if you could talk a little bit about the genre itself of virtual pet care and why you think that's something that can compete for attention in a modern gaming.

Dominic: Yeah, sure. So I think there's something very unique with Neopets as like, uh, Nostalgic gaming brand, or like the first digital native virtual pet game. We actually, because of the lack of update and the lack of upgrade, we're probably one of the very few games that actually kept the pureness of the early internet culture.

So I think that itself is definitely an Attraction or differentiation for any young gamers, if they want to visit history, a living history or kind of a historical relic, they should come to Neopets and that itself would introduce them to the brand and whether they play the classic game or not for the long term.

Maybe it doesn't matter, because they, once they get introduced to Neopets, there's this new, these new games that we're also building out, and eventually they can just play our new games and experience kind of part of the Neopets ecosystem without ever getting into the classic game.

So that's our hypothesis on one end, but on the other hand. We also see that like kind of like being in this casual gaming genre sometimes like just works will always continue to work because it's a part of human nature that we need virtual companionship as part of human nature that we want to build relationship with kind of a digital pet because in real life actual pet is actually one of the biggest kind of emotional support Like how like activity that you can ever get, but that's not scalable to the max because there's always How like limitation on there are people who cannot get pets because of their living conditions or where they live They don't allow pets and etc, but virtual pet can potentially be Something that's, that everyone can enjoy.

And we are just like one of the games playing this space. We don't have to be the only game. It's I think it's like Tochi coexisted with us back then. We're probably as big as Pokemon at one point, but of course they're now like a much bigger giant. But there's just I would see that we need to win.

All of them but what keep us unique and what helps us differentiate from all the other kind of a virtual pet game were able to continue to give us like enough growth like behind it, of course back then, as I mentioned in the first era of how Neopets become very successful is because that we back then we were probably at the very forefront of the gaming technology evolution.

So of course, in the long run in the conflict for a pillar of the strategy that we discussed, we'll always try to explore whether there are new technology that could help put Neopets back into the spotlight that were actually at the forefront of the gaming industry evolution and might be the Neopets 2.

0 might be some new games that we're building, but of course building a new kind of Like Neopets 2. 0 game would probably require a lot more investment than we're currently able to to deploy. But the goal is to really run Neopets and future proof this this whole game and this whole IP and make sure that we're building the foundation so that we can successfully fundraise or grow enough that way you can further invest into the future of Neopets.

And the long term strategy has always been more about future proving this IP and extending this IP and this Neopets game into a cross generation product that can be beloved by more and more generations to come.

Alexandra: Okay, got it. So it sounds like from right now, You're focusing more on the core demo and ARR expansion is going to come from growing a business off of the backs of higher ARPDAO versus expanding out laterally to a new demo, a new age demo of, Gen Z or a new geography in China or the like.

The Middle East or wherever and that's like the core focus.

Dominic: Yeah, I think at least for the coming year our core focus would be on the classic game. And the target that we can, that the users that we can target are mostly probably Neopets players in the past who left us. We called them the recent lapse users people who probably left the game in the past five years.

We estimated that there's around 5 to 10 million of these people. Most of them probably left because of the death of Flash, because the lack of updates, the lack of maintenance. So as long as we deliver those patches and upgrade the experience and introduce like new features that excites them, introducing a new plot, for example, these are things that we're using to target these recent LAPS users.

And as you mentioned, back in the days, we have over We, we have over 150 million registered users, probably like 30 to 50 million unique users. So those are the kind of like the rest of the 20. Ish to 30 ish million of users are like the long term lapse users. I think those users we're trying to attract and get them to come back with our new games.

And as we bring out these new casual games in the mobile segment, we're also hoping that we can attract existing gamers or younger generation of gamers who enjoy these games. type of games and can attract them to play these new games. But we probably won't be using the classic game to target the next generation because uh, what we believe is that they will come, but it might not be a game that would stick immediately.

So it's hard for us to pour like marketing dollars to attract new users to play the classic game.

Alexandra: Sure. Yeah. So it basically in your MAU stack. You're focusing on reducing churn, aka fix the game so it's not broken. So nobody just reads and, exits the browser. And you're focusing on win back more so than you're focusing on acquiring new users, which I think makes sense.

And obviously is a strategy. But they did say something interesting before that I want to lean into. And this is maybe shifting more towards the it. The future, right? You talked about Neopets 2. 0 and, growing the IP to being something that's long lived and more transmedia esque, right?

And we see that with a lot of franchises. Sega is doing that today. It's expanding out of games into films. You're seeing IP littered across the CPG universe, or sorry, consumer products video games, movies, books, etc. And so I'm wondering, right now it sounds like you have two teams, one that's building the core product, and Neopets Classic and you have some outsourcing teams that might be building mobile games do you have plans for a major licensing strategy to potentially maybe other big mobile gaming studios, for example?

Going to a Netflix or going to any kind of Zynga or something like that and basically having them build, a bubble shooter or a match three game or something else, right? I'm just spouting random ideas to enlace in the Neopets IP, similar to how that's been the core of a lot of Disney's gaming strategy, which is basically don't build it, license it.

Dominic: Yeah. So I think that would definitely be part of the, like the strategy. So we are actively like building up our brand presence, and as part of that is to drive licensing opportunities not just on the gaming side, but also on the on product side, on animation, on entertainment, etc.

But on the gaming side, specifically, we are exploring different types of partnership. For example, there are, there has been console games, like Neopets console games in the past, on PlayStation, on Wii. Et cetera. Can we rebuild, remake some of these classic beloved games into a Switch game or into a Steam game or into a different format so that we can grow into not just desktop and mobile, but into other kind of like formats.

So I think those are like areas of growth that would love to continue to explore. So yeah, we're very open to the licensing model, and I think it will be a core pillar of growth. But on the licensing side, we're probably making a lot more progress on, on like actual products. So for example, later this year, we're launching a brand new trading card game with Upper Deck, and it's been in development for the past two to three years.

And it's like a whole new game. We used to have a Neopets trading card game back then, but this one is like a completely new one that we Who developed which I'll protect and it's partially tied to the plot and it's going to be exciting to see where like these type of licensing partnership can bring us like new, like new revenue and new growth drivers and probably reaching some brand new demographics as well.

Alexandra: Yeah, that sounds really exciting. It does seem like there's a lot of synergy with the card games, and it's a huge popular strategy for getting that transmedia collectibles, collectible translation from digital to physical cards or even digital cards. And so I can't help but be curious, though, because we talked a little bit about licensing in a very official manner, right?

Oh can we make a Switch game about with Neopets, or, we had console games in the past, or we're making a card game, but, is a UGC partnership at all part of your strategy? For example, putting the Neopets IP inside Roblox, or inside UEFN, which is, I would say, probably where the predominant Gen Z user base is today.

And if you wanted your Neopets to be understood and seen by Those users, right? Because again, I know that the first core focus is win back in the core, obviously there's going to be a phasing to things. If this, if phase one goes successfully, you'll be, your shareholders are going to push you to move to phase two, or you're in order to raise venture.

There's going to have to be some sort of more proof of traction in the younger demos. How are you thinking about the UGC experiences being the hotbeds right now for basically?

Dominic: No, we're definitely very open to that. It's definitely one thing that we've been always exploring. So we have. Looked into kind of for example, building on roadblocks and whether we can leverage the IP and reach to the younger audience.

I think so far we've been in discussion with multiple studios trying to find the right business model so we could find the right partner. We definitely. More than happy to do it. It's just hard for the team to do it ourselves. We don't have the capabilities. We don't have the resources to like further invest into stretching ourselves too thin, but with the right partner who's willing to invest in this and believes in the, that's IP.

I think we're definitely will entertain that. I think at it stands. It's just that the new pets renaissance has just begun for a lot of like potential partners. Mhm. They need to take a huge leap of faith if they actually want to license our product and build a game as opposed to licensing a more well known brand and like in these days in this day and era to push out a game just that we probably need to still keep up with our kind of like brand new product line.

Brand awareness, build up our brand presence, like among the broader community with the strategy that I've laid out. And then that would continue to help make licensing much easier further down the line. Because like, to be honest, now we're reaching a very core demographic that loves Neopets.

You're right that though, these demographic, they're not growing. And for a lot of potential licensees, they see that as a risk so it's a kind of a very stagnant base. If we can show that we can grow that, then I think that will give them a lot more comfort and conviction as well.

Alexandra: Yeah. That's their first checkpoint. Yeah. And so, you know, we're wrapping up on the top of our, on the top of our episode, but A final question for you is that obviously Neopets is a company that's clearly tried many things, right? It has an incredibly long lifespan. I think you guys are about to celebrate your 25th anniversary.

This is an IP that has actually managed to withstand the test of time. It obviously has its peaks and its valleys as with any business life cycle or product life cycle, but now it's its current CEO. What do you think is one of the most important things to preserve from the Neopets original DNA?

What is something that, okay, we tried this, this failed, we tried this, this failed, but This thing is something that we will never change about our identity because this is the kind of the core of what Neopets was founded on and what we're here to do. And so what are you trying to preserve from the past?

Dominic: Yes, I think what we're trying to preserve is definitely the early internet culture that existed in Neopets even as of today. We definitely want to preserve that because that's Neopets success has always been built on and because of the lack of for all the wrong reasons. We kept it, and that's a very unique product for that's part of the DNA, and that's part of what Neopets represent, and I think that's the one thing that we definitely need to preserve.

I think in the past, we've tried too many things and neglected the core, which is the classic Neopets game. And I think fixing the classic Neopets game, it's just the first step of revitalizing and part of this whole renaissance. It's just we need to look back and really connect with the community that cares most about Neopets and really building and revitalizing this game together with the community is the first step to really help us radiate the love that we share for Neopets to other people and to like new generation of players and to show that This is the early internet culture and why Neopets has been so fun and so interesting back then.

And just looking at the broader gaming industry, evolution, I believe that the, there's a lot of games that are becoming more and more very like toxic driven, short term gameplay driven, just like a lot of microtransaction very like very profit driven as well. And that never existed in Neopets back then.

And that's why. That's what made the game fun. It's always about the pets. It's always trying to make it pretty. It's always about expressing your digital identity socializing, and also like just make friends and explore the world of Neopia. And it's very pure. And of course, a lot of We've also tried to monetize on all these different ways, but definitely not the way that we're seeing in a lot of other games in the modern gaming world.

So that part of the early internet culture, I think it's actually very unique, where if I were to introduce a game to the next generation, And not want them to expose immediately to the kind of a relatively toxic environment that we're seeing. Neopets could be a good start. It's like a very open, very diverse it's very like a supportive community.

It's actually like a game, probably probably one of the only games left that's like that.

Alexandra: Yeah. I was really moving actually. I think that soon you're right. I think even when I look back at it, I'm like, wow, this is a place where people join this community to be socially connected.

And to care for a creature And it's not about shooting heads, it's not about battle pass monetization. And so I really enjoy that because I think it's something, like you said, that's the core identity of what the franchise is. It's the core fantasy of what the player is And, even though throughout the many generations of Neopets managerial hands, it's business strategies, right?

That's something that seems to have mostly stayed. And so Dominic, this was such a pleasure. Thank you for coming on. I'm really excited about what potentially could happen for Neopets. And it's amazing that you're leading this new change and new frontier. For neopets.

And so thank you for coming on. And we usually conclude our episode by asking our guest members, if anybody in the audience is interested in reaching out to you

Dominic: yeah feel free to connect with first of all, thanks for having me. Alex. It is a very enjoyable conversation. I'm always like, Very excited to talk about Neopets.

So it's it's great to be here. So yeah, feel free to uh, so I'm very open, feel free to find me on like LinkedIn on Facebook, on Instagram. There's a lot more channels but these are like the three main channels that I respond to. So yeah, I'm happy to help you to answer any questions that anyone might have.

Alexandra: Or they can log in and get a pet and find you in the world of that's for sure.

All right, as always friends if you have feedback or ideas, please hit me up at alexandra and novak. co. We're always open. And with that's concluding our episode. So bye.

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