'Neopets' Cancels NFT Game After Raising Money From Polygon, Avalanche

Just a few months ago, Neopets Meta CEO Dominic Law publicly promoted the concept of “play-and-earn” Web3 gaming and told Forbes that the cutesy Neopets franchise offered “all the right ingredients” for an NFT game. But now it’s been abruptly canceled—and it’s not entirely clear why.

Neopets Metaverse, a free-to-play title based on the 1999 virtual pet simulator web game, was in its alpha stage of development and the team had already sold over 9,000 Solana NFTs across multiple collections—plus it raised millions from backers including Polygon Ventures and Avalanche's ecosystem fund.

On Monday, the Neopets Team—which refers to itself as the acronym TNT—published a blog post explaining the Neopets Metaverse shutdown and its pivot to a non-crypto mobile game in development called World of Neopets.

“TNT has taken a close look at every nook and cranny of Neopets, and after doing so, the decision has been made to transition away from the Neopets Metaverse game and redistribute those resources to the development of a game that we feel can better reflect our values and vision,” the company said.

“This decision was not made lightly,” TNT added, “but it was made for the best reason: we want to design a game that’s more in line with what the community has been asking for!”

Neopets is now also under “a brand new leadership team,” per the post. Does this mean that Law, its Hong Kong-based Web3 advocate who previously worked at various financial firms, is out?

It actually appears that he’s staying at the company. Law’s Linkedin profile still shows him at Neopets, and his title shifted this month from “Chief Metaverse Officer” to CEO. That said, it’s unclear whether it was his decision to move Neopets away from NFTs. 

Law has not yet responded to Decrypt’s request for comment.

However, Neopets has secured a “management buyout,” meaning it will become independent for the first time in 18 years. Neopets was bought by Viacom in 2005, who later sold it to Jumpstart, which was then acquired by Japanese gaming firm NetDragon—who then shuttered Jumpstart last month.

“Free from the corporate baggage that existed in the past, the newly united TNT has now been entrusted with the decision-making and overall brand strategy of Neopets,” the blog post reads. 

The new Neopets entity is called World of Neopia, Inc. and promises its fans monthly updates, AMAs, and a brand ambassador program. TNT plans to launch a new homepage for Neopets on July 20 and will use an emulator to update its old Flash games and make them playable again.

Unfinished business

In response to the news, several Twitter users called the now-canceled NFT game “a rug” or rugpull—referring to a type of scam in which creators sell NFTs with promises of future utility, only to abandon said project before the promises are fulfilled without refunding buyers.

Neopets assured one Twitter user that it “will continue to support the Web3 community.” The company echoed that sentiment in its blog post as well, noting that it will continue to operate a Discord server for NFT holders.

While TNT said it has “repurposed some of the best assets” from the canceled game, it’s unclear whether NFT owners will be able to claim refunds or see any benefits in the new mobile game, which does not use any form of crypto. A Neopets representative told Decrypt that it plans to offer NFT owners "perks," including its digital "NC" in-game currency and digital items on the platform.

"We are so grateful for the support of the community that has sprung up around the Neopets digital collectable lines, and as a sign of our appreciation we will be announcing more details on future perks soon," the representative said. "These may include physical merch, NC items, NC, access to IRL events, and more."

Asked if Neopets pivoted away from NFTs due to community backlash, a company representative told Decrypt, "Listening to the voices of the community is paramount to the success of our brand. It’s important to our team to listen to the needs and wants of our fans—this is what’s best for Neopets overall.”

Neopets' crypto push

Neopets has a history of exploring NFT integrations. Back in 2018, it briefly experimented with Ethereum NFTs. But Neopets fansite JellyNeo estimates that only 1,800 NFTs were sold, leading to a meager take of roughly $14,500 at the time.

After TNT said it had been running Neopets at a loss for over a decade, it raised $4 million in funding in January from a number of venture capital firms, including notable crypto-centric firms. The list included Polygon Ventures, Avalanche's Blizzard Ecosystem Fund, HashKey Capital, IDG Capital, and NetDragon.

A Neopets representative told Decrypt that its backers remain "extremely supportive" of the company despite the current pivot away from NFTs.

“Our investors believe in the team’s ability to execute on building a brighter future for Neopets," the representative said. "They are extremely supportive of our vision for the IP and what we have in the pipeline."

In the January funding announcement, HashKey Investment Director Xiao Xiao said that Neopets had “great potential in its NFT and P2E [play-to-earn] features,” and that “founders like Dominic [Law]” were able to “always execute and deliver.”

But Law himself told Forbes just a few months later that he believes “play-to-earn” games resemble Ponzi schemes—and that he prefers a “Web3 gaming” model that prevents speculators from manipulating markets by focusing on fun gameplay first and foremost.

Representatives at Ava Labs, IDG, and HashKey did not immediately respond to Decrypt’s request for comment. Polygon Ventures declined to comment.

In January, Law said that the NFT game “will capture the spirit of the Neopets community.” But now, the Neopets team is singing a different tune—that moving away from NFTs is ultimately best for its community.

Big backlash

Given the announcement comment about responding to what the community was asking for, the Neopets Metaverse game may have been canceled in part because of the backlash from fans.

One angry Neopets fan who started the #NoNeoNFTs campaign previously told gaming publication Polygon in 2021 that he believed that NFT games were “low quality and scammy.” The fan also accused the NFT community as a whole of being “homophobic” and “racist” as reasons why he didn’t want the Neopets brand to associate itself with digital assets.

Other publications also slammed Neopets for its decision to release NFTs. The Verge called Neopets NFTs “the fracking of your child memories.” Kotaku argued that the Neopets NFTs “look like garbage.” And Game Rant claimed that Neopets was going down a “harmful path” by releasing NFTs.

While Neopets apologized back in 2021 for the “massive change” brought on by the creation of the Neopets Metaverse game, it continued to build and support its NFT plans—until now, that is.