A little about my owner: She does not work for Neopets, nor has she ever worked for Neopets. She studied journalism in college, which taught her a lot of research skills as well as how to write about things without putting in her own opinion. She also studied Computer Science and took courses in economics. She has over 15 years of professional experience in writing software and designing and programming web sites.
Virtually all of the facts that follow were found by her through Google, and everything that isn't opinion has been verified by a reliable source, such as Viacom press releases, transcripts of Viacom earning conference calls, the New York Times, and other sources. She wishes she could put in links to the sources that back things up, but external links aren't allowed, so if you want to verify things independently, you'll have to use Google yourself, I'm afraid.
This page is not intended to be pro-mall nor anti-mall. It's intended to provide facts, which are much needed when so many rumours and false information is spread, and to provide responses to questions and statements that people have made on the board. I realise that people can twist facts to suit their purposes, but I am not responsible for that, nor do I condone it. If you quote from a section of this page that is marked as denoting an opinion, not a fact, please make note of that!
Kyra Reppen. Her biographical blurb from the Virtual Goods Summit says:
TNT literally stands for The Neopets Team. It used to refer to both the people who work for Neopets — for example, the artists and programmers — and the people who made the decisions about Neopets. Since the people who make the decisions are Viacom people, TNT only refers to the programmers and artists now.
Until June, 2005, Neopets was a privately held company, which means that it wasn't on the stock exchange and earnings did not have to be made public. At about six months after it was created, Doug Dohring invested in the site and it became a real company and not just "a site made for bored college students". It is not known when they became profitable, and that will probably never be known.
Until they update the page, you can see how many "suits" were involved with Neopets even before Viacom bought it in the press kit. It's not known how many of the business people are still with the Neopets division./>
The following are portions of the FTC Policy Statement on Deception. It's quite long and much of it isn't relevant or is redundant, so I've extracted portions of it. The whole thing is available on line at ftc.gov. Seemingly relevant passages are in bold.
Most deception involves written or oral misrepresentations, or omissions of material information. Deception may also occur in other forms of conduct associated with a sales transaction. The entire advertisement, transaction or course of dealing will be considered. The issue is whether the act or practice is likely to mislead, rather than whether it causes actual deceptions.
In some circumstances, the Commission can presume that consumers are likely to reach false beliefs about the product or service because of an omission. At other times, however, the Commission may require evidence on consumers' expectations
The Commission believes that to be deceptive the representation, omission or practice must be likely to mislead reasonable consumers under the circumstances. The test is whether the consumer's interpretation or reaction is reasonable. When representations or sales practices are targeted to a specific audience, the Commission determines the effect of the practice on a reasonable member of that group. In evaluating a particular practice, the Commission considers the totality of the practice in determining how reasonable consumers are likely to respond.
To be considered reasonable, the interpretation or reaction does not have to be the only one. When a seller's representation conveys more than one meaning to reasonable consumers, one of which is false, the seller is liable for the misleading interpretation. An interpretation will be presumed reasonable if it is the one the respondent intended to convey.
When representations or sales practices are targeted to a specific audience, such as children, the elderly, or the terminally ill, the Commission determines the effect of the practice on a reasonable member of that group. For instance, if a company markets a cure to the terminally ill, the practice will be evaluated from the perspective of how it affects the ordinary member of that group. Thus, terminally ill consumers might be particularly susceptible to exaggerated cure claims. By the same token, a practice or representation directed to a well-educated group, such as a prescription drug advertisement to doctors, would be judged in light of the knowledge and sophistication of that group.
In sum, the Commission will consider many factors in determining the reaction of the ordinary consumer to a claim or practice. As would any trier of fact, the Commission will evaluate the totality of the ad or the practice and ask questions such as: how clear is the representation? how conspicuous is any qualifying information? how important is the omitted information? do other sources for the omitted information exist? how familiar is the public with the product or service?
The third element of deception is materiality. That is, a representation, omission or practice must be a material one for deception to occur. A "material" misrepresentation or practice is one which is likely to affect a consumer's choice of or conduct regarding a product. In other words, it is information that is important to consumers. If inaccurate or omitted information is material, injury is likely.
A finding of materiality is also a finding that injury is likely to exist because of the representation, omission, sales practice, or marketing technique. Injury to consumers can take many forms. Injury exists if consumers would have chosen differently but for the deception. If different choices are likely, the claim is material, and injury is likely as well. Thus, injury and materiality are different names for the same concept.
They didn't lie. The original owners probably thought that they could be profitable enough with advertising, sponsor games, sponsorship deals, and merchandise. And they were profitable from all of that. But the company has been sold to Viacom, and Viacom wants to increase profits.
At this point most of the site is still free. So far, there are only three things you have to pay for:
Of the approximately 1,700 clothing items on the Neopets site, only roughly 300 are not wearable as they were created long before we dared to even dream about making customisation possible. It might not seem like a huge amount but multiply drawing those items 54 times for each Neopet and you get the whopping sum of 16,200 different images.
That says that there are about 1400 clothing items! Quite a lot, right? So what are they? Here's what I've been able to figure out as of that date, based on neoitems.net and echoh's excellent page.
|Kind||Total Items||# of all-species NP items||# of single-species NP items||# of NC items|
|Toy shop puppets||32||4||None||NA|
|Paint brush items||1176||None||1176||NA|
|*Some of the items cover more than one wearable area.|
|**101 of these are for the Usul!|
So, including paint brush items, there are indeed about 1,700 wearable items. Only 5% of those are cross-species items, however, which makes the editorial statement more than a little misleading, in my opinion.
Note that most of the Neopet shop items have a fairly high rarity, so you have to be very lucky or an excellent restocker to manage to snag one of them.
No, you don't have to pay to dress your pets. There are a number of items available for neopoints. The mall has more items of every type, and most of the neopoint items have a fairly high rarity which makes them difficult to buy from a Neopets shop, but there are neopoint items you can wear. echoh's page is a good one to see what your pet can wear.
It's hard to compare the number of clothing items available for NP versus those available from the mall because some of the mall items go into more than one wearable slot, like the Maraquan Exploration Suit. As of October 10, 2007, there were 39 NC trinkets vs 14 NP trinkets; 34 NC backgrounds vs 32 NP backgrounds (this includes the 16 Altador backgrounds which are essentially all the same)
Given that revenues were up 3 times the increase in traffic, it's likely that they were profitable then.
No. A necessary part of a scam is that the scammer deceives their victims. Neopets makes it very clear that the items last for only 180 days. Some people -- hopefully not too many -- have managed to not notice this, but Neopets is not hiding the information in any way
Assuming that the game isn't rigged, the odds are 1 in 16 of winning NeoCash. That means that about 1 out of every 16 people who play the game will win NeoCash or, over the long run, if you play every day, you should win NeoCash about once every 16 days. This does not appear to be the case, however. After several days of tracking the results, the probabilities appear roughly:
Not really. It's true that if you wanted all of the items in the capsules, then you've effectively bought the items at 100 NCs less than you would have spent, which is pretty close to "making 100 NCs". But since the items can't be swapped for other items, if you didn't want the items, you haven't made anything.
Yes, the pages are pretty cluttered up with ads now. You have to remember, however, that advertising is the main way that the site makes money. Without the advertising, the site would almost certainly have to be pay-to-play, which I doubt very many people want.
What's interesting is to compare what Stephanie Yost Cameron, Neopets' general counsel and executive vice president of business and legal affairs, said in an article in the LA Times in April of 2005
If what she said was true, there's been a huge increase in the number of ads since Viacom took over.
Now for the dollar amounts. According to a 2004 article from clickz that appears in the press kit, active users viewed upwards of 1000 pages per month. In that same article, Neopets said that approximate 11 million users were active users, the number of which is almost certainly higher now.
Banner advertising is often paid by something called CPM, which stands for costs per thousand impressions. If each active user views about 1000 pages per month, then Neopets would make that much money per user per month. CPM rates can vary widely, from 18 cents to 60 dollars, but for the purposes of this discussion I'll assume they're paid on the low end of that rather wide range. So here are some estimates for what Neopets might be receiving from advertising alone:
Also of interest is what Google says about Neopets:
Among Neopets' top priorities is earning revenue on the billions of pageviews it draws every month. Chris Davis, Vice President of Sales, wields several strategies to help Neopets capitalize on its loyal following. Among the most powerful tools is User Initiated Brand Integrated Advertising – activities or games built around advertisers' products and services that help build relationships and generate revenues with Neopets visitors. "User Initiated Brand Integrated advertising is the biggest chunk of our revenue," explains Davis. "But we realized it wasn't taking advantage of all of our pageviews.
To reach more Neopets followers, Davis began investigating contextual advertising options, including Google AdSense. A top priority for any ad program he considered was ensuring that it would deliver ads that were correctly targeted and relevant to the content on the site. Even more important, ads had to express a community feeling and meet or exceed Children's Online Privacy Protection Act requirements. With these goals in mind, Neopets began running Google AdSense ads. Davis and his team began with AdSense on a heavily trafficked page where members go to feed their virtual pets. After a successful initial test, they began running AdSense ads throughout the site.
It was very easy to get started, Davis says, but what impressed him most about AdSense was how appropriate the ads were for his target audience. "We are always extremely careful about advertising on our pages because of the age of most of our members," says Davis. "There have been no inappropriate ads from AdSense – the quality has been excellent. We've also found that the ads are very targeted. AdSense helps us provide useful information for members that engenders loyalty.
From the beginning, AdSense has been a key source of revenue. Davis estimates that AdSense ads on Neopets garner roughly 50 million impressions each day. Davis and his team have since optimized their AdSense campaigns to achieve even better results. They used channels and A/B testing to discover that bolder colors that made ads stand out worked better than blended colors. After making these changes, Neopets doubled both its clickthrough rate and revenue. "It's worth the effort to test and experiment. We've found that our optimization efforts on AdSense have had a substantial positive impact on revenues," says Davis.
By adding site targeting to the AdSense mix, Davis noticed several positive outcomes. Site targeting drew more brand-name advertisers and more rich-media ads that his users respond well to. Even more impressive was a dramatic increase in revenues. "Our overall revenue doubled as a result of site targeting," says Davis. "Now, site targeting accounts for 30 to 40 percent of our AdSense income.
In terms of AdSense features, Davis appreciates the ability to block competitive ads and quickly change ad formats and colors to maximize income. He also likes the excellent service from the Google AdSense team and informative Google blogs that help him work through questions or issues.
We're pleased with Google as a company, and with the Google AdSense program," says Davis. "Our next step is to experiment with AdSense for search, where we think there's even more revenue potential."usiness."
|CPM||Monthly revenue||Annual revenue|
|30 cents||$3.3 million||$39 million|
|50 cents||$5.5 million||$66 million|
|$1||$10 million||$120 million|
If anyone can find a reliable source for what Neopets may be receiving as a CPM rate, I'd appreciate them letting me know.
Nope, it isn't. Some people can't afford it. Many people can't use it for one reason or another. But that's the way life is.
On the other hand, there are lots of things that are "unfair" on the Neopets site. Most of the ways to earn neopoints are unfair in the sense that some people have a greater ability to earn neopoints in that way. Probably no one is good at all games. Most people aren't good at restocking. It's easier to make neopoints when you have a lot already, because you get more money each day from the bank and can afford to invest in the stock market.
On the third hand (do any pets have three hands?), the mall is the most conspicuous way that real-life money has made things unfair, which is why there has been a much greater fuss made over it than the previous two pay features, premium and Lutari Island (there being a board devoted to the mall of course also increases the fuss). Not coincidentally, Neopets has made pets more conspicuous by putting your active pet on nearly every page and everyone's active pet on the boards. In editorial 299, they said:
Finally, on the fourth hand, there will be cash cards, so people who can't use it because they can't use PayPal will hopefully have an alternative. And they are planning for the mall to be international, so people who can't use it because of the country they live in will get a chance later on. So eventually, if things go as planned, the mall will be a lot fairer than it is now to a lot more people. There will still be people who can't afford it, but that's just the way things are when it comes to buying things.
It's not a "pet-geared" site... it's a pet site. :) We totally understand that you may do other things on the site, and that's completely fine, but the site is called Neopets and it has always been about the Neopets themselves. That's something we're trying to get back to.
Note: This is not intended to make anyone feeling guilty for buying from the mall. Everyone has a right to spend their money as they choose. This is meant merely to put that statement into perspective and, perhaps, to make people think a little.
Probably most people who play Neopets can, in a literal, afford $5. (It should really be $10, not $5, since that's the smallest amount that a cash card will be, per the Mall survey.) But there are some things to keep in mind when you say that.
First, in most states food stamps are $3.00 or less per person a day. It is extremely difficult to eat well on that little money, as a number of government officials have found out when they've tried to do it. So that $5 represents more than poor people get per day to eat.
Second, not everyone who plays Neopets necessarily has a computer of their own. Many, although certainly not all, schools allow access to Neopets. On the Testimonials page of Neopets, they quote teachers who use Neopets for teaching purposes, which clearly indicates that at least some schools don't block it. Libraries provide free access. Kids can play at friends' houses. So you can't assume that just because someone is playing Neopets they necessarily have a computer or Internet access at home
Third, approximately 20% of the poorest tenth of the population have computers at home. Translating that into real numbers: The population of the US is roughly 300,000,000 (300 million) people. That means the poorest tenth of the population is about 30,000,000 (30 million) people. 20% of that 30 million people is 6 million people! That's a lot of pretty poor people with computers. Unless their employer is providing the computer, they probably have a pretty old computer and dial-up, but that still provides access to the Web and Neopets
Finally, Neopets is unusual among kids sites in that almost all of it is free. That means that poorer kids are more likely to be playing Neopets than other sites.
The short answer is yes, although probably not a lot. The longer answer is a lot harder to explain. (Note, however, that saying that the Mall affects the economy does not say whether it's having a bad or good effect.)
There are a few different ways to explain how it affects the economy. The first and simplest is that if the mall didn't exist, every wearable item would be purchased for neopoints, because that's the only way they could be purchased. (I'm ignoring the near certainty that customisation wouldn't exist at all if it weren't for the mall in this example.) That means that every single person who bought something for his or her pet to wear would have fewer neopoints because of that purchase, and every time an item was bought from a user shop, the owner of that shop would wind up with more neopoints. The mall's very existence changes this.
Another way to look at it is this: If two people have the same amount of neopoints and one buys an item for neopoints and the other buys an item for neocash, the first person wind up with fewer neopoints than the second. one.
I'll add more examples of how it affects the economy as I come up with them./>
Currently there are three pay parts to Neopets: Premium, Lutari Island, and the NC Mall. Planned for the fall of 2008 are two illustrated novels, a puzzle and game book, a how-to-draw book, and a field guide, all done with HarperCollins Publishers. (The Book Standard, June 26, 2007). According to an article in The Book Standard from June 26, 2007, each book will come with codes that can unlock special features on the Neopets website.
It's exciting to bring Neopets, a digital first brand, to the publishing platform offering our audience new ways to interact with the virtual world, its characters and storylines," said Kyra Reppen, senior vice president and general manager of Neopets. "Not only will we be expanding the virtual world to include books, but will also include unique connections between the books and the website that unlock special features to further enhance the Neopets experience for readers.
There used to be game cards that you could buy that came with a code that gave you a (potentially) rare item, but they're no longer being sold./>
No, Neopets is not greedy (or, more accurately, Viacom, since that's who owns Neopets now). Neopets was profitable when it was bought by Viacom and it's unlikely that Viacom has made things worse.But they have a right to increase their profit margin. While they bear extra responsibility because it's a site largely aimed at kids, that does not mean that they shouldn't make money.
This is a hard one to figure out, given the number of accounts a single person may have and different ways of describing things. Different places refer to owners, the number of accounts, unique visitors, and active monthly users. One number that can be ignored, except for perspective on how many accounts are no longer active, is the Total Owners number listed on the Neopia Central page, which as of this writing was 147,893,836.
According to Viacom's SEC filing for 12/31/06, there were approximately 7 million monthly unique users globally. (google viacom sec filing 12/31/2006 Neopets)
According to Viacom's Investor Publication for the second quarter of 2007 (which can be found under Investor Relations on the Viacom web site) Neopets averaged 4.2 million unique visitors per month, a 13 percent gain over the previous quarter's unique visitors count of 3.7 million.
compete.com tracks US visitors:
August was a record high, perhaps due to advertising on Nick, but there was a huge drop (38.4%!) from August to September. Obviously kids have far less time once school starts, but that's quite a drop, suggesting that perhaps new users didn't stick around. Losing 11% of their users from the year before is not a trivial drop either.
September 10, 2007, issue of Media Week:
Still, it seems as though MTV has had only varied success with its acquisitions. For example, the tween-skewing virtual world Neopets has lost roughly 15 percent of its audience over the past year, according to Nielsen//NetRatings. Regardless, "We're extremely bullish on it," said [Mika] Salmi, [MTVN's global digital media president], who hinted that the site's creators may launch new virtual worlds targeted to boys or different age groups...
Also rising in importance are virtual worlds, seven of which the company has launched this year, including the recent Virtual VMAs. But Salmi downplayed the idea that a big, cross-branded social networking/virtual world play is on its way, as some have hinted. He did say that MTVN was looking to better connect its existing worlds, allowing users visit multiple ones with the same avatar.
A press release from Viacom says that Neopets had 5.9 million total unique visitors in August 2007, the highest ever. This presumably means that there are a fair number of new users, although the average number of users at any one time remains about the same, between 35,000 and 70,000, depending on the time of the day. compete.com shows 3.7 million unique US visitors for August 2007, making the US percentage about 63%.
Finally, editorial 295 said that the total unique visitors in a single day is over 1 million, and the total unique visitors is around 11 million. The 11 million number is almost certainly inaccurate, since official corporate publications kind of need to be right.
In August, 2004, clickz.com reported that the number of Neopets users was above 23 million, of which approximately 11 million -- that is, half of all users -- were active monthly users, and that active users spent more than 4 hours per month on the site. When Viacom bought Neopets in June 2005, they claimed about 25 million members. In June 2006, they claimed over 30 million members. In August 2007, they claimed 40 million registered users. (All numbers except the clickz ones are from dwmmedia.com.) If the Investor Publication number is correct, that means about 10% of their registered users visit per month currently. If the 1 million visitors per day number from the editorial is correct, then about 2.5% of all users visit each day.
Well, the staff of Neopets probably did most of the programming and artwork. Viacom, in its Q2 2007 conference call said "We have revamped Neopets...", which presumably refers to the goals set for the Neopets team. And Nexon, partnered with Neopets, is responsible for the NC Mall, although it's unclear whether they had a hand in the programming or merely just the processing of the purchases. Given that it looks a lot like Maple Story, which is owned by Nexon, they probably did have a hand in the programming.
The Neopets division of Viacom is going to be renamed NeoStudios, according to a press release from mid-July:
The wording is rather vague, but it is unlikely that they'll change the name of the web site. And, yes, there is already a web site and a company named NeoStudios which has nothing to do with Neopets or Viacom. Domain names can be purchased, so the company that owns it now will probably make quite a lot of money to sell it to Viacom.
No. Kyra Reppen, the general manager, is in charge now. According to Donna's website earlier this year (the front page has been taken down), she is currently retired and living in the UK. In addition, Adam published a wishlist on crowdstorm.com, with the description:
Adam is the founder of the 'cute' virtual pet site Neopets. After selling the site in 2006, he returned from Los Angeles to the UK and is currently bored and looking for new ventures to invest in.
So it's pretty clear that Adam and Donna are no longer with the company.
Oh, and his wishlist?
I imagine he can afford all of these with his share of $160 million Viacom paid for Neopets. Well, except for the ligament. Can you buy those?
No one really knows how much Adam and Donna were in charge of Neopets, except for those who have worked there. Six months after they created the web site, Doug Dohring invested money in the site and turned it into a business. The impression has always been that Adam and Donna were in charge, or at least had a major influence on what happened on the site, but we'll almost certainly never know one way or the other.
Everything on the web is fake in some sense. If someone wants to buy a fancy background or clothing for their pets because they enjoy how it makes their pet work, that's no more "stupid" than paying for a movie. Paying for entertainment isn't "stupid" (sorry, but I hate that word) as long as you can afford it.
Kyra Reppen: I'm going to talk a little bit about Neopets and where we've come and where we're going and then a little sneak peak at the Neopets mall that is launching next week.
[Shows a video intro to Neopets. There are stars and colorful animals flying everywhere. Everyone is excited by the idea that you can buy pets for your Neopets. They're Pet Pets.]
Reppen: Just a little bit of context. MTV acquired Neopets just about exactly two years ago. MTV's mission is to serve niche audiences and develop deep relationships with them, and Neopets does all that. It fits into the digital area that the audience is clearly going.
The Neopets story. The important piece here is that Neopets is an original, and that speaks to the staying power, that there are so many people here and that there are so mamu youth-targeted sites out there, it validates the space. It launched in 1999 as a persistent game, long before the ideas of virtual worlds were forming. It's the stickiest youth entertainment site.
The virtual economy, the NC Points. There is success within it. What we hear from our audience is that it's like real life. We empower our audience, the tweens, to roleplay and experience life. There are 750,000 Daily Transactions. And like our heritage with Nickelodeon and MTV, we researched and spoke to our audience. There are four key emotional drivers:
Why is this going to work? The emotional connection makes the pixels go away and it's about the experience. Kids have 60 billion dollars in income through allowances and chores.
Some of the key important features are to try before you buy. We provide unique items and animations. There's something like 40 different spots that we can add features to [items, features, backpacks, different accessories].
We're still experimenting with consumer purchasing experiences. Full outfits might add up to a certain cost, there might be packages. We're going to be listening and learning as we go.
Let's say that each user takes up a quarter of a megabyte of data. (This is probably high, but when estimating it's better to overestimate.) 150,000,000 accounts * 1/4 MB per account = 37,500,000 MB of storage total
Each megabyte costs roughly a penny. (Again, probably quite a bit less, but we'll go with a penny. After all, a 20 GB hard disk goes for about $200, which comes out to a penny a MB.) Doing the math:
37,500,000MB * $.01 per MB = $375,000 to store everybody's data. To be even more conservative, let's double it to $750,000. That may sound like a lot of money, but it's a one-time cost. And at the estimated 1/4 MB per account, that means it costs at most 1/4 of a cent to store each additional person's data.
In reality, a megabyte of storage costs a lot less than a penny, especially when you're a big company and own your own computers. So, in brief, the storage cost per user is trivial for a company this size. This is, of course, why they are always trying to get new members: they make more money per person from advertising than it costs to store all of that person's data.
Warning, numbers ahead: You may well be surprised how little storage a single account will take. Take, for example, the contents of a safety deposit box. Each different item in it can be represented by three numbers: a number that is unique to each user, a number that is unique to each item, and a number that represents how many of those items you have. So each item in your SDB takes about 12 bytes (4 bytes per number). My packrat owner had 2,269 different items with a quantity of 6,919 total items on 16 September 2007, which sounds like a lot but would take only 27,228 bytes (0.027 MB) to store!
With the new customisation spotlight, that's not true any more. Unlike the follow discussion about game play, the spotlight awards trophies, prizes, and neopoints, and so is part of game play no matter how people think of game play. People who can buy from the mall have more choices of wearables than those who can't. It's as simple as that. As of this writing, there was only one cross-species NP shirt, the potato sack, as opposed to 10 NC shirts.
This doesn't mean that only people who have NC items will win the spotlight, of course. But having more choices of items means ore ways to create an unusual look and a better chance of putting together a winning outfit.
In my opinion, there should be two spotlights: one for pets with NC items (as well as NP items) and one for pets who don't. Someone who didn't have any NC items could still put themselves into NC competition, but would have the choice to compete only with people who had the same array of items available to them.
A discussion of gameplay
Yes and no. It all depends on what one considers game play. The talisman was the only item so far to change the behaviour of a game and, realising how upset some people were about it, they removed it from the mall. Some people argued that it didn't help you with the game all that much, but that's irrelevant, since it did affect game play in its most literal sense.
But your pets are part of game play as well. Neopets has made that clear, both by putting your active pet in the bulletin board and by explaining why they did that. By that reasoning, mall items do affect game play, even if they don't give an "advantage" to anyone.
In editorial 303, they said that they're "trying our best to come up with items that are useful but don't give anyone a huge advantage - the perfect balance." So they are continuing to think about adding "useful items" to the mall and, of course, a "huge advantage" is in the eye of the beholder. Until we see what they add, however, all we can do is hope that they think about it very very carefully.
In a word, no. Neither Viacom nor TNT reads them. But feel free to waste your time if you want to./>
Note: I have removed a table that tried to estimate the amount of money that Viacom might be making from the mall, because they were just that -- estimates -- yet people misused or misunderstood them.
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