Andrew Sykes: 

Do you remember Neopets? If you're a millennial or you spent a lot of time online between 1999 and 2005, chances are you either had a Neopet or knew someone who did. For millions, this online browser game was a portal into a world of digital pets, delightful mini games and a rich online economy. Now, 20 years later, Neopets is aiming for cultural revival under the leadership of a new CEO, Dominic Law. Dominic's joining us today. How are you, Dominic?

Dominic Law: 

Great, I'm doing great. How are doing, Andrew?

Andrew Sykes:

Good, terrific mate. Look forward to talking to you a bit about Neopets and where they're headed.

Hello everyone and welcome to the RSM talkBIG podcast. I'm your host today, Andrew Sykes.

I'm a partner with RSM in the Business Advisory Division and I'll be talking to you about business, money and the economy and helping you get ahead. I'm also joined by one of my other partners from our Tax Advisory Division in Sydney, Peter Xi How are you, Peter?

Peter Xi:

Fantastic, Andrew, and thanks for having me and welcome, Dominic. Really, really excited to talk through everything Neopets. It's been a long time since the dial-up days of me accessing my account, but really, really excited to be here.

Andrew Sykes:

Yeah. So, thanks, Pete. So, Peter and Domine, we'll kick it off. So, Peter, you head up RSM Australia's sub-sector group focusing on the gaming, media and entertainment industry. What made you get involved with that?

Peter Xi:

Yeah, really good question. I think sort of underneath the surface, you know, we're accountants, so, you know, there's quite a few nerds amongst us. So, I think in terms of gaming, that's a fairly, you know, natural thing that everyone's interested in. For me, it really came up a couple of years ago when the Australian government started to introduce real government incentives to help accelerate the gaming industry here in Australia. So, we really looked into that and started speaking to some of the major players here in Australia, including the Interactive Gaming and Entertainment Association. 

And that's when we realised that Australia already has quite a massive gaming industry as it is, both in terms of players, but also in those that work in the industry. And then RSM International as a whole, we then started to explore, you know, in which countries are we already assisting major players with the day-to-day business. 

And we realised that in Europe, in the US and in the Asia Pacific, we already have a very big gaming base in terms of clients. So, you know, I was really, really excited and privileged to get into some of those conversations around the world with our RSM partners, you know, around who they currently service and the clients that they currently work with. As a result of that, we decided we would, you know, proactively set up a gaming group here in Australia.

Andrew Sykes:

In what is truly a global business, isn't it? And I think this podcast demonstrates it. I'm in Canberra, Peter, you're in Sydney and Dominique, I think you're based in Hong Kong.

Dominic Law:

Yep. That's correct.

Andrew Sykes:

Yeah, and what got you into the game before we get into Neopets? What got you into the gaming industry, Dominic?

Dominic Law:

Well, I've always been a gamer my whole life and I played Neopets when I was a kid. So, I guess I started as a gamer and then got interested in the gaming industry, I actually joined the gaming industry around five or six years ago when I was doing more on the management, strategy and M&A initiatives for another gaming company. And that's kind of how I got into gaming.

Andrew Sykes:

Yeah, cool. So, when you were younger, Neopets was how you spent a lot of your time, was it?

Dominic Law:

Yeah, so I started playing Neopets when I was 12, when it was first launched. It was introduced to me by my friends in Canada. So, I was born and raised in Canada. I moved back to Hong Kong. And then around that time, like there was like pre-social media and Neopets has been a big part of my childhood where I use it to meet people, meet friends around the world. And also, we connect with a lot of my childhood friends in Canada.

Andrew Sykes:

Yeah, that's really cool. So, Neopets obviously means something to you. Talk us through how you came to be the CEO of something that was one of your childhood hobbies.

Dominic Law:

Yeah, I mean, it's definitely a childhood dream coming true. And it's definitely a very interesting journey. So, it actually started when I joined this company called NetDragon. And NetDragon is a Chinese gaming company. They're listed on Hong Kong Stock Exchange. And when I joined, I'm helping them to actually restructure a lot of their overseas business, trying to do a secondary listing of some of their overseas assets. It's mainly in the education sector, education technology sector.

But what's interesting is that they've acquired Jumpstart, which was in 2017. And Jumpstart is actually the holder of Neopets asset and they've been running the Neopets game, which they've acquired from Viacom in 2014. So, when NetDragon acquired Jumpstart, it's actually part of a larger acquisition and they mainly wanted to focus on the education asset that is merging with the other education assets that they have.

So, when I first joined NetDragon and then it spiked my interest, was one of the main reasons why I joined it was like, wait, why are they holding one of the assets under the portfolio? It Neopets. And to be honest, I played Neopets for like two, three years when I was in middle school. But after that, I thought like Neopets was gone, like most people who played Neopets during that time. And then it was very exciting to see that, actually, it's still around, and it's been around for 20-something years.

And it's now owned by a Chinese gaming company and that definitely spiked my interest. And one thing led to another. Around two years ago, we started talking about, so how does it make sense for Neopets? It's been around for 20-something years, but to be honest, there has been mismanagement, and there's a lack of focus. It's kind of like there hasn't been any updates for more than a decade to the game, but there's still a very core community that's still playing the game.

And a lot of people like myself who has like fond childhood memory. and then we have like strong emotional attachment to this IP. So that's when we came up with a business plan of like, okay, what can we do if we don't do anything? Like, I'm not sure if Neopets can survive for much longer. And then the rest of the Jumpstart business has been restructured. So that's kind of when we came up with the idea that we should do a management buyout. So that a team of us coming from a NetDragon background, Neopets background, Jumpstart background all came together to come up with a business plan to see how we can spin this off and so that we can run independently to really revive, and I'd say like a turnaround strategy for the whole Neopets classic game, but also Neopets as an IP.

Andrew Sykes:

Yeah, because there's certainly, so I understand it celebrated, 25 years in November. So, there's a strong legacy brand there. Does that excite you trying to revive that legacy brand and bring that back? And do you see there being a direct connection to turning that into a revenue stream, if we look at some of the business side of it?

Dominic Law:

Yeah, think, okay, it's very exciting journey. And then it excites me on a daily basis. I'm very excited to go to work every day to make it happen. But on the other hand, it's also very, very challenging, a lot more challenging than, we have ever imagined, to be honest, like a lot of the low hanging fruits we thought we can kind of get it out of the ballpark really quickly. It just becomes like, there's like so much tech debt. They're just things that we never envisioned. And because of the lack of maintenance and update in the past decade...

Managing a 25-year-old game is actually no small feat, especially with a very relatively lean team that we're trying to do a turnaround strategy on such a legacy brand. But the excitement actually comes with being able to kind of go through these hurdles, and with every challenge we overcome, we can see the results immediately. So, it's very exciting that we're able to kind of deliver joy and deliver updates and bug fixes to a very supportive and loyal community. So, I think that's that's a very exciting part and it brings us joy every day when we're able to deliver a message like, okay, we finally fixed that after so many years. We delivered our first plot and then now we're joining hands together to celebrate our birthday together. So, all these are all the excitements that overshadows all the challenges that we've been facing.

Andrew Sykes:

I can only imagine the sort of legacy tech debt you've got there with a 25-year-old site.

What sort of advice would you give a tech entrepreneur looking at, say, acquiring an older site?

I mean, what are the things that you looked at in terms of that? And does that add an additional cost burden to your operation?

Dominic Law:

I think it definitely does. But I think I would say to look at other revival of a legacy IP or a legacy game. There are two things that really reinforce our hypothesis originally that why we think this business model would work. So, one is actually the most important thing - is the community. So, we realised that after 25 years, even with the lack of updates for the past decade, there's still a core group of core users who are still playing Neopets and they've been very supportive of the IP, and it's become a very strong part or emotional part of their daily lives. And then a lot of our core users log in on a daily basis. And I think that forms the core and the DNA of this game. And with their support, knowing that someone really cares and a big group of them really cares about this brand and this game.

I think that really forms the most important hypothesis of whether this turnaround makes sense. And that kind of leads to what I alluded earlier, like every update, every bug fix, have enough, like we definitely have enough feedback or advice or contribution from the community of what we should do next, what they care about, what they want. So, it's not like we have to do a lot of guessing work to find product market fit, like building a new game. But it's really about, okay, prioritising strategically what we want to do. And then also after setting that is more about churning down, churning through the to-do list that we have. And it's kind of like ever growing lists. And it's really prioritising and resource shifting to make sure we can deliver and keep our customers and keep our players and keep the brand and keep the whole community engaged. And I think that's a big part of it.

And the reason why we think that there's a huge potential for Neopets is actually not just the classic game. The classic game is really the core users we've been playing. We've been able to grow MAU (Monthly Active Users) by close to 3x since we took over. So, a lot of lapsed users are actually coming back to the game once we deliver these fixes and once we introduce new gaming features, optimising the performance of the site, et cetera. So, it's kind of like...

Live ops and every other game has probably a very modernised way of doing it. It's just that it was never introduced and never done properly at Neopets because of the lack of maintenance. So that's kind of the classic site. And the other part when we're evaluating why this hypothesis, why we believe so much in this potential is the emotional attachment that we all have with the Neopets characters, the magical Neopia that we've all grown up in.

[It] actually is a big part of a lot of people's childhood. It's [not just] myself. It's actually [the] majority of the team members, they all played Neopets when they're young. So, a lot of them are actually still playing to date. So, we understand our community. We understand our users. But what's more important is we understand our brand and we really want to really rekindle this whole magic through building up, through brand building activities, through building up our social media presence, rebuilding our licensing and merchandise program.

To really reintroduce Neopets to everyone who has loved and enjoyed Neopets in the past and also bring Neopets to many generations of new users, new players and new users to come.

Andrew Sykes:

So, it would be fair to say, you're being really careful not to impact on your existing core users, still provide them a great experience, but open it up to a whole range of new users or ones to come back to.

Dominic Law:

Yeah, I think that's our business 101 strategy is stay true to our core and the core for Neopets from a brand perspective, from a player perspective has always been the classic game. So really maintaining that it's definitely the most important part of ourbusiness.

Andrew Sykes:

So, Pete, you're a bit younger than me mate, you must have played Neopets at some point.

 Peter Xi:

Yeah, absolutely. I think, you know, as Dominic's talked about, for a lot of us in that generation, it was a big part of our lives. It was one of the first times you really went online and interacted with people all over the world. So, for me, know, even looking through at some of the photos of the Neopets, I still remember my Shoyru for example, you know, it's bringing back lot of those memories. So, I suppose...

Yeah, a question for Dominic there would be if I were to log back in today, which is something I'm very interested in doing, what can I expect to have changed from the last time I played it, which would have been in the early 2000s to now, so in the last 20 years, what would I expect to change if I logged in today?

Dominic Law:

Yeah, so to be honest, it depends on when you last played. So, we probably didn't change much. The whole look and feel of Neopets is still very similar to the late 2010s or 2008, 2009, around that era. think everything kind of like just is a time capsule and we kind of basically stopped there. So, it's like a living historical relic, if you put it that way. But comparing to the early 2000s, there's still some upgrades changing in layouts. We've added like customisation

in later in like 2006 or 2008 and things like that. But I would say the look and feel of the site, the characters, most of them are actually still the same. And that's the interesting part of how, like we always joke around how we actually kept and maintained the purity of the early internet culture because of the lack of update that we had on Neopets. And now it becomes a very unique, nostalgic experience that one could ever have to really experience what early internet gaming looks like. So that's kind of an interesting part for us to get new users to come back and experience it as well.

Peter Xi;

Yeah, fantastic. I guess my follow up question is in relation to that. So probably around the communication strategy for people like myself that used to play. [You] obviously talked about there are core users that have remained on the platform. And then we've got, you know, younger kids that are coming through now that might get onto Neopets 2.0. But what's been your, I guess, you talked about social media, what was being your social media and communication strategy to, I guess, remind people like myself who played it in the early 2000s, what we're missing out.

Dominic Law:

Yeah, so we're definitely trying a lot. It's really focusing on the reactivation aspect of how we get our lapsed users from 20 years, 25 years ago to really understand, to just know the fact that, Neopets is actually still around. The game is still here. The IP is still here. And then doing a lot of those outreach. And there's a three-pillar strategy that we're doing. So, one, like really fixing the game. It's helping us spread the word of mouth among the existing players, to their former friends who played together or friends that in their current social cycle, like in their social life knows that I actually played Neopets in the past as well. Okay, maybe let me log in. So that's has been a big part of how just improving and fixing the game. And because of the ongoing engagement of our existing players, that would naturally have the word-of-mouth aspect to get a lot of our lapsed users to come back. 

And the second part is really the brand-building aspect of Neopets like on our own social media presence, working, collaborating with other brands, doing launching experiences together. For example, it could be a licensing, it could be a merchandise, it could be like offline collaboration that we do. For example, we're working with different FNB players to offer kind of like, okay, Neopets crossover limited edition experiences. So, for example...

Last [year] we did the ice cream shop with Chun's group in December, and then we did it with the Yifan tea house, like having Neopets flavoured drinks. And then we're also working with like Boba tea, kind of shops to offer those experiences. So really, we're introducing Neopets to a lot more people in the offline setting so that people don't really...

They're probably not playing Neopets anymore, but they can pass by CR Merchandise or CR Marketing, and they realise, I've played Neopets when I was young. let me see what's going on. And they might not come back to the game, but they will be enjoying Neopets and experiencing Neopets in different ways that they never had in the past 15 years.

So, in terms of the last strategy is really doubling down on the licensing and rebuilding the merchandise program. So really, it's like because we have such a legacy IP, we're rebuilding the program. [Neopets] used to be one of the top selling Happy Meals toys, for example. We used to be one of the best-performing plushies in Target. So, whether we can build a backup, build our program back up, relaunching some of our key merchandise. So, we're working with great partners on the licensing side. So we launched a tabletop trading card game with Upper Deck that was launched last year and that brought in a lot of new users but also attracting traditional trading card players or trading card players to collect, to get involved with this Neopets IP and also getting a lot of Neopets users who don't play Neopets anymore but they are playing other trading card games to get back into the ecosystem. And then we're launching a Plushie, a blind box Plushie line with Phat Mojo and it was like one of the hot sellers these past few weeks. So, we're doing a lot of these things to really get our lapsed users to know that we're still around and we have a lot of exciting new products coming up. But all in all, not just keeping the nostalgic style of Neopets, but really modernising certain parts of it. The good part of Neopets is like it's always evolving and there's so much customisation that happens inside the game. So, the possibilities are actually limitless, like how we can evolve the style or add new styles to our core Neopets characters, are ways that we can continue to upgrade our style and have something that's maybe more attractive to new users as well.

Andrew Sykes:

Yeah. So, Dominic, I think that's really interesting because what we see with some of our big franchises, you know, that mix between merchandising, trading card games and the digital realm. And you mentioned your plushies. Do you have any of those that we can have a look at?

Dominic Law:

Yeah, sure. I mean, my favourite plushie similar to Peter is also a Shoryu. So, this is actually one of the samples that we have received. It's pretty big. We call it a jumbo plushie. And then this is the Shoryu that I really like. And it's always a blue Shoryu. It was my first Neopet since I started playing. And it became maintained and always my favourite.

So well, but of course it is also one of our fan favourites. So, it's not only because I like it and then we make a merch out of it. But it's also one of the most popular Neopets species on our site and then so there's like a jumbo plushie that we did. It's a limited edition. We only produce like 400 of them and then we actually did a pre-order a few months ago and then it all sold out within days. So, it's kind of proved how our community members are really hungry and has been underserved for the past decade. We haven't produced nice quality merchandise for a long time. And then there has been lack of innovation in the IP or lack of maintenance in the IP. But once we're delivering the right product, like quality product, a lot of people are willing to support us in this way. So, it's been a very exciting journey, of like slowly building back up the whole merchandise program, competing. Well, I would say that competing with a lot of, it's a very crowded space to be honest, and it's dominated by a few big IPs. And for us to have the potential to become an evergreen IP and really compete in this kind of merchandise and IP space is a very exciting journey to say the very least.

Andrew Sykes:

So, do you find, do you envisage that the offline merchandise being just really supportive of the online environment?

Dominic Law:

Yeah, it does. It's actually a very interesting flywheel because a lot of our core users would be purchasing our merch. On one hand, it's because they're collectors and they really like the merchandise itself. On the other hand, there's always a code that can give you interesting items or limited-edition items inside the game. So, it really creates a flywheel where I might be back for Neopets just because of the merch that I remember. And this is like...the character that I really liked when I was a kid. And then once you get it, there's like a code that you can scan. It's like, maybe I can redeem this item in the game. So that kind of brings people back into the game. But we're also trying, like we also make it interesting for people who wants to collect items inside the game too. Maybe I should get that merch so it's like more interaction between the merch collectors or like the collectors inside the game.

And then it's also creating kind of like, okay, I love Neopets. I take care of Neopets inside the game, but can I care for my plush in the real world and having more holistic interaction with the cute Neopets characters I love the most. And that would create a stronger emotional bonding between our players and the characters. And I think that would reinforce itself and make the IP kind of become more long-lasting and have the potential [to] become evergreen. So, the interaction, online and offline sometimes interact with each other.

Andrew Sykes:

Yeah, so look, I personally, I find the trading card business absolutely fascinating. Are you planning to expand more into that? And will you have limited releases that are very collectible? You know, different finishes, different limited releases, rare cards that are collectible.

Dominic Law:

Yeah, we definitely have plans for that. Our partner, Upper Deck, has been working with us very closely on launching this line for years already. So, we launched our first set last summer, and then we actually launched our first expansion pack in December last year. So, there has been great momentum for the trading card community to continue to not just play our cards, collect our cards, but also having a...

Continued expansion and the way we've designed our trading card game is actually we focus very much on the playability. So, it's not just for collecting for the sake of collecting but the game itself is actually very playable: easy to learn but also has enough depth and collectability so that you can add to your strategy on what deck you want to build. But the interesting part is of course we can introduce limited edition cards different finishes on some of these cards. And there are secrets that people are trying to chase. There are kind of like a special finish, like extra shiny cards that people can, if you don't mind, can also showcase some of my collection later if you want.

Andrew Sykes:

That'd be great. We'd love to, if you could show some of the cards, that'd be great. It'd be good to look at, see what they look like.

Dominic Law:

Yeah.

So yeah, I mean, I haven't been in trading cards, playing trading cards for a long time, but the Neopets cards definitely got me back into it. So, I have a whole binder collecting of all these cards. So, there's different finishes. [You] can see the special really shiny characters and then there are things like this. That's like, just the cards themselves are very cute, but there's more than 300 cards now, I think that you can use to collect and also to build your deck. So, there's like an infinite amount of potential on how you want to build. And this is just the beginning. And Upper Deck and us have plans to put in more and more expansion packs on probably like on a biannual basis. Like every six months we'll have a new expansion pack coming out in the market. And then that would continue to expand the player base and getting new players to come in and join in for the fun.

Andrew Sykes:

Yeah, and the opportunity to, like we've seen in some other, over the last few years in some other playing card games or trading card games is collab with another well-known brand. Are you looking to do any of that?

Dominic Law:

Yeah, so we are expanding our collaboration on a different level. So, I talked about how we can collab with offline brands to create offline experiences. We can collaborate with other IPs to create limited edition crossover merchandise. So, we have recently launched something. So, for example, like working with other partners to create apparel items. So, we're working with Steady Hands on cardigans. We're working with Youtooz on a special limited-edition merch where it introduces Youtooz’ signature eye design onto our Aisha and launch a baby Aisha plush. And then we're also working with many other IPs working on collaboration. So, we're launching a lot more on that end because we believe that that's how we can really reintroduce Neopets to not just our own users, but also users that have like forgot about us, but they're now become a fan of other IPs, but now they can get back into, this is like the Neopets that I played and join, like just be part of the ecosystem now.

Peter Xi:

Well, obviously one of the hot topics for anyone in tech is the rapid development of artificial intelligence across various formats. So, Dominic, I guess a question in relation to that is how's AI going to impact Neopets both at a technological level and just at a general level and how you guys grow grappling with that particular topic.

Dominic Law:

Yeah, I mean, it's definitely always a hot topic for the industry. And I think everyone is trying to figure it out. It's kind of like everyone's talking about it. Everyone says they're doing it, but not everyone really understands that type of situation, I would say. But there are a few things that we're following very closely and trying to introduce like AI into our workflow. For example, is there things that AI can help with our productivity? And I'm sure like at a very general level, it's already helping us on a lot of email drafting, legal documents review, or things like that. It's definitely very helpful at doing some basic research. AI is definitely very helpful on some of those parts. But when it comes to the content creation, Neopets is not really doing much on that front. We believe in a lot of the creativity within our artists, in generating these items, in-game events for our players and for our users. So, we haven't been using AI on the content generation side, but we are exploring whether we can use AI on the more coding level side to really help with, okay, can AI really help us fix a lot of this broken code base that we have, but we just don't have enough engineers to really go through all 25 years of code base?

Can AI be part of that to help? Eventually, I think it definitely makes sense. For now, I think most AI models are not trained on such old programming languages, so maybe it's not as helpful as it could be. For other engineers who're building a new game, using new tech stack and stuff like that, maybe AI can be more helpful. I think there are already AI-generated games.

There are a lot of engineers using AI to do 80% of the work. So, they focus on bug fixing and checking the code later on. And that greatly helps their productivity. So, we're definitely seeing that a lot in the industry. We want to see how we can leverage this technology to improve our productivity so that we can have a higher throughput, fix more bugs, and introduce more things.

Also, for example, apart from bug fixing or upgrading our tech stack, there are certain part of the game features that has been discontinued on our site. Can AI be part of the tools that we use to reintroduce a lot of these old content that we just don't have the manpower to really bring it back yet? Maybe those can be areas where we can leverage AI. And so that's kind of more on a tool and productivity level.

And on the other hand, can AI bring new ways of like new way of a gaming experience? I think that's an also interesting topic for the gaming industry. Definitely like AI powered, NPC characters are starting to boom everywhere. And but how can that be part of the integral experience of the game? And how can that add additional value for the game experience is something a lot of people in the industry is figuring out.

We're also kind of exploring on that front, whether, for example, whether a Neopets can be powered by AI and have more interaction with the pet carer or our players in a different way and be more kind of like an intelligent companion. Could that be something that happens? I don't know. It could be something that we can explore, but to be honest, we're probably not going to bring that into the classic game. I think the classic game has a very unique way of how our players have been interacting with their Neopets. And it's been the same way for the past 20 years. So, we're probably not going to shake the boat by introducing all these new elements. But whether AI could be something we explore on for Neopets 2.0 would be something interesting for us to kind of continue to make sure that there will be evolution to the Neopets IP as we figure out what we want to build for the next generation of players. So that would kind of like really bring Neopets back at the forefront of technology. Because if you think about it, when Neopets was first introduced, we're basically at the very forefront of this whole technological evolution. We're the first I would say like MMORPG pet carrying game that existed on the internet on a web-based platform. So that's one of the main reasons why we became so popular, and it's just spread virally. Whether we can do something like that in today's world, leveraging on new technology, I think that would be something that we're constantly exploring.

Peter Xi:

Fantastic. Thanks for sharing. I think, you know, it's a really interesting insight and everything you've said there resonates with us and a lot of the technology businesses that we work with both in gaming and elsewhere where a lot of people sort of think of AI as you said Dominic, they think of it as just a blue sky concept and they ask, you know, is AI just going to take over the world? But really when you break it down, there's really the day-to-day tool side where it can really help people today. And then there's probably the other side where, you know, how do you really bring it into the future where, you know, there's a lot of ideas being formulated about is AI really at that point to just click your fingers and then something happens. That's probably not the case. I think that that's quite common in a lot of clients we talk to.

On the automation and AI piece, you know, in a platform such as Neopets, bots presumably could be an issue. Automation in particular is everywhere. You know, we've got people in the office who have even written scripts to automate desk booking here to try and beat other people in the office to booking their desks. For you guys, in terms of people writing automation scripts and other bot related activities, is it a problem and how are you dealing with it?

Dominic Law:

Yeah, I think just like all the popular games out there, like, botting is always a problem for us and especially for a poorly maintained site for the past decade. So botting problem has existed since many, many years ago. So, it is a top priority for us to see how we can fix it. And there are steps that we're taking. So, I would say it's a two-step process. On the one hand, we need to improve our security.

We need to upgrade our login system, account creation system, so that makes it harder for botters to create massive number of accounts and hack us or try to create accounts to claim three items and trading among the accounts and washing away the high value items that they received. So, things like that we're definitely working on in upgrading our system. So, there has been things that we're doing, for example, like completely upgrading our login system, introducing two factor authentication, and also making sure that it's making it harder, for bots to create a lot more accounts. So that's step one. And then step two is like, okay, improving our security and improving how it makes it harder for bots to navigate and create all these automated ways to buy up stuff or flood event and et cetera. So those are things that we're introducing, of like reCAPTCHA, putting it at the right places, having a more streamlined experience would be part of it. But the bigger way of really tackling this issue is also improvement and changes to our gameplay. So, for example, bots are created on an automated basis. It's really to manipulate part of the gameplay based on the rules that we've set many, many years ago, and we haven't been updating those. So really changing the behaviour of how normal users will interact with each other or changing the behaviour of how the bots have been interacting or trying to take advantage of us, we can really make it harder for at least the existing bots to continue to do what they're doing. And then also changing the gameplay behaviour and make it not worthwhile for botting.

So those are things that we're improving on the gameplay. So that involves game design, balancing, and also making sure that it's things that you improve some bit, like the bots will also improve. But to the point that it doesn't really make sense to create a bot to do certain things, then the botting problem could be fixed on that level.

Peter Xi:

Fantastic. So, leading off from that, then I guess one of the things that you've touched on is the whole wealth economy in the game itself. Obviously, a lot of people play the game for fun, but in terms of that reward mechanism, etc., a lot of people play to accumulate that wealth. In terms of that, again, back to the question of someone like myself, or to re-enter the game today, right? Obviously, with inflation and that sort of accumulation of wealth in the game, you know, I'd be...far behind in terms of that. What measures have you guys got in place to potentially level that playing field or allow someone like me to be able to re-enter the game?

Dominic Law:

Yeah, that's definitely a million-dollar question for most game economies. It's how do we curb inflation and how can we make it interesting for new players or returning players to get back into this. So, there are things that we've introduced. We definitely want to make it easier for returning users or having a chance to accumulate wealth.

So, we've introduced, for example, a daily quest system. Returning users have a chance to go through the daily quest system to get back into the game and explore different functions of what Neopets has to offer. But on the other hand, doing these quests would give you rewards to items. And there's always a chance of some of the highly valued items being rewarded through these quests. And then we're also rotating the quest logs and make sure that the items will be rotated.

So that's kind of one way of how we're fixing inflation. And the other hand is we're reintroducing a lot of the old rare items. Historically, the drop rates might be extremely low, adjusting those, and then also having new ways for returning users to have a chance to get these items is one way of accumulated wealth. Because at the end of the day, people want to accumulate neopoints so that they can acquire the items that they want and collect the items that they want.

And then so if you're able to get some highly valued items, you can sell it, you can trade it, and then you can build your own collection. And I think that's the beauty of Neopets. Like there's so many items out there. If you're only chasing aesthetics, there are probably a lot of low-value items that you can still get and have a lot of fun with customisation and showing off your collection. It could be like not highly priced, but it's just very unique in its way when there's humour or when there's way of how you build your collection. So, I think there's definitely ways of that, but there are some highly prized items that it just becomes really hard to get. So, some of the bug fixings that we've been doing has also helped with that, because there's a lot of random events inside the game where these random events will be giving out really rare items or avatars. Some of those random events has been discontinued for some reason, because of bugs.

So, we have been fixing some of those. It's reintroducing them. And once those bugs are fixed, then because the expectation that, there will be more in terms of supply and more of these rare items will be in circulation, then the astronomical prices would just have to come down because it's been a discontinued product. And then now it's like, we've fixed some of those. So, these are things that we're doing. But on the other hand, when we tailor these fixes to welcome new players and returning players, we also make sure we have to balance out that we don't antagonise the super core players who's been the wealthiest or like the top 1 % of the players. We want to make sure that there's new goals for them to achieve, like new collectible items. The good thing about Neopets is most of these items, they're skins. They're not really gameplay items. So, we don't really have to overpower and overpower to create new items. So that's kind of another problem that most other...

Andrew Sykes:

Mm.

Dominic Law:

MMORPG game with fixes, like, okay, you have a more powerful item that trumps everything. But like for us, it's more about the aesthetics, at least for half of the items. So how we can create interesting new items, hard to get, but exotic, and that's very collectible and create new ways for our collectors to have new goals that they want to achieve.

And make it fun for them to continue to engage with the game. So, I think that's kind of how we've been trying to balance this problem of fixing inflation, making it easier for returning users to accumulate wealth, but also making sure that the wealthiest also have new goals that they can chase out.

Andrew Sykes (38:10)

So that's a bit of catch up for those older users. So, making it, or sorry, for the returning or the new users, it's easier to get a basic level, make it easy to get to that basic level, but the rare and the harder stuff, you don't want to make it too easy because you've got an existing base that's been there. It's a tough problem, isn't it?

Dominic Law (38:29)

Yeah, not unlike the real world that we're living in.

Andrew Sykes (38:33)

Yeah, very much emulating that. 

So, if we look at that, what's your broader vision and what's the road ahead for Neopets? You've mentioned Neopets 2.0. If we look at that road ahead, is that going to be mobile first and getting a broader mobile-based active in the game?

Dominic Law:

Yeah, I think what's ahead for Neopets can be broken down into three parts. So, the classic game, there's still a lot of work for us to continue to improve it, fix it, and introduce new game features. And even with the classic game, we're planning to make it more mobile-friendly in a way that we can convert more of the web pages to be mobile responsive. I would say for now, less than around 30 % of the pages are mobile-friendly, which is not that much, to be honest.

But there's a lot more that we can do on that front. And then for a mobile app related to [the] classic game, whether there could be a new way of us having the core pieces of the classic game and become a mobile app that makes it easier for our players to perform some of the daily tasks or just interacting with their pets or customising their pets is something that we'd love to work on. But on the other hand, we also have other types of mobile games that we have introduced to the market.

So, an integral part of the Neopets experience is playing different mini games to accumulate wealth or get Neopoints in the past. So now we have introduced bigger games that is living separately as a mobile game. So, we have a game called Fairie Fragments. It's a match three game, and we have an island building game called Tales of Dacardia. So, these are two mobile games that we have launched that has been developed in the past and we [are] making sure we upgrade the art style, having it tied in terms of the login and the accounts. And then we've introduced it last year to get to help to really attract some of our users who are more mobile friendly and mobile first to get back into the space, but also allowing our classic game users to have new ways of making, accumulating wealth and also enjoying Neopets in a more modernised way.

So, think that's kind of the second part where there's more mobile experiences that we're offering. And the longer-term strategy is definitely to, what can Neopets build in terms of Neopets 2.0 and in this day and age, what can we further invest in to really bring a new modernised experience of Neopets that would be attractive for the new generations of players. So, what I've been saying in the first two part has been still targeting mostly our lapsed user base.

At our peak, we have 150 million registered user base. So, there's a lot of re-activation to be done and getting them back to the ecosystem. But what we are building next should be attracting the many, many more, millions of users that are gamers, that will be gamers and to get back into, to start playing Neopets in the future would be kind of our ultimate goal. And my goal is to really build an IP, build a game that we can live on for many, many more 25 years to come.

Andrew Sykes:

Yeah, that's a fantastic goal. You mentioned at the start of our discussion that, you know, the platform's gone through several owners and not probably all have been as passionate as you. And from what we see, your honesty and communications resonating with the fans. Do you have a strategy to open that outreach a bit more, you know, a Q &A with Dominique, send the CEO some questions.

What's your views on communicating more with the community?

Dominic Law:

Yeah, so we have been trying to do doing more and more on that front. So, there are a few things that we are doing and we're continuing to optimise the experience. For example, we have a monthly section with our community. We call it a live section. It's kind of like a live podcast style. And then part of that, there's always an AMA section where users can, like players can raise questions and ask us.

But whether we can open that up more, used to be like a full hour and then now my AMA sessions are more like 10-15 minutes and then we collect the questions ahead in the game and in the Neoboards and kind of answer the topmost asked questions. So, there are things that we're doing like that, but we're continuing to optimise the structure to see how we can get more fans to participate and more of our community members to ask better questions, but there's only limited time. So, there's so many questions that we can answer.

So, we're trying to optimize the Q &A experience. On the other hand, we have a community ambassador program where we've recruited passionate community members who are very knowledgeable of the IP or knowledgeable in different aspect of the gaming business or the art aspect of Neopets. And they help give us feedback and collect feedback from the community to really act as the bridge between the company and the community to really help us channel through the suggestions, the frustration and everything in between to help us make better business decisions. And we can also have like a better sounding board of the activities that we want to do, programs that we want to introduce. So that's also been around for almost a year already. And then we're also continuing to make upgrades to the Community Ambassador Program. Like how often do we take meetings? How do we update each other?

Improving the process so that we can improve the throughput and have better efficiency in taking care of all these requests that we're getting in. So, we're doing things like that. And then we're also trying to, like more recently, we're trying to involve the community and really work with us more closer to celebrate everything Neopets. For example, for the 25th anniversary, we actually...recruited a lot of community hosts to help us to together to celebrate our birthday over the course of two, three weekends. And ended up we have like more than 300 hosts applying to become a local host to host some meetups, similar to how Pokémon Go help have a lot of local meetups. That's kind of where we drew the inspiration. And then ended up we're selected I think 40, 41 events that happened around the world in 13 countries and 41 cities, and then ended up having more than like 5,000 people attending our events in person over the course of two, three weekends. And then some of the hosts also did a live podcast for 24 hours and we have another thousands of fans joining in to just celebrate everything Neopets. So yeah, so those are the things that we've been doing trying to be more transparent.

Community is our core and that's a big part of what the Neopets experience has always been about. So, we're definitely working very closely with them, trying to deliver what they expect and continue to engage them to make sure Neopets will be a very community-driven IP since the very beginning and continue that for the many, many years to come.

Andrew Sykes:

Yeah, that's fantastic, Dominic. And look, it really does sound like you're as much a custodian of the community as the CEO of the company. So, I'd like to thank you for your time today. You've given us some really great insights into what it takes to revive a legacy brand, the complexities of dealing with a multifaceted online, offline business and maintaining that community. It's been really good.

I'd encourage everybody who's listening to this, you've got an old Neopets account, get on there and jump in and try and revive it or log in and give it a go and see what it's like. I'd like to thank Dominic for joining us today. And I'd like to thank all of you for listening to talkBIG today. I've been your host, Andrew Sykes. I've been joined by Peter Xi, a Partner at RSM and Dominic Law, CEO of Neopets. If you found this episode helpful, please subscribe and if you can, leave us a review. Thanks, and we'll talk to you next time.

Dominic Law:

Thank you.