How Neopets.com Works

Simply put, Neopets is a Web site that allows members to create and care for virtual creatures. Creating a Neopets account is free. The Web site is supported by the money they make through advertising and marketing, which we'll discuss in more detail in Behind the Scenes. Each account can have up to four Neopets, and there are currently 53 varieties to choose from. The pets themselves are loosely based on animals or fantasy creatures.

At the most basic level, caring for a Neopet simply requires feeding it every few days. There are other ways to interact with the pet, however. You can make your pets more intelligent by "reading" books to them, for example. You can acquire toys, food and other items in several ways. You can purchase them with Neopoints (NPs), the currency of Neopia, the fantasy realm where all this takes place. A simple food item like a cheeseburger might cost 200 NPs, while rare items can cost tens or hundreds of thousands of points. Some games within the Neopets site give out items as prizes, and occasionally items are awarded as random events.

There are three primary ways to earn Neopoints:

From time to time, the creative team at Neopets constructs a storyline that will help shape Neopia. The storylines can be influenced by Neopets users, usually through playing a certain game or trying to solve a puzzle. As a result of the storyline's outcome, a new area may appear or a villain may leave Neopia. For example, when Tyrannia was invaded by monsters, Neopets had to fight them off in the Tyrannian Battledome.

Next, we'll find out why Neopets is one of the Web's "stickiest" sites and see where else the Neopets have appeared.

Neopets boasts that it is one of the "stickiest" sites on the Internet, with users spending an average of six hours and 42 minutes at the site per month [ref]. How does Neopets generate such loyalty in its users? There are many ways for Web sites to generate stickiness, and Neopets does several of them very well.

Neopets has licensed their characters and name to several different manufacturers to bring products to Neopets fans around the world. Wizards of the Coast, makers of "Dungeons & Dragons" and the "Magic: The Gathering" card game produces the Neopets Collectible Card Game (CCG). Each pack contains several cards from the set, some more rare than others. Players build their own decks out the cards they have, so each player has a different deck. The object of the game is to defeat your opponent's Neopets in arena battles using items and weapons. Each pack of cards also contains a code that can be entered at the Neopets site to receive special items.

Thinkway Toy holds the license to produce 6-inch action figures and plush versions of Neopets creatures and characters. In 2004, Sony Software Entertainment released "Neopets: The Darkest Faerie" for PlayStation 2. The adventure game allows players to control two different Neopets on a quest to defeat the evil Darkest Faerie.

Perhaps the biggest project in the works for Neopets is the Neopets movie. Slated for a 2006 release, the movie will be a computer-animated feature directed by John A. Davis (director of "Jimmy Neutron: Boy Genius"). Neopets currently has a multi-picture deal with Warner Bros. Studios, so more Neopets movies on on the way.

Next, we'll find out who owns Neopets, how they make money and how the site was created.

Neopets started out in 1999 as a small project by two British college students, Adam Powell and Donna Williams. Powell did the programming while Williams designed and drew the creatures and other graphic elements. Initially, Powell and Williams intended the site for other students, so they included a lot of inside jokes and Britishisms. Some of these elements remain, notably in the site's continued use of British spellings for words like "grey."

Powell and Williams were soon overwhelmed by the site's popularity, so they sold it to market research expert Doug Dohring [ref]. Dohring kept the site's creators on-board, moved company headquarters to Southern California and started developing what he hoped would become a "media empire."

In June of 2005, Dohring sold Neopets to MTV, a division of media conglomerate Viacom, for $160 million [ref]. He stayed with the company through the sale. As of the sale date, Neopets reported 92 million accounts. Adjusting that number for users with multiple accounts, that represents about 30 million unique users. Children under age 13 make up 39 percent of those users, with 40 percent between the ages of 13 and 17, and 21 percent over 18. In addition, 57 percent of users are female, a very high number in the traditionally male-dominated online gaming market [ref].

Neopets is able to turn those numbers into profits a number of different ways. The most obvious method is something Dohring calls Immersive Advertising, a unique way of incorporating ads into Web sites. It works a little like product placement in a movie or TV show. Along with the Neopian-themed games, Neopets users will find games that are thinly disguised marketing tools. These games reward players for answering trivia questions about a TV show or a toy. Owners can buy McDonalds food for their pets or play a Pepperidge Farm game. A taxi game uses an image of a cell phone to send messages to the player -- the game is sponsored by the maker of the phone, a model designed for kids. Retail sales make up a portion of Neopets' revenue as well, including the CCG, action figures, plush toys and the PlayStation game.

While Neopets uses the marketing information they collect to design new games and marketing partnerships, they also use it to make money. The company owns a huge set of research data on children 12 and under, a difficult demographic to get because marketers must comply with the Children's Online Privacy Protection Act (COPPA) and obtain parental permission. Neopets claims more than 50,000 kids in their marketing database. Neopets sells market research (not personal data) to other companies, trading on Neopets' "unparalleled access to young people," as the company press kit phrases it. As of January 2006, Neopets was operating on 300 Linux-based servers pumping out 1.7 gigabits of bandwidth each day [ref, ref].

In the next section, we'll discuss some of the problems Neopets has faced.

Like any online community, Neopets has had to deal with malcontents, swindlers and cheaters. The company's response efforts involve two tactics: education and account freezing. Neopets maintains a Wall of Shame, a page that describes some of the more common frauds and schemes. There are also members who act as self-appointed "Newbie Guardians," helping new players avoid pitfalls and problems.

Account freezing is the Neopian death sentence. Neopets responds to almost any suspicious behavior by freezing the account permanently. The user can always create a new one, but all Neopoints, items and other benefits associated with the old account are lost forever. Longtime players with a lot of time invested in their pets are understandably terrified of this punishment, especially since freezes occasionally seem to happen arbitrarily, or because the user violated site rules inadvertently. For example, sometimes in-game events allow players to visit a certain page once per day to collect a rare item. On several occasions, a bug allowed players to get the item multiple times per day. Players who got the item more than once, even if they didn't know it was a bug, or just forgot that they already got one that day, had their accounts frozen.

Neopets scams are similar to most Internet phishing scams that try to steal information. Instead of bank account numbers, these scams focus on getting account passwords or the e-mail address associated with an account. While the scams take many forms, they can all be avoided by following one simple rule -- never give out your account password to anyone for any reason.

The other big problem with Neopia is one that has parents and consumer advocates worried. Neopets aims their marketing efforts directly at children who may not be old enough to understand the difference between a game and an advertisement. Immersive Advertising places corporate-sponsored games right next to unsponsored ones. The site added a "This Page Contains Paid Advertisements" disclaimer near the bottom of pages in response to complaints. However, the disclaimer appears on just about every page at the Neopets site, so it doesn't really help kids determine what is an ad and what isn't.

Neopets also bowed to pressure after a flap over gambling games. Parents were upset that young children were learning to gamble by playing games similar to those found in casinos. Since then, accounts held by users under age 13 do not have access to any gambling-themed games. However, there is no verification process to prevent a child under age 13 to create an account and say they are actually 18.

According to Neopets, keeping kids safe is a high priority. They have monitors who keep an eye on chat rooms and message boards 24 hours a day, removing offensive language and making sure kids aren't posting personal information or falling prey to online predators. Neopets also follows Children's Advertising Review Unit (CARU) guidelines.

In the next section, we'll explore Neopets' connection to the Church of Scientology.

Neopets CEO Doug Dohring has strong ties to the Church of Scientology. He is listed on Scientology's Hubbard College of Administration Web site as someone who uses the "Administrative Technology" created by L. Ron Hubbard, founder of Scientology. He has also received awards for donating more than $250,000 to Scientology-related groups and causes [ref]. On one Scientology site, Dohring declares, "Having used his [Hubbard's] technology in every business activity for nearly two decades now, Mr. Hubbard's organizational concepts are always with me to the point where virtually every aspect of running my companies involves the use of his administrative technology" [ref]. Dohring also confirmed the use of Scientology principles in an interview with Wired magazine, saying of Hubbard, "He created a management technology that's very powerful."

What exactly are these administrative principles? Hubbard's Administrative Technology is based on the Org Board, short for organizing board. This system creates seven divisions within a company: executive, personnel, sales, finance, training, marketing and qualifications, with three subdivisions within each division [ref, ref]. The Church of Scientology Web site states that Hubbard developed this system in 1965. However, Hubbard described the Org Board in a 1965 lecture as a system that had been in use by a galactic civilization for 80 trillion years in the past -- his system is an improvement upon this existing system [ref].

While no one has claimed that any aspects of Scientology exist on the Neopets Web site itself, there are unsubstantiated rumors that employees are encouraged to convert to Scientology.

Despite the criticisms and controversies, the Neopets empire shows no signs of slowing down. As of February 2006, Neopets claims over 100 million users and over 150 million individual pets [ref]. The company will soon make the jump to another lucrative market -- cell phone ring tones and wallpapers [ref].

For more information about Neopets.com, check out the links on the next page.