In March this year, Dominic Law, the CEO of game developer Neopets, told Forbes that his firm was excited about the idea of a play-to-earn game and was in the process of building one. However, Neopets announced on Wednesday that it had abruptly halted the development of its Web3 game. It is still not clear why the company made that decision.
Titled Neopets Metaverse, the NFT-powered game was in the alpha stage, and Neopets had, as of June 30, 2023, sold more than 9,000 Solana-based NFTs, along with raising millions from blockchain companies Polygon and Avalanche, to support the game development.
In a blog post, Neopets announced that it will use the raised funds to develop World of Neopets, a non-crypto game. The firm said the new game reflects its vision and values and is in line with the demands of its customers.
As per the blog post, the game developer has a new leadership team. But does that mean Law is out? Well, it seems like he is staying. That’s according to his Linkedin profile which still indicates he works at Neopets as its CEO.
It is worth mentioning that Neopets is no longer a subsidiary of gaming company NetDragon. The firm now operates independently for the first time since 2005. In the blog post, the Neopets team says since corporate baggage is a problem of the past, it will come up with programs designed to connect with customers, such as Ask Me Anything (AMA) sessions.
Neopets Accused of Executing a Rug Pull
Following news that Neopets had canceled its NFT game, the crypto community on Twitter called out the company for rug-pulling its investors. For starters, a rug pull is a scenario where a developer collects funds from the public and then abandons the project, leaving investors in losses.
However, Neopets has assured the crypto community that it’s not planning to run away with the NFT holders’ funds, adding that it will communicate further details on its Neopets Metaverse discord server. But it is not clear whether the NFT holders will get refunds considering that Neopets’ blog post said the raised funds would be used to support the development of the company’s non-crypto game.
Neopets’ Crypto Journey
Neopets began exploring the crypto space in 2018 when it released its Ethereum NFT collection featuring 9,000 pieces, but only 1,850 were sold.
At the start of this year, the company raised over $4 million to build Neopets Metaverse from multiple venture capitalists, including Haskey Capital, NetDragon, IDG Capital, and the two crypto firms Polygon and Avalanche. Despite Neopets’ decision to move away from Web3, the game developer says its backers have continued to be supportive and believe in its vision.
Most of the investors that participated in the January funding round said at the time that they believed Neopets would help boost the adoption of NFT-powered games. However, as things stand, it looks like they will have to find other Web2 game studios to help onboard traditional gamers to Web3.
Did Backlash Fuel Neopets Decision?
While Neopets has not disclosed the reason for abandoning its Web3 project, many crypto analysts are convinced that the company’s decision was driven by backlash from several fans. One Neopets fan once initiated a campaign dubbed “NoNeoNFTs, arguing that NFT-powered games were “scammy.” In addition, the fan accused the crypto community of being racist and homophobic, and that’s why they did not want Neopets to be involved with digital assets.
In recent months, several publications have also mocked Neopets NFTs, with Kotaku calling them garbage. In February, Game Rant said that the NFTs would bring financial risks to traditional gamers, arguing that the crypto industry is filled with fraudsters. That month, The Verge labeled the Neopets Metaverse game as a ponzi scheme.
Despite the backlash, Neopets promised to continue building its Web3 game, but its latest announcement indicates it has given in to pressure.
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