Economic Impact of Habitarium Closure

In around 2008, before Habitarium was released in its current form, it had a short era of beta testing under a different name- Petpetpet Habitats. This beta was restricted to premium users and let players use a standalone windows program to play a game very different to what we eventually received. The concept was rather different and there are still archived pictures from this time but there was one key difference between this version and the one we eventually got which I want to focus on. In Petpetpet Habitats the items inside the game were real neopets items which could be transferred between the game and the site and traded on Neopets.com. This was likely going to be the way in which TNT was going to encourage users to play as they could make neopoints off the items they earned. After a short time the whole project seemed to disappear, it was buggy and didn't really work as intended.

After a long period of silence about the whole concept TNT finally showed their hands by releasing to premium beta a new version of Petpetpet Habitats, Habitarium. Habitarium appeared to be a complete reconstruction of the concept from the ground up in flash and it was promised to be just the beginning. While some assets were reused the whole game was entirely different and TNT promised a bright future for the Habitarium. Unlike Petpetpet Habitats, Habitarium did not allow items to be traded outside of the game and the rewards were paid out directly as NP. If a user was to reach the max level they would receive a sum of NP for their time with promises that more content would come. In theory this was a fine idea and I don't think anyone at TNT would have made it if they didn't believe that they would be able to hold up this promise. The problem is that things often don't go according to plans and for some reason and TNT was unable to release further updates to Habitarium.

Habitarium was abandoned by TNT but still very much alive in the eyes of users. While few users could ever argue that Habitarium was fun, it worked as a very effective way for players to earn NP and in doing so earned a place in many players' browsers. The problem is that this was never what TNT intended and the huge influx of currency had a very negative effect on the economy. During the period of Habitarium's release and beyond Neopets had been (and is) undergoing some serious inflation problems. While TNT attempts to rectify this with mass giveaways of items and the occasional NP sink (such as stamp auctions or the save the wheels event) they are fighting a losing battle. On the surface players see prices rising and that they need more Neopoints to get what they want; Habitarium gives out huge amounts of NP so for many players this seemed like a great solution. The problem is that inflation is by definition a problem which arises when currency is devalued.

The Neopoint has an exchange value with every other item on the website, prices rise and fall due to demand but the overall value of the neopoint is based on how many are in circulation. The more neopoints in circulation means the less they are worth; this is why NP sinks are good for the economy. They make NP gain in value. Imagine something is on sale for 10000NP, a Book of Amazing Cabbages (hint hint nudge nudge) and as it stands there are a pool of 5 users. These five users have 5000, 12000, 200, 15000 and 7500 NP. As it stands only a percentage of the users can afford this price and hopefully those users will consider buying the book. If they do not, the seller may be forced to lower the price, if both the higher users want it the price may raise. This is basic supply and demand where the price is dictated purely on consumer desires but let us add inflation in. Say a new game comes out which provides users with 10,000 extra NP per day- some players choose to do this while others do not. Now we have a whole new landscape, 15000, 22000, 10200, 25000 and 7500. Most players were able to do this deal and now there are many more points out there- so what does the book seller do? Due to the extra amount of neopoints in the market, the value of an individual point has dropped and in doing so now the book is selling for 20,000 NP. What is more is that some users were unable to earn the 10k due to glitches or other reasons and now are forced to live with the increased price. This may be a small scale example, but it is happening all over neopets.

Inflation is unavoidable in a game like neopets, as time passes players will always be earning on the whole more points. New players will come, old players will go, but the prices will continue to rise steadily unless there are other methods being used to regulate the inflation. The issue with Habitarium is that it causes this problem to the extreme. While players may earn 20-40k per day with games, 45k per day through shares (with delayed payout, assuming a 60 sell point), or windfalls in Food Club chances are this won't happen every day. Games get boring, shares take time and Food Club isn't guaranteed- Habitarium plays itself. With minor user input players are able to earn upwards of 100k neopoints per user, per day. Over the months and years this figure slowly adds up and suddenly there are a lot more Neopoints out there. Prices rise aggressively, TNT is forced to create huge giveaway events to lower the rampant inflation and the particularly rare items on neopets which cannot be given out continue to rise in price. You may be saving for your new Battledome weapon, but unless you are buying from the Hidden Tower, the players you are bidding against are also doing the same thing.

Habitarium likely would have been a very good thing for Neopets if the content had continued and the NP payouts were less extreme. Two things could have been used to reduce the inflationary problem which Habitarium posed. Firstly the NP payout of the gems at level 50 could have been cut by a factor of 10; this would have let the daily payout be more of the level of a normal game or Key Quest. The second option would be to replace the NP rewards from gems with items from a pool in much the same way Key Quest pays out. Both of these options would have dramatically decreased the negative inflationary effect on the economy, but also would have had another side effect. After the initial rush on items had ended or after reaching level 50, people would no longer play Habitarium anymore. People only play it for the payout, so without it very few would remain. Ironically this leads back to TNT's original reason for closing Habitarium, that it isn't worth transferring over. In its current state it causes more harm than good and if fixed no one would play it, so why would they bring it over exactly?

TNT is trying hard to deal with the inflation through giveaways, which while it is a perfectly reasonable strategy risks killing the economy even further if it is used too much. Closing Habitarium would mean closing one of the worst inflation causing problems on Neopets today and if it was combined with a good NP sink could be an amazing way to help stifle inflation. While you may be lamenting the loss of your bottomless neopoint supply, the problem is so is everyone else. If everyone has access to it then all it does is causes a major disadvantage to new players and players who cannot play Habitarium for some reason. By closing the hole over time we should see lower prices across the board.