Despite the widespread interest in leveraging non-player characters (NPCs) to enhance gameplay experiences, there is a gap in understanding of how NPC spectators (i.e., those virtual characters in the scene that watch users' actions) affect players. For instance, the impact of NPC spectators' presence and feedback on players' performance and experience has not been studied, especially in virtual reality (VR) exergames. This paper aims to fill this gap and reports two user studies that assess their effect on such games. Study 1 explored the impact of having NPC spectators present and their feedback available in a gesture-based VR exergame and found having NPC spectators and their feedback could improve players' game performance, experience, and exertion. Based on Study 1's results, we further explored two characteristics of the spectators—their group size (small/large) and their feedback (with/without). The results show that (1) a large spectator number is more helpful since it improves the overall game experience (higher competence, flow, immersion), increases AvgHR% (the average heart rate percentage divided by the maximum heart rate), and enhances performance (improved players' combo performance and increased gesture success rate for particular gesture); (2) spectator feedback is instrumental in improving players' performance (higher gesture success rates, more combos performed successfully, more monster's combos prevented), enhancing game experience (positive affect, competence, flow, and immersion), and reducing negative game experience, increasing exertion (AvgHR% and burned more calories). Based on the results, we derived two main design recommendations for VR exergames that could pave the way for improving gameplay performance and game experience, especially among young adults.