Four decades ago, Indianapolis set out on a mission: to become the “Amateur Sports Capital of the World.” It was an intentional effort by government, business and the community to remarket the city as the place to be by creating the foundations for international amateur sporting events and venues throughout Indy. And it worked.



Today, there’s a similar opportunity for our city and our state: esports. Video games like League of Legends, Fortnite, Overwatch, FIFA and NBA 2K can furnish audiences in record-breaking sizes comparable to the Super Bowl. Leagues have formed with professional players and large, active fan bases who live in the U.S. and cheer on teams around the world. It’s an industry that’s grown exponentially and is projected to do so for years to come.



In light of this opportunity, can Indiana adapt for esports the model that Indy used for amateur sports? While the elements for esports success exist in Indiana, it requires a confluence of companies, talent, universities, government and passion and innovation to launch Indiana headfirst into esports.



What are esports?



Video games in general earn about $150 billion globally, and approximately 166 million adults in the U.S. play video games regularly. Esports was born out of functions within the video game industry: gamers wanted to watch other gamers play, and tech tools were created to facilitate that—most notably Twitch, a video streaming service that Amazon bought in 2014 for $970 million.



Those tech tools have resulted in an esports system today that overlaps in many ways with traditional sports models. Like any sporting event, players compete individually or on teams, and an audience cheers digital bleachers through videos, text chats, online communities and more. Game publishers and national competitive organizations host professional leagues, with games and players drawing millions of global online followers who stay passionately connected to their teams.



Esports requires sustainable talent pipeline to thrive



While esports has been growing recently, it faces an industry-wide challenge: it’s too “top-heavy.” The competitive esports landscape has necessitated a focus on recruiting pro-level players to fill teams but has left behind an anemic talent pipeline to regenerate aging teams and launch new ones.



Many of the Indiana-based companies we interviewed noted this lack of a pipeline and have focused on creating sustainable esports activities, from youth leagues through high school, college and beyond, in a system that mimics professional sports. These companies are laying much of the foundation to hopefully catapult Indiana into the top tier of esports-friendly regions by establishing a talent pipeline.



Some companies focus on the frameworks for hosting and managing successful esports activities. Based in Terre Haute, ggCircuit produces cloud-based esports operating system software that is loaded onto banks of gaming computers where players compete. The software tracks rewards and manages other critical functions of this LAN-based eSports infrastructure. ggCircuit has more than one million registered users and 600 global installation locations, most of which was achieved with zero outbound marketing, according to Director of Strategic Initiatives Jason McIntosh. The company’s reach could be a high-potential indicator for the continued meteoric growth of esports.



Indy-based esports tournament management software provider Challonge also creates and manages a popular tech product affiliated with esports. Over 10 years, Challonge has amassed more than 4 million global users and now operates more than 108,000 tournaments a month, including a tournament with over 3,000 competitors in Japan, according to Matt McIntyre, CEO of Challonge.



Carmel-based Player One Esports (P1E) is building professionally competitive teams by recruiting and managing top esports talent. While the company organizes teams for international competitive play, it’s also inspiring the next generation of players through the Evolve Youth Esports initiative. It doesn’t set out to professionalize its young players; rather, it seeks to imbue them with a lifelong passion for esports. “We’re trying to teach them different life skills they can use in different areas as they get older, like being coachable and communicating and working as a team,” said Noah Hankinson, director of esports at P1E. “The different life skills that you learn as a kid through sports, they’re present here.”



Participants in Evolve Youth Esports learn about team-building and other critical functions through gaming. (Photo Credit: P1E)

The love of esports is necessary from gamers and fans alike for continued industry growth. The Indy Gaming League (IGL) covers that middle ground through amateur esports competitions. IGL’s founder, Kyle Pendergast, has been championing esports for a while now. For Kyle, esports offers an excellent avenue toward retaining talent in Indiana by uniting the city’s business strengths to attract people and gaming companies. “Eventually you could have this cool culture where you have the best digital marketing companies in the world situated here, tied with game developers and publishers who are trying to market their games and attract an audience. There’s a synergy here,” he said.



Universities generate talent for pipeline and raise esports’ profile



That synergy can begin while esports talent and future video game creators are in school. Universities are taking esports seriously: they’re building arenas and venues for training players and creating esports programs akin to athletics programs with scholarships to the tune of $4,800 per year to promising esports talent—some even earn full-ride scholarships.



Around Indiana, several universities have invested in esports as a function of student life and are considering how much further it could go. Butler University has been studying its role in esports and has several ties to that field, including former Butler forward and Boston Celtics forward Gordon Hayward and sportscaster Brandon Gaudin (the voice of Madden NFL). The school’s esports team competes in the Big East Conference against teams from Villanova and DePaul, and the university is planning major efforts directed toward esports in the coming months.



Franklin, Ind.-based Harena Data is injecting data into this collegiate effort. Its product, GYO Score—billed as “Moneyball for esports”—analyzes players’ performances in gameplay to identify top players and strengthen team management capabilities. The company has contracted with national organizations to run collegiate esports drafts, an important feeder for the talent pipeline. “Esports allows schools to target the individuals who are the personality types more interested in STEM fields. It attracts the type of student colleges want,” said Harena Data’s CEO Shawn Smith, a long-time proponent of esports.



Harena Data’s Shawn Smith talks with Inside INdiana Business’ Gerry Dick about the company’s national contract. (Video Credit: IIB)

Alongside recruitment efforts through esports, IUPUI also offers a game development concentration within its computer science major. Students learn the entire development process and master the skills required to step right into a game studio—and conceivably launch their own games someday. Creating opportunities for these students then becomes paramount. If a student graduates and wants to ply their gaming trade, options around Indiana are limited. They either leave the state to begin their careers or, as more often happens, they never use their skills, says IUPUI professor Mathew Powers, who teaches courses in the game development program.



The demand for these jobs exists, as Indy-based Plow Digital’s Greg Philips noted about the hundreds of resumes he’s sifted through. “They want to do the thing they’ve always wanted to do: work on video games,” he said.



Plow Digital produces interactive games for internationally-renowned enterprise clients and builds its own games through Plow Games. While the company hosts many interns, according to Greg, jobs in the local game dev community are in short supply.



Game development becomes gateway to tech entrepreneurship



As the state has done for other parts of the tech ecosystem, we can foster an environment primed for esports and video game development and entrepreneurship. The elements exist in Indiana, but there must be proactive and intentional efforts to bring them together and ignite future success.



Creative talent lives here or has visited Indy before (Gen Con’s 60,000+ annual attendees bring many of those gaming skills with them). Indiana companies involved in esports are capitalizing on functions that play to the state’s strengths in SaaS models and service provision: they set the infrastructure for a global network of players and esports tournaments. There’s already a crossover between traditional sports and esports, as evidenced by Pacers Gaming, part of the official NBA 2K League.



Pacers Gaming, headquartered in Indy, boasts its own state-of-the-art training facility. (Video Credit: NBA 2K League)

Travis Lynch, executive VP of business development at BitLoft, a P1E sponsor, sees opportunity in this groundwork. “It’s a new industry, there aren’t any preconceived notions yet, and we have strong sports traditions here. We also have that Midwestern hospitality personality aspect, and I think all of that makes for fertile ground for finding great esports talent,” he said.



What remains to be done to cultivate a stronger, unified ecosystem around esports?



Secure f unding for new and current companies



As it is for other tech companies, capital is a critical component for gaming companies. Founders we interviewed have turned to bootstrapping entirely or have closed seed rounds with aspirations toward Series A and beyond. The business models for gaming have undergone significant change over time: what was once a three-month-and-done holiday sales cycle has morphed into long-term revenue generation, with purchasable extra content, pay-to-play access and in-game advertisements and product endorsements.



Esports fits perfectly into this new way to play, and investors around the U.S. have noticed. In 2018, funding for esports ventures was up 74% over the previous year, with the esports market expected to reach $1.4 billion by 2020. Institutional investors like Goldman Sachs are investigating esports, specifically lucrative entry points in media rights and sponsorship deals.



Locally, Elevate Venture’s Ting Gootee shared that while Elevate isn’t actively investing in esports or video game ventures, there are company attributes that she would look for when considering an investment. “From a business model standpoint, gaming startups share similarity with other consumer-facing businesses. The key points I would be looking for would include efficient distribution models, leadership teams with good consumer market instincts and design expertise, and last but not least, monetization strategy and based on the strategy whether the team would have the credibility to raise capital needed to pursue such strategy.”



Create collisions between passionate people



Indiana’s tech ecosystem is replete with talent who love gaming. Matt sees an opportunity to activate that passion: imagine a statewide esports tournament event, with companies forming teams and competing for fun, where collisions arise and new ideas form. That will take a concerted effort, both with an event and in how Indiana prepares for an esports environment: “We have to decide as a community if it’s our place to set up that infrastructure and do it in a way that’s for the betterment of the city, not just the betterment of an individual business,” he said.



Through its programs, IGL connects users who are passionate about esports and gaming, providing linkage within their specific local community. As IGL thinks about building a national web of local groups, that local element creates a space for players to learn about Indy and its offerings, as well as for local businesses seeking partnerships esports fans, says Kyle.



Accelerate entrepreneurial game development with intentionality



Esports can also spark video game development. The companies that produce games popular in esports can generate impressive revenues and returns for investors. While we’re attracting top talent through esports, why can’t we also build the next Fortnite in Indiana?



Other states have dedicated efforts toward attracting gaming companies and talent. Georgia recently included video game studios in its extensive tax credit plan, and Raleigh, North Carolina, spent years creating a video-game-friendly environment that now houses some of the largest studios in the country. We’re consistently rated as a business-friendly state, so it would behoove Indiana to consider how it can best support this industry by attracting studios into Indiana and supporting current Indiana-based studios.



That’s part of the equation; we should also consider how to encourage our entrepreneurial tech community to latch onto the video game industry—some impressive talent is here, how do we activate it? A video game accelerator, constructed like many other accelerators, could develop a wave of games that succeed in the same vein as Fortnite has. Greg has thought about this from Plow Digital’s perspective, and he sees potential plug-ins for government and business, especially around simple-to-understand incentives to attract, upskill and retain game developers seeking business acumen.

