Sporting a pair of black Jordan 11 Cap and Gowns that look like they were just unboxed and a dark baseball cap that casts a slight shadow over his baby-cheeked face, Delane Parnell fields questions from the audience at this September’s TechCrunch Disrupt, the annual San Francisco assembly that has become a startup kingmaker of sorts. He shares the stage with Jason Citron, founder and CEO of Discord, a messaging app for video gamers with more than 150 million users, and—after a $50 million fundraising round in April—a valuation of $1.65 billion. Parnell’s PlayVS (pronounced play versus), an e-sports platform for high schools, has yet to even launch. But the 26-year-old Detroit native exudes confidence. “Investors are starting to realize that gaming is the next social paradigm,” says Parnell, answering a question about e-sports’ mainstream popularity. “And they want a piece of it.”
You don’t have to look far for evidence of gaming’s influence. It’s all over YouTube and Twitch in how-to videos and live-streamed sessions of FIFA 19 and Assassin’s Creed. A robust ecosystem of e-sports competitions is rising as well, with game publishers, entertainment companies, and even colleges and universities creating leagues and events for pro gamers and amateurs alike. The largest tournaments, for titles such as Dota 2 and Call of Duty, can fill stadiums and dangle purses of millions of dollars. According to research firm NewZoo, revenue from e-sports-related media, sponsorships, merchandise, tickets, and publisher fees is expected to nearly double from 2014 to reach $1 billion this year. Goldman Sachs projects e-sports viewership to reach 300 million by 2022, putting it on par with the NFL.
For all the organizations rushing into e-sports, a hole remains: high school competitions that engage the estimated 75% of American teens who already play video games. Parnell is filling that void with PlayVS, which lets schools create leagues and host virtual and live competitions. Though he’s diving into an industry full of well-funded sharks, including Amazon (Twitch’s parent company) and Discord, Parnell has an edge. In January, PlayVS signed an exclusive, five-year e-sports partnership with the National Federation of State High School Associations (NFHS), the organization that oversees varsity sports and activities at nearly 19,500 public and private high schools across the country. The first test season of a PlayVS-powered competition, for the popular multiplayer game League of Legends, commenced this October at high schools across five states, and the company is gearing up for its official inaugural season in February.
Parnell is now on a roll. Last week, just five months after PlayVS closed its $15.5 million Series A, the company announced a $30.5 million round from investors that include Adidas, Samsung, Sean “Diddy” Combs, and the VC arm of the Los Angeles Dodgers. “I don’t care if you’re gaming on your phone, on a console, or through a cloud service,” Parnell says. “Gaming in high school, even if it’s tic-tac-toe, will run through us.”
If he succeeds, he could effectively control a pipeline that would feed into the burgeoning pro leagues. It took the NBA two decades after its first draft to start recruiting players from high schools, but e-sports leagues are already tapping young talent. A 13-year-old recently signed with a European pro Fortnite team. Given the venture capital and startups flooding into e-sports today, Parnell could create another, equally valuable conduit: one that enables high schoolers—particularly those from disadvantaged backgrounds—to parlay their interest in gaming into lucrative tech jobs. All he has to do is convince schools that e-sports deserves to be taken as seriously as football and basketball.
In a consumer tech world dominated by Amazonian giants, e-sports (for now) is a relative land of opportunity: a place where someone with hustle and perhaps an atypical skill set can still plant a flag. Growing up, Parnell embraced video games as a welcome distraction. He was raised by a family friend in Detroit’s troubled Jeffries Projects until his mother was able to move with him to a better part of town. Not long afterward, Parnell came home to an FBI raid that ended with his stepfather going to jail for several years. “For not snitching,” Parnell says. “I think [my childhood] really fueled my hustle,” he adds. “Entrepreneurs love to joke about eating ramen. I don’t eat fuckin’ ramen today—and don’t plan to ever again.”
As an associate at a cell-phone store during high school, he ginned up business by offering free cases and ringtones to classmates. By the time he turned 16, he was part owner of the store and several others. Parnell’s next act was starting a car-rental chain with a friend who owned a collision shop. (Parnell made it a hit by renting rides to teens during prom season.) He tried college, hated it, and turned to tech. He launched a startup event series, with speakers such as Alexis Ohanian and Mitch Kapor, and later took a job at an internet provider called Rocket Fiber.
Parnell’s interest in e-sports was piqued when tournament organizers began reaching out to Rocket Fiber for help in getting faster connections. In 2015, he created his own professional Call of Duty team. He sold the team a year later and began looking for his next venture. That’s when, at a party during his first South by Southwest, in 2017, Parnell was introduced to investor Peter Pham, who was jigging by himself on the dance floor. “Within a few minutes, it was very clear that [Parnell] understood what was happening in [e-sports],” says Pham, whose Santa Monica, California–based incubator, Science, has nurtured Dollar Shave Club and DogVacay. Pham urged Parnell to focus on the high school market and invited him to move to Santa Monica and work with Science. Pham also provided the brand-name legitimacy that locked in the NFHS deal.
The world of opportunity for e-sports players
Today, PlayVS is powering up for its first full season, which will run from February through May in high schools across 12 states (and counting). It’s the only time in the NFHS’s 100-year existence that it has completely handed over the operation of a sport to another organization. In addition to receiving fees of about $64 per student, per season, from participating schools, PlayVS has the right to operate all online and real-world e-sports competitions and partner with game publishers to bring their titles into high schools. To reassure educators, Parnell is choosing his first titles carefully: League of Legends, a multiplayer game that encourages teamwork and strategy; Rocket League, which combines soccer and driving, and SMITE, which incorporates classic Greek mythology.
Some critics recoil at the idea of school-sanctioned e-sports. “We wouldn’t bring gambling into high schools, because we know it wouldn’t be good for kids,” says Hilarie Cash, cofounder and chief clinical officer of the Restart Life clinic, outside of Seattle, which treats addiction to video games and other digital technologies. But Mark Koski, CEO of NFHS Network, the organization’s video platform, sees e-sports as a way to engage disenfranchised teens: “We want students who are currently not in athletic activities to be involved in the school community.”
Parnell has an even bigger vision. “This is the most accessible, affordable, and inclusive sport at the high school level,” he says. “If we grow, the e-sports [industry] grows.” He aims to build the same kind of recruiting and scholarship infrastructure around gaming that exists for other sports. Tobias Sherman, a former global head of e-sports talent at WME/IMG (now Endeavor) who founded the gaming studio Foundry IV earlier this year, shares this perspective: “As an agent, [I was] always looking for anything that supports the ecosystem and allows players to reach their full potential.” He sees PlayVS as an opportunity not only to develop new athletes, but also to help parents and teachers “understand there’s a pathway to a career.”
It’s not just fame and prize money at stake. With some of the biggest brands in the world acting as funders, sponsors, and headhunters, e-sports can get young people interested in (and scouted for) careers in gaming and tech. Pro gamer Lester Chen, for example, is now a global head of emerging gaming partnerships at YouTube. The e-sports job board Hitmarker posted nearly 2,500 openings in the space for the first half of 2018. Gaming can help “students think more critically from an engineering and design perspective,” says Len Annetta, a professor at East Carolina University who researches gaming. “A lot of kids who aren’t succeeding in school play video games. They have an interest in learning what’s under the hood.”
Parnell knows as well as anyone how a future career can present itself in untraditional ways. “It’s like having somebody open the door for you, and you gotta find your seat,” he says. “I didn’t just find a seat, though. I took it.” For now, it seems that the schools most in need of those opened doors will have to wait. The PlayVS platform requires equipment specs (strong Wi-Fi, CPU power, and PCs with high-quality graphics cards) that can be prohibitively expensive. Parnell acknowledges that some schools have been benched because they can’t afford the technology—a missed opportunity given the dearth of black and brown players in e-sports.
The plan, Parnell says, is to get video-game publishers and other brand partners to help refurbish computer labs and cover participation costs. “We’re focusing on narrowing that wealth gap,” he says. There may be another young CEO-in-the-making who’s depending on it.
How mainstream organizations are pushing into gaming
1. MLS: In January, Major League Soccer announced a partnership with EA Sports, which makes the FIFA 19 video game, to create an eMLS league. It will pit the best players from the U.S. and Canada against each other to determine who will represent the league in the FIFA eWorld Cup. The tournament’s sponsors include AT&T and Wells Fargo.
2. NBA: The NBA 2K League, a partnership between the NBA and game publisher Take-Two Interactive, tipped off its inaugural season this past May with 17 teams (each owned by real-world NBA franchises) competing for the $1 million prize. Games were live-streamed on Twitch, and sponsors included Dell and Intel.
3. NFL and NHL owners: Pro sports team owners, including Robert Kraft (New England Patriots), Stan and Josh Kroenke (Los Angeles Rams), and Jeff Wilpon (New York Mets) each paid $20 million to buy a franchise of the year-old Overwatch League, overseen by gaming giant Activision Blizzard.
4. U.S. colleges and universities: Since forming in 2016, the National Association of Collegiate Esports (NACE) counts more than 80 educational institutions as members, and awards more than $9 million in annual scholarships. Today, some 1,500 student athletes compete on varsity e-sports teams.
5. TBS: Two years after TBS launched its ELeague tournament and broadcasting operation, the network now airs a one-hour show on Friday nights with teams playing CS:GO, Overwatch, and Rocket League. Advertisers include Arby’s and Credit Karma.
6. United Talent Agency: After acquiring e-sports talent firm Press X Agency and gaming management agency Everyday Influencers in June, UTA is now the only company to represent both e-sports athletes and gaming publishers.