Delane Parnell sees the future of the billion-dollar esports industry — and, it's still in high school.
Parnell, 26, is the founder and CEO of PlayVS, a Santa Monica-based tech start-up that has raised $46 million from high profile investors to create officially sanctioned high school esports leagues that can turn teen gamers into varsity athletes. Through an exclusive partnership with the National Federation of State High School Associations (NFHS), PlayVS (pronounced "play versus") is the official operator of esports in high schools in 15 U.S. states, so far.
"Obviously, there's a lot of excitement and momentum around esports today," Parnell tells CNBC Make It, referring to the fact that esports is already a billion-dollar industry where the top professional gamers rake in millions.
"But, what people don't really recognize is that esports really only exist at the pro level."
Professional esports leagues and tournaments have a global audience of roughly 380 million viewers, according to industry research firm Newzoo. But Parnell — a college dropout who furiously networked his way into a tech career — had formed and sold his own esports team, so he realized that the growing esports business would soon need a talent pipeline where amateur players could hone their competitive gaming skills to maybe one day go professional.
With that in mind, Parnell launched PlayVS in early 2018. PlayVS partnered with the NFHS (essentially the NCAA of high school), as well as video game publishers like Riot Games to make sure that high school gamers across the U.S. can form teams at their schools, receive coaching and compete against rivals at other schools in much the same way that teen football players do.
The primary product that PlayVS offers is its software platform that schools or parents pay $64 a season for students (13 and over) to access from their schools' libraries or computer labs. It serves as the high school esports leagues' defacto version of everything from practice space and playing field to league administration office. Schools can use the software to get a local team coach certified by PlayVS, while student players log on to hone their skills and compete against rival schools. PlayVS' platform also tracks the students' gaming skills, allowing them to keep track of their progress during practice and tally points and wins during competitions.
"All of that activity happens online," Parnell tells CNBC Make It.
"We basically take on the entire operation of esports at the high school level on behalf of NFHS and their state associations," Parnell says.
The NFHS is on board with launching esports leagues in part because it could attract some of the 8 million U.S. students who do not currently participate in sports, according to a statement by Network CEO Mark Koski. Since high school esports leagues are virtual, participation does not require travel, and it's more affordable than traditional leagues which require equipment and facilities. Indeed, 42% of students who participated in PlayVS during the past school year said it was the first time they'd been involved in a school sport or activity, according to the company's survey results.
The first PlayVS season kicked off in October 2018, with state-wide competitions playing Riot Games' "League of Legends." That season ran through December, after which PlayVS crowned its first five state championship-winning teams in Connecticut, Georgia, Kentucky, Massachusetts and Rhode Island. (Parnell tells CNBC Make It that PlayVS does not publicly disclose the number of participating students or schools.)
"There was one team in Georgia that won 18 straight games, which is now the most wins in esports history at the high school level," Parnell says.
Of course, not everyone is convinced that high school students should be encouraged to spend their free time playing video games, even if it is sanctioned by their school and the NFHS. Last year, the World Health Organization classified video game addiction as a mental health disorder, and some parent-formed groups now exist that aim to combat supposed addiction to gaming among youths.
PlayVS points out, however, that it "works with coaches to develop guidelines for monitoring screen time at home, scheduling game time/practice, as well as screen-free times." PlayVS also says the company encourages high school esports coaches to have players do physical stretches and warm-ups in order to "prevent eye, neck, wrist and back strain."
Meanwhile, Parnell also points out that participating with PlayVS could help put high school gamers on the radar of colleges that offer scholarships to esports players. Already, roughly 200 U.S. colleges and universities are offering about $15 million per year in scholarship money for the top college esports players, according to the National Association of Collegiate Esports. Last month, ESPN even hosted the first-ever Collegiate Esports Championship and live-streamed competitions to viewers around the world who watched teams from Georgia Tech, University of California at Berkeley and other schools claim titles.
"[PlayVS players] see esports as a trajectory for their career, and certainly for their lives, whether they become pros or they want to work within the industry," Parnell says. "So, to be able to offer them an opportunity, and to be able to serve as, sort of, the connective tissue between the high school level and the college level is super important to us."
For the league's second season, Parnell and PlayVS added more states to the roster and also secured licensing rights for Psyonix's "Rocket League" and Hi-Rez Studios' "Smite." PlayVS has other publisher partnerships in the works that have yet to be announced, Parnell tells CNBC Make It.
And with investment from the likes of Adidas, Sean "Diddy" Combs, Twitch cofounder Kevin Lin and the investment arms of Samsung, the Los Angeles Dodgers and San Francisco 49ers, Parnell even feels PlayVS can grow beyond high school.
"What we're doing here in high school we can do at every level: we can do in college, we can do at the adult amateur level, we can do internationally," Parnell tells CNBC Make It.
Part of expanding the scope of the business will involve growing the PlayVS software platform to include additional offerings for players and coaches at all levels of play, including offering teams tools to help them recruit and analyze players. PlayVS could also look to expand into broadcasting competitions and selling apparel as well as landing sponsorship deals should the company eventually move beyond just the high school level.
"We certainly think about ourselves as a company really focused on amateur esports and building software for that space, and high school is really just that first product offering."
UPDATE: This article has been updated to show that Delane Parnell is the sole founder of PlayVS, and that the participation cost for the high school esports league is $64 per season.
Like this story? Subscribe to CNBC Make It on YouTube!