Ready, gamer? Play!

INGAME, A COLLECTION OF GAMERS BACKED BY AJIT GUNEWARDENE’S BLUESTONE CAPITAL, IS LEVERAGING 10 YEARS OF DOMAIN KNOWLEDGE TO TURN SRI LANKA INTO THE SOUTH ASIAN HUB FOR AN UNLIKELY CANDIDATE: ESPORTS

[Pictured: Ajit Gunewardene (L) is investing in the next generation of people and businesses: an esports community founded by (from R) Vikum Jayasekera, Raveen Wijayatilake and Ramesh Liyanage]

“Everyone just starts playing for fun, right, and then eventually you find the game that’s most interesting to you.” “Computer games” were just picking up in Sri Lanka when Viren “Hawkie” Dias started playing them in the early 2000s. There were internet cafes – Surf ‘n’ Play and Elements down Park Road – where people advertised “tournaments”. You’d walk in on the designated date and pay something like Rs500 to participate. That “registration” went towards the “prize money”. They’d play, maybe eight, ten teenagers, on PCs connected to a local area network (LAN) and whoever won the game would walk away with the day’s collection. “You were mostly just expecting a day of organized fun,” he shrugs, “and if you won, you got bragging rights.”

Viren “Hawkie” Dias at the Acer Predator League 2019 in Thailand

Over 15 years since he first started, Dias, now a big data researcher still plays very seriously. He’s been a part of every DOTA 2 team that won the championship at the Sri Lanka Cyber Games since 2012 (except one) and represented Sri Lanka at regional tournaments, most recently at Acer Predator League 2019 in Thailand. He and his teammates have turned down invitations to international tournaments, simply because they didn’t have enough time to practice, or enough money to make it happen. At the tournaments they did make it to, Dias met people his age or younger from India and South East Asia who make bank playing video games. Some of them make millions of dollars each year.

“They wake up, have breakfast, practice their games and then sleep, you know? It’s not like us going home after work or school to catch a few hours of practice in the night.”

Dias and his teammates considered full-time careers in this arena and gave up because they knew it’s not viable in Sri Lanka. Yet.

“What if you gave those kids a place to practice, and paid them a salary?” Ajit Gunewardene, the legend who once led John Keells Holdings, asks. The man who jumpstarted PickMe, Sri Lanka’s first ride-sharing app, has found his next arena: esports.

According to Newzoo, the dedicated source for global esports statistics, industry revenues doubled from just under USD 500mil in 2016 to nearly a billion in the short span of two years between 2016 and 2018. In 2018, the League of Legends World Championship Finals viewership peaked at 2 million. ESPN features esports on its platforms alongside football, cricket, NBA, F1, tennis and NFL, and super-star ‘Fortnight’ player Tyler ‘Ninja’ Blevins, arguably the most popular esports athlete alive, was featured on their magazine cover in September 2018. Google has announced the launch of its own esports platform ‘Stadia’ in 2019. The 2024 Olympics may see the introduction of esport to the portfolio, as a demo sport.

5The facts speak to Gunewardene. Less than six months since what may have seemed like a premature foray into unknown territory, Sri Lanka’s #1 Counter-Strike: Global Offensive team ‘Xyphos’ was signed on by German Esports organization myRevenge. The team is not only the first esports team in Sri Lanka to become a professional salaried team, but they are also the first in South Asia to be funded by an international organization.

What stands between Sri Lankan esports players like Dias and highly lucrative careers in this global arena is a financially viable ecosystem. No matter how much talent we’ve got, not every great gamer out of Sri Lanka will be sponsored by a European organization. Our gamers need a supportive local ecosystem and Gunewardene has found just the way to create one: an event-planning firm called InGame Entertainment. The business model is that of the traditional tournament organizer: revenue comes from registration fees, tickets, merchandise and sponsorships. But their core proposition is far more valuable than that of just any event management company. They are at the core of the gaming community in Sri Lanka through the first and only online community devoted to esports in Sri Lanka: Gamer.LK

“These guys have been doing this in an organized manner for ten years,” exclaims Gunewardene, fairly gleeful. “They’ve created an ecosystem which is quite unique. And they have domain knowledge which far exceeds what anyone else has. That’s what I invested in.”

Unlike PickMe, and most other businesses in that small pool of new economy businesses In Sri Lanka that investors can throw some money at, GLK isn’t an idea or a pilot. It is a proven business model, running since 2008, and it was already scaling steadily, albeit slowly, by the time it caught Gunewardene’s eye. In August 2018, Gunewardene’s investment firm, Bluestone Capital, injected “almost second stage” capital to InGame for a 25 percent stake in the company. The management was in turn charged with achieving a few key targets: turn esport into a household term, thereby increase its audience and sponsorship in Sri Lanka, and build Sri Lanka’s position as an esports hub in South Asia.

4The Gamer.LK or GLK calendar has four major annual events: the interschool, inter-university and mercantile games, and the gala play expo in December, within which is also held the SLCG. By end 2018, when Bluestone bought into InGame, the crowds at SLCG had grown to 10,000. The Inter-University Esports Championship 2018 saw participation of over 40 public and private universities, the largest number of Sri Lankan universities to participate in a single sporting event. The inter-school and mercantile events see over 100 registered teams, each.

Facebook reports that a population of 3.1 million users in Sri Lanka have expressed an interest in gaming and esports. That’s the potential of their market. Admittedly, much of InGame reach is so far limited to Colombo followed by Kandy and Galle, but with Bluestone behind them, that’s about to change.

“We are positioning esports to a mass market now, and spending money to create awareness,” Wijetilleke says. Their marketing budgets are now nearly ten times what they were in 2018, and they expect a “huge influx” of new players over the course of 2019. “A lot more people will understand that there are video games, and then there is esports.”

Part of the bid to make esports a household term, across the island, is mobile games. Online and mobile leads will “even out the playing field,” as Wijetilleke says. It will also help them get the bigger fish which is what Gunewardene really has his eye on: South Asia.

China, the United States and South Korea are the biggest gaming markets. South Asia does not feature in this list for the same reasons it does not feature in a lot of the big-industry and new-economy lists. Relatively small proportions of the population are online, and even those that are, struggle with bad connectivity. But Gunewardene and Wijetilleke are convinced the situation will change fast and want to be ready when it does. Most of their arguments are based on the success of the global industry, and the possibilities for Sri Lanka to become a “South Asia hub”.

“THEY’VE CREATED AN ECOSYSTEM WHICH IS QUITE UNIQUE. AND THEY HAVE DOMAIN KNOWLEDGE WHICH FAR EXCEEDS WHAT ANYONE ELSE HAS. THAT’S WHAT I INVESTED IN.”
– AJIT GUNEWARDENE

The lion’s share of revenue to the global gaming industry (36% in 2017 and 37% in 2018) already comes from smartphone games. All other segments (PC, console, tablet) are gaining less and less of the burgeoning market while smartphone gaming will continue to grow. Despite low smartphone penetration, India remains one of the top three potential markets for esports, second only to China’s 782 million smartphone users (and the 253 million in the USA, depending on where you get your statistics from). And one may assume that with the right mix of improved awareness and better connectivity, a not insignificant portion of this growth could come from South Asian gamers who have never used a PC and are organically mobile device users.

3Indubitably, India is already far ahead. 2017 saw the establishment of a 6,500 square-foot gaming stadium and the establishment of fully-funded esports teams. Nazara Technologies, 55-percent shareholder in Nodwin Gaming (an Indian counterpart to InGame), announced that they would invest USD 20 million over the next five years to develop the industry in the country.

But InGame does also possess a core value proposition that is unique to them: an organically grown gaming community and ten years’ experience in bringing them together at the Sri Lanka Cyber Games, and now the IGE South Asia Cup. Gamer.LK, or GLK as it’s more popularly known, started with a Counterstrike server.

Most of us only worry about download and upload speed when we’re on the internet, since we’re usually just clicking through to a different page, or attaching a document to an email. For gamers, the key measure of good connectivity is latency or roundtrip-time. Every move you make on your machine through your character must be communicated to a server, yield a change on the server, and return to your machine as a change in position of the character. Esports move so fast that a millisecond could determine win or loss. Dias played DOTA, a team sport which was, even then, popular among Sri Lankans because latency wasn’t an issue – you could play peer-to-peer without worrying about the connection. The most popular first-person shooting game, Counterstrike, wasn’t so easy because you had to be connected to a dedicated server to play. Among those few that Dias used to play “video games” with when he was a teenager, was another player people referred to as “Rav”. He and some friends ran a Counterstrike server that they could host other players on, and “Rav” was good at the game.

“That was the start of GLK as community,” Wijetilleke remembers. “That’s what motivated us to organize actual competitive tournaments.”

2Running the Counterstrike server, hosting discussion forums, organizing online gatherings for weekend gaming and then physical events that just grew bigger and bigger automatically turned Wijetilleke into something of a representative for the gaming community. In 2007, he took that role on board in a more formal fashion. He and a few others set up GLK simply as an online portal for the gaming community of Sri Lanka to congregate, to talk about how to take things to another level. They organized more tournaments, and 30-40 and sometimes even 50 people started showing up. Then, in 2008, GLK hosted the first edition of the Sri Lanka Cyber Games at the BMICH. They had a nearly 400-strong crowd.

“We were blown away,” Wijetilleke says. “We really weren’t expecting anything, you see.”

Encouraged, they continued to organize events and up the game. In 2010 they set up InGame entertainment as a registered partnership. “We didn’t want to put a lot of money in, and registering a partnership didn’t cost a lot,” Wijetilleke explains. They weren’t spending more than a million rupees on SLCG at that point, Wijetilleke guessed. “Everything ran on volunteers.”

While registering InGame was simply a matter of “getting their books in order”, the content on the platform was what really took up their time and interest. “We didn’t have a yearly sponsor or anything of that sort, but we were clear that we either do it well or we kill it,” Wijetilleke says. “People looked at the brand in a certain way,” and they wanted to maintain that standard. In 2011, GLK took the initiative to set up the Sri Lanka Esports Association as a governing body for the sport. Then somewhere in 2012 or 2013, Ramesh Liyanage, Vikum Jayasekera, and a few others from the gaming community met with Wijetilleke to share their ideas on how GLK could be grown. They were also willing to commit their time to help see that growth. In 2012 GLK started a national ranking and announced the first Sri Lankan national awards for esport in 2013.

In 2015, GLK hired its first two employees: Liyanage and Jayasekera. Liyanage quit a full-time job as a systems and administrative engineer and Jayasekera shut down a web development company with two employees, both for a salary of 50,000 a month, to run GLK. It didn’t make sense, but they believed in the potential of esport in Sri Lanka. Wijetilleke continued full-time in digital content at Pixel International, to finance GLK, pay salaries and keep the whole set-up afloat. As the events grew bigger, InGame started publicizing in traditional media. And one day in 2017 or 2018, a story caught the eye of Ajit Gunewardene. He asked Google what esport was all about. Google said it was a billion-dollar global industry. Gunewardene was hooked.

“WE ARE POSITIONING ESPORTS TO A MASS MARKET NOW, AND SPENDING MONEY TO CREATE AWARENESS. A OT MORE PEOPLE WILL UNDERSTAND THAT THERE ARE VIDEO GAMES, AND THEN THERE IS ESPORTS.”
– RAVEEN WIJETILLEKE

“Everything that has happened the way we are used to, is going to change dramatically in the next 20 years,” he says. “That is where the opportunities lie.” Gunewardene’s years as Deputy Chair at John Keells Holdings are legendary. They were successful, but they were also long. “If I continued doing the same things after I left, frankly, I’d have been bored.” Hence PickMe, the first ride-sharing app in Sri Lanka and break successfully out of Colombo. The new economy, he says, hasn’t been invested enough in, by anybody.

“I monitor trends, that’s my job,” he says. He saw InGame and he knew he wanted in. Gunewardene knew someone who knew someone, who knew someone on Facebook. He asked Wijetilleke for a meeting.

“The first thing I told him was that we don’t have an investment pitch,” Wijetilleke laughs. “We didn’t have a valuation or anything.” They got it together, though, the core proposition, and the basic numbers. They also asked around about Gunewardene. They didn’t want an investor who would proceed to micromanage their brainchild. “Raveen had a structured approach to his thinking,” Gunewardene explains. “He didn’t think he had the next billion-dollar idea. In fact, he was asking me more questions than I was asking him.”

The two met a few more times over the next three months, making sure their individual perspectives on the future of InGame, were aligned to the same vision. For Wijetilleke, this meant understanding what his potential investors expect from InGame, and why they expected it. He wanted to make sure he could deliver.

Gunewardene was already sure they would. InGame Entertainment was incorporated in November 2018 with Jayatilleke and Liyanage as Directors and Wijetilleke as CEO. Wijetilleke quit his job as well. And this time it made sense.

1What are esports, who is in the game, and how are they making money?

Esports are videogames with an essential element of human competition. So your super high scores on the Tetris way back when, unfortunately, don’t count. You’ve got to be competing against an actual human being, either on the same machine, on a different machine connected to yours over a local area network (LAN) or an international server (over the internet). There are a couple of different genres of esports: real-time strategy (RTS), first-person shooter (FPS), fighting, multiplayer online battle arena (MOBA) and battle royale. Some of the most popular games worldwide are League of Legends, Dota 2, Counter-Strike and Call of Duty.