Metro firm turns video gaming into spectator sport

Employees: About 150, at least double from a year ago

The backstory: The gaming industry is a hit-and-miss market. Hi-Rez spent millions on its first game and lost money on the effort. It's second game was largely break even. It's third game, SMITE, is profitable, according to Hi-Rez co-founder and chief operating officer Todd Harris said.

The current plot: Hi-Rez is part of the free-to-play sector of gaming. Anyone can play SMITE for free online. They pay $1 to $10 a pop only for extras, such getting access to specially-themed gods, premium voices or ability to do taunting dances in front of adversaries. Only 10 percent of users ever pay, Harris said, but that's enough to put the company on pace for $20 million in annual revenue.

A mini ESPN of sorts has quietly bloomed in north Fulton. Instead of focusing on college football and the NBA, it’s fixated 24 hours a day on what some might consider an unlikely draw for spectators: watching other people play video games.

Every day, several thousand people online watch as Hi-Rez Studios airs a 24/7 online channel showing people playing the company’s SMITE, a game in which players control battling gods.

Georgia officials have long dreamed of becoming a more substantial hub for tech jobs and for entertainment production. So earlier this year state legislators renewed job tax credits for developers of video games, which straddles both industries. Alpharetta-based Hi-Rez is one of the sector’s biggest local operators, with 150 software developers and other employees, a hit game, a million active players around the world and a deal to expand into China.

But its Hi-Rez’s moves to draw spectators that has led it into an emerging arena for the nation’s massive gaming industry, which last year generated $15.4 billion in U.S. software and content sales.

“My dad doesn’t quite understand it,” acknowlegdged Anthony Adame, a Georgia Tech student and Hi-Rez viewer.

Adame sometimes plays SMITE about three hours a day, but he watches and listens to online streams of others playing another three hours a day.

At first he watched so he could pick up tactics to improve his own skills. Then it morphed into entertainment, Adame said. He looks for good players and people with interesting screen personalities.

Adame likens it to watching pro baseball and football, two of his other passions. But unlike pro sports, there’s always a streaming live SMITE game to watch – including plenty that are not on Hi-Rez’s official stream.

“I can just pull it up on my computer and be able to watch it free of charge,” he said. “It feels like an actual sports event.”

He’s part of a growing wave. Earlier this year Amazon agreed to pay about $1 billion for Twitch (Twitch.tv), an online site where anyone from amateurs to pros can stream their play live for all the world to see. More than 50 million people tune in.

League of Legends

Last year’s world championship of League of Legends, a popular game produced by a Hi-Rez competitor, attracted about 32 million viewers. The crowds aren’t just online. Gaming tournaments are filling sports arenas with thousands of fans who act like legitimate sports fans: waving signs, wearing jerseys of favorite pro players and, of course, screaming.

Yet most Americans probably don’t know realize that arm of gaming even exists, said Matt Wolf, who became Coca-Cola’s global head of gaming two years ago to help the marketing giant jump into the business.

“It’s the blue pill from the Matrix,” Wolf said. “There is a whole nother world out there…. eSports is the biggest sport many have never heard of, and the numbers are growing at a staggering rate.”

Coke this year launched its first eSports marketing partnership, a deal with Riot Games, the maker of League of Legends.

eSports have been around for years, drawing particularly big crowds in South Korea, where consumers have long had easy access to super-fast Internet connections. Its rise in the United States is relatively recent.

A growing chunk of viewers don’t even play the games, Wolf said.

“Isn’t that wild?” he said. “I’m a 24-year gaming veteran. I’ve never seen anything like this before.”

How big it will get here is unclear. But it harnesses powerful forces, mixing gaming, online viewership and the veneer of sports production and programming (the industry has its own batch of headset-wearing commentators).

It reflects a broader shift underway in what and how people are watching, as many young and old Americans shift from traditional scheduled TV. While gaming overall has found ways to attract women and older players, fighting games like SMITE still skew male, including teens to those in middle age.

Hi-Rez’s SMITE channel (twitch.tv/smitegame) is like a nerdy nightclub scene on sensory and Red Bull overload. Viewers see a screen dominated by the live-action video game of the featured player. In a lower corner is streaming video of the head-setted player as they kill and maim in the virtual world and simultaneously respond to viewers, whose streaming messages – funny, inane and other – scroll up the right side of the screen. Music is pounding.

‘More interesting than basketball’

Hi-Rez co-founder and chief operating officer Todd Harris compares some of the draw to having a personal gym session with a basketball legend.

“If you had the opportunity to watch Michael Jordan practice in a gym and in real time send them questions and have him respond… For many kids these days, video games are more interesting than basketball.”

The 9-year-old company started its own Twitch channel two years ago as way to build an online community, draw more people to the game and get feedback for potential improvements. It doesn’t run outside ads on its channel. Revenue comes from a relatively small percentage of SMITE players who pay for “extras” that boost their game.

At first, scheduled shows often started late. It wasn’t unusual for viewers to see an unmade bed over the shoulder of the online player’s streaming video, the 46-year-old Harris recalled.

“We said, ‘Get a green screen.’ “

Now, the Hi-Rez operation is quadrupling the size of its studio space inside the company’s Alpharetta headquarters. Announcers wear suits and site behind casting desks. Players include full-time employees whose paid duties include hours a day of game playing. Hi-Rez also contracts with outside players and airs active gamers who are unpaid.

“It’s finally getting the right balance of making it more polished and also making it authentic and not taking ourselves too seriously,” Harris said.

Hi-Rez pulls in its biggest viewing audiences with live tournament play. An event in March brought in a crowd of 1,000 to Center Stage in Atlanta as well as 300,000 viewers online over three days. The company is preparing for its world championship finals Jan. 9-11 at the Cobb Energy Performing Arts Centre. It's offering a $1.4 million (and growing) prize pool for a lineup that includes winners from teams in the U.S., Brazil, China, Europe and elsewhere.

It’s a long way from what Harris remembers of the typical thrown-together gaming tournaments held in the U.S. a decade ago.

“It was maybe in a hotel ballroom and the prize was a case of beer.”