CHAPEL HILL, N.C. -- They stood outside the Dean E. Smith Center with their arms raised in the air. In their hands were tickets. Some people had a pair, other had four, some even had a fist-full.

These weren't just any tickets, these were North Carolina basketball tickets. And this wasn't just any game on Wednesday night, this was the Tar Heels and Indiana -- two of college basketball's bluebloods.

While it wasn't Dean Smith vs. Bob Knight, it was still the Hoosiers first trip to Chapel Hill since 1980.

	Walk on Will Johnson started Wednesday night. That's all you need to know about the state of UNC basketball.

"You can't give 'em away, can you?" one scalper said to another.

And this was before the 79-66 loss to the Hoosiers in the ACC/Big Ten Challenge.

Welcome to the changing world of North Carolina basketball.

Inside the Smith Center -- a building where often times the demand for tickets far exceeds the 21,750 capacity - there were huge holes of open seats. As the second half progressed the fans that did come started heading for the exits. By the time Carolina's third consecutive loss to start the season was over, the crowd that was left had a bewildered silence.

After all, they have now seen the Tar Heels lose to Hampton, Davidson and Indiana (North Carolina bounced back with a 83-77 win over Georgia Tech on Sunday). They have seen the guys in baby blue start the season 0-3 for the first time since 1928-29. They have seen Carolina go 0-for-November.

Yes, even the most ardent of Tar Heels fans knew this North Carolina team was going to struggle after Brendan Haywood graduated, Joseph Forte declared for the NBA Draft and Ronald Curry and Julius Peppers went back to the football team.

But they didn't expect this. They didn't expect the Tar Heels to look ordinary at best, look disfunctional on offense and look worlds removed from the group that went to the Final Four in 2000 -- just 20 months ago.

Things aren't going to get a lot easier in the next few weeks either. North Carolina heads to Kentucky next weekend. After what should be a victory over Binghamton, the Heels play College of Charleston on the first night of the Tournament of Champions in Charlotte before playing either Georgia State or St. Joseph's the next night.

The loss to the Hoosiers was simply a continuation of the problems North Carolina has had in the first two losses of the season. The Tar Heels made just 22 of 60 field goal attempts, that's 36.7 percent, and 5 of 19 3-pointers, 26.3 percent. In three games, the Tar Heels have made 17 three pointers, but missed 56.

Ouch.

Not surprisingly, the best defense against the Tar Heels has been zone. While it isn't surprising that Hampton and Davidson played zone, it is shocking that Indiana did. Entering the game, the Hoosiers hadn't ran a second of zone this season, but in the second half, Indiana coach Mike Davis put his team in a 2-3 zone.

It baffled the Tar Heels to the point where the offense consisted of little more than passing the ball around the perimeter and they went nearly three minutes without scoring a field goal.

Maybe the most amazing thing about the Tar Heels' start is that they didn't lose this game because of a lack of effort. They dove on the floor, they fought for rebounds, they played hard. Usually when North Carolina does that, they win.

And this wasn't Indiana's best performance of the season. The Hoosiers had a tough time scoring in the second half and missed all nine of their 3-point attempts after the break.

"Starting 0-3, you guys may think it's weird for me to say it, but I am really proud of this team's effort," North Carolina coach Matt Doherty said. "That's all I asked of them, to give me great effort -- and they did. I think we could have easily won this game if we made some shots. I know that has been a really big 'if' lately."

In the locker room after the game, the words, "1-0 ACC," were written on the dry-erase board in reference to the upcoming game with Georgia Tech, which the Heels won.

"It's another opportunity for us to go out and compete and get better," said forward Jason Capel, who went 4-for-15 from the floor and 0-for-7 on 3s. "We're going to try to get a win and be 1-0 in something."

Part of the problem for the Tar Heels this season is simply a lack of talent and experience. Capel and Kris Lang are returning starters, but both were not expected to be the go-to guys in the past. Lang played his best game of his career against the Hoosiers, finishing with 27 points, but Capel -- who told the Raleigh News and Observer before the season that he hopes to be a first-round NBA Draft pick this summer -- is 2-for-22 on 3-pointers this season.

Against Indiana, Carolina started a pair of freshmen guards and a walk-on forward -- words that are also unheard of at North Carolina.

While Jackie Manuel and Melvin Scott are both talented freshmen and both will get better, they went a combined 4-for-20 from the floor against the Hoosiers. Junior Will Johnson -- who attends Carolina on a prestigious Morehead academic scholarship -- started at small forward.

Isn't he supposed to be a guy who helps the team grade-point average?

"I don't know how many times I've heard that," said Johnson, who made three 3-pointers, including two in the second half when the Tar Heels tried to make a run.

Other than the starters, reserve guard Brian Morrison was the only other player to play more than 10 minutes against the Hoosiers. While the Tar Heels have a full complement of scholarship players, recruiting mistakes and less-than-stellar player development has led to fewer quality reserves than North Carolina is used to.

This isn't a problem that's going to fix itself overnight either. While Doherty signed a very good recruiting class this fall, the Tar Heels will lose both Lang and Capel before next season. The reality is that Doherty and his staff are going to have to land another solid recruiting class -- not to mention a center -- before all of the current problems are solved.

While some fans in this part of the country -- a place where college hoops sometimes ranks ahead of family and friends -- have given up on this version of the Tar Heels, the players are trying to stay both positive and calm. They talked about how they made improvements and good things are going to come.

"We gave it everything we got," Lang said. "You can't say Indiana played harder than we did. We just didn't make shots, Indiana did. That's basketball.

"I'm not worried no matter what y'all say about the 0-3 start, it'll come. As long as we play hard, it'll come, better things will happen."

While it might be easy to say that now, what happens if things start to slide? How long can the Tar Heels be happy with playing hard and losing?

"It's hard, especially at Carolina where expectations are you're going to win every game," Johnson said. "It sounds trite, but you just have to take it one day at a time and we need to get better. We have to know we got better in the practices leading up to the game and we got better in the game."

It's not exactly the North Carolina everyone is used to.

Jeff Shelman of the Minneapolis Star Tribune is a regular contributor to ESPN.com.