- Modern Times Group reported a net loss of kr132M SEK ($13.35M USD) for the first quarter of 2020, which ended on March 31.
- During Q1, the company generated net sales of kr924M ($93.44M) – a decline by 2% compared to the same period last year – of which 32.4% or kr299M ($30.24M) was accounted for by its esports vertical.
- The company responded to novel coronavirus (COVID-19) policies by rescheduling or moving online its ESL and DreamHack events, cutting costs, and looking for new business opportunities.
Yesterday, ESL and DreamHack parent, Swedish esports and gaming company Modern Times Group (MTG), reported its financial results for the first quarter of 2020. The company recorded a slight decline in net sales by 2% to kr924M ($93.44M) from kr940M ($95.06M) in the same quarter last year.
MTG’s net sales for the quarter ended on March 31, were offset by operating costs of kr993M ($100M), which increased by 1% compared to Q1 2019. In total, the company reported a net loss for the period of kr132M ($13.35M) compared to a similar net loss of kr133M ($13.45M) in the same period of last year. Broken down to earnings per share (EPS), the quarter resulted in a loss of kr2.37 ($0.24) per share.
The first quarter of 2020 has been a quarter unlike any before for the company due to the global pandemic and the policies caused by the health crisis. MTG’s President and CEO, Jørgen Madsen Lindemann, stated that “we are executing on a three-phased plan responding to the pandemic, with focus on business continuity, operational efficiency, and seizing of new business opportunities. And this is being done from a position of strength with a solid net cash position.”
The company, which is operating its business in two verticals (esports and gaming), made several adjustments during the quarter to adapt to the current situation. Quarantine regulations and restrictions on hosting events with live audiences had a negative impact on MTG’s esports vertical and forced the company to run the Intel Extreme Masters in Katowice in February without a live audience as well as rescheduling several events or moving events to an online format. Furthermore, the company reported that it continued working to further commercialize its esports vertical during the quarter.
The company’s gaming vertical has maintained stable performance and its products experienced an accelerated inflow of new users towards the end of the quarter. As the gaming vertical showed potential to help offset the esports verticals’ downturns, MTG increased its marketing efforts for gaming products and achieved higher returns on marketing campaigns during the quarter.
Despite several rescheduled and canceled events, Q1 2020 was a rather eventful quarter for MTG. The company entered multiple partnerships to run events, including a three-year agreement with Blizzard Entertainment to create new ESL Pro Tour formats for StarCraft II and Warcraft III: Reforged and a partnership with PUBG MOBILE on an esports program.
In January, MTG announced the termination of plans to form a joint venture with Chinese live-streaming platform Huya by mutual agreement and its plan for annual savings and write-down of assets as part of the company’s ongoing strategic review. In February, the portfolio companies ESL and DreamHack signed the “Louvre Agreement” with thirteen esports teams outlining their participation in the brands’ esports circuits.
