Modern Times Group Reports $2.15M Net Loss, Announces Further Cost Reductions for ESL and DreamHack

ESL and DreamHack parent Modern Times Group (MTG) reported its financial results for the second quarter of 2020, recording a constant net sales of kr1.1B SEK ($124M USD) compared to the same quarter last year.

MTG’s net sales for the quarter ended on June 30 were offset by operating costs before depreciation and amortization of kr992M ($112M), which decreased by 4% year-over-year. In total, the company reported a net loss for the period of kr19M ($2.15M) compared to a net loss of kr38M ($4.3M) in the same period of last year (excluding discontinued operations). Broken down to earnings per share (EPS), the quarter resulted in a loss of kr1.01 ($0.11) per share.

“Our esports vertical continues to deliver on the strategic objective to professionalize the commercial part of esports by onboarding more strategic partners to our tournaments, despite the challenging circumstances. The focus has been to move our events online, in order to ensure continued attractiveness towards all our stakeholders. The vertical performed better than anticipated compared with the financial guidance for the first half of 2020,” explained MTG President and CEO Jørgen Madsen Lindemann in a release. “This was driven by new agreements with media partners such as Twitch, higher esports services revenue and stronger performance by our business to consumer product. Equally important factors included good cost control and a more favorable revenue mix with a larger high margin media component during the quarter.”

During the quarter, MTG was able to secure several deals and partnerships, including a three-year streaming deal for its subsidiaries ESL and DreamHack with Twitch, an agreement with Fortnite developer Epic Games to launch a new DreamHack tournament series featuring Fortnite, and a partnership with Rocket League’s developer Psyonix to partner on the production of the Rocket League Championship Series Season X.

Going into H2 2020, MTG expects esports revenues to decline by 30-40% compared to the same period of 2019 as a result of the COVID-19 pandemic and its impact on live events. The company is addressing the expectation of declining esports revenues by continuing to reduce costs of goods sold and fixed costs for ESL and DreamHack. The company estimates the savings from those measures will be kr325M ($36.71M) for H2 2020 compared to H2 2019.

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