Modern Times Group Reduces Costs by 25%, Reports Net Loss of $1.27M

ESL and DreamHack parent Modern Times Group (MTG) reported its financial results for the third quarter of 2020, recording net sales of kr912M SEK ($105M USD), down 12.5% compared to kr1.04B ($120M) in the same quarter last year.

MTG’s net sales for the quarter ended on Sept. 30, were offset by operating costs before depreciation and amortization of kr788M ($90.6M), which decreased by 24.9% year-over-year. In total, the company reported a net loss for the period of kr11M ($1.27M) compared to a net loss of kr80M ($9.2M) in the same period of last year (excluding discontinued operations). Broken down to earnings per share (EPS), the quarter resulted in a loss of kr1.00 ($0.12) per share.

“I’m proud of how we and our portfolio companies have adapted to the new circumstances dictated by the coronavirus pandemic. We have changed our operations, continued to successfully convert live audience events to digital-only, and retained high levels of fan engagement across the board,” said Maria Redin, MTG’s new president and CEO, in a release. “The highlight of the quarter was the combination of ESL and DreamHack, an important strategic move to take the esport business to the next level. The newly combined ESL Gaming creates more expansive opportunities for partners and provides a bigger platform for MTG to leverage for continued and more efficient growth.”

In addition to the merger of its ESL and DreamHack assets into ESL Gaming and the appointment of Maria Redin as the new president and CEO of the group, MTG closed several media rights deals for some of its esports assets. In July, the company extended its streaming portfolio with a one-year deal with Chinese live-streaming platform Huya for the Counter-Strike: Global Offensive ESL Pro Tour that will be live-streamed exclusively on Huya in 2020 and 2021, covering standard Mandarin and other Chinese languages and dialects. In August, MTG secured a one-year media rights deal with Douyu, another Chinese live-streaming platform that will merge with Huya next year, for its StarCraft II and WarCraft III ESL Pro Tours. In the same month, a three-year media rights deal was formed with Brazilian media outlet Globo and Omelete.  

Looking ahead to the last quarter of the year, MTG is expecting its esports vertical revenues for the second half of 2020 to decline by approximately 27% to 32% compared to the corresponding period in 2019. The expectation is based on the ongoing coronavirus pandemic and its impact on conducting live events with audiences, players, and partners present. The company expects to return to a more regular operational performance once borders are fully open and it’s allowed to conduct large live events under safe conditions. Until then, ESL and DreamHack will continue reducing costs to achieve savings of at least kr325M ($37.4M) for H2 2020 compared to the same period of 2019.

Note: The Esports Observer used the exchange rate in effect as of Nov. 5 at a rate of kr0.114994 to $1.00 for currency conversions in this article.