MTG Q3 2019 Interim Report

Modern Times Group underwent a significant structural transformation during the third quarter of 2019, pivoting toward a specialized focus on esports and digital gaming. This strategic realignment followed the distribution of Nordic Entertainment Group and was characterized by a series of major divestments, including the sale of Nova Broadcasting Group and Zoomin. These portfolio adjustments, combined with a merger involving MTG Publishing AB, resulted in substantial capital gains that bolstered the parent company’s net income to SEK 2.2 billion for the quarter and SEK 14.8 billion for the nine-month period.

Operational performance during this period reflected the inherent volatility of the digital entertainment sector. Net sales reached SEK 1,066 million, representing a 4% year-on-year increase. The esports vertical emerged as a primary growth driver, achieving a 12% rise in net sales fueled by robust sponsorship and ticket revenue. Conversely, the gaming segment experienced a 2% organic decline as the company intentionally narrowed its focus toward a smaller selection of high-performing titles. Increased marketing expenditures and the specific timing of esports events contributed to an adjusted EBITDA of SEK 19 million and a group EBIT loss of SEK 98 million.

Looking forward, the organization is actively evaluating the future of its gaming vertical, weighing options such as joint ventures or a complete transition into a pure-play esports entity. While the company successfully navigated the transition to IFRS 16 accounting standards, it remains exposed to risks associated with publisher dependencies and the unpredictable nature of game development. By balancing these operational challenges with targeted venture capital investments in early-stage gaming, the company aims to solidify its position as a global leader in digital entertainment.