MTG braced for substantial esports revenue drop in first half of 2020
Modern Times Group, the Swedish media group, expects its revenue from esports to decline by as much as 45 per cent year-on-year in the first half of 2020, but then pick up during the latter half of the year.
MTG, which now focuses primarily on esports and gaming following the spin-off of media and television business Nordic Entertainment Group (NENT) in 2018, has today released an initial assessment on how the current coronavirus pandemic will affect business.
In comparison to the equivalent period last year, esports-based revenue in the first half of the 2020 financial year is expected to decline by between 35 and 45 per cent, as multiple events and live tournaments operated by MTG have now either been cancelled or postponed.
Both ESL and DreamHack, the two main esports promoters owned by MTG, will be reducing their costs in the second quarter, in order to “protect business continuity and the future potential of the operations when the current crisis comes to an end”, according to the assessment.
By doing so, they are projected to save over SKr150 million ($14.75 million) in the first half of 2020.
MTG, as of the fourth quarter of 2019, has net cash of SKr1.8 billion.
MTG has also said that it expected “an improved operational performance” in the second half of the year, assuming that live events will be back up and running by the third quarter.
It has also said that plans to separate the gaming and esports sides of its business are still being considered, and that such a separation would “allow them to adopt their own financial structures and independent strategic objectives.”
The MTG board, following a strategic review carried out in October last year, has now apparently “received multiple expressions of interest in the business from both strategic and financial investors.”
The company is now set to wait until the markets have stabilised before deciding on the best way to separate the two wings.
Betway, the online bookmaker, will be live-streaming esports competitions including Counter Strike: Global Offensive and League of Legends and DOTA 2 to fans from its website and mobile platform.
Betway customers will be able to view the action after logging in to their accounts, and can simultaneously place bets and stream action.
It is one of the first online bookmakers to install live-streaming of esports tournaments as a feature.Elsewhere, Flamengo, the Brazilian sports club most commonly associated with soccer, has brought in Redragon, a computer hardware manufacturer, as a sponsor for its Flamengo Esports division.
The deal with Redragon was signed by Simplicity Esports, which in January took over management of Flamengo Esports, which competes in the Brazilian League of Legends competition.
Redragon will now provide the team with equipment including headsets, keyboards and mice.
Simplicity has already brought in partners including streaming site Twitch, and sportswear brand Adidas, to partner the Flamengo team.
Roman Franklin, president of Simplicity Esports, said: “We value all of our official partners and sponsors, and their financial commitments that contribute to the success of Flamengo Esports. This will be a mutually beneficial sponsorship arrangement that prominently displays the Redragon brand on our Flamengo Esports jersey sleeve.”
Meanwhile, Gen.G, the global esports organisation, has brought in Han Sung Motor as an official partner.
Han Sung, an official South Korean dealer affiliated with the Mercedes-Benz vehicle brand, will provide team transportation, as well as hosting events and matches at its Seoul headquarters.