MTG reports continuing operations growth, despite eSports losses

MTG reported 83% profit growth for continuing operations in Q3, despite wider losses for its eSports operations.

The Nordic company reported higher profits and margins for Nordic Entertainment, International Entertainment and MTG Studios.

Meanwhile, its digital arm MTGx recorded lower losses on a sequential and year on year basis, thanks to the contribution from Innogames – the mobile and browser-based games company that MTG invested a further €82.6 million in earlier this year, upping its stake from 21% to 51%.

However, within the MTGx division, MTG’s eSports losses widened as the company further scaled its market presence.

“We are investing in new products because of the exponential growth in the viewing numbers for each eSports event, and publishers’ greater than ever focus on eSports to drive community engagement,” said MTG president and CEO, Jørgen Madsen Lindemann, in the company’s quarterly report.

“This is attracting more and more interest but the high margin sponsorship and distribution sales have been slower to materialise than anticipated.”

MTG said it still aims to deliver a first quarterly profit for MTGx during Q4, but “at a lower level than previously anticipated”. This excludes the potential for a non-cash write-down of up to SEK35 million (€3.6 million) in Q4 related to “bad debt” at Turtle Entertainment.

“Our objective remains to deliver profitable full year growth for the Group’s continuing operations, as well as for the Nordic Entertainment segment,” said Lindemann. “Following the investments that we have made, we have adjusted our expectations for MTGx’s full year results.”

Discussing MTG’s ongoing transformation, he said that the company’s focus is on “capitalising on the shift in consumer video consumption to on demand and mobile entertainment products like Viaplay, Viafree, Splay, ESL and InnoGames.”

In Q3 the firm closed the acquisition of its second gaming company, Kongregate, and earlier this week it completed the sale of its Baltic broadcasting business.

Overall the company reported Q3 operating income of SEK257 million and sales of SEK4.28 billion with 7% organic growth. Net income from continuing operations was SEK189 million compared to SEK83 million a year earlier.

MTG acquired a 74% majority stake in Cologne-based e-sports specialist Turtle Entertainment, which operates the ESL brand, back in July 2015.