In a preliminary assessment published last week, The Modern Times Group (MTG) estimated that the COVID-19 pandemic would have a sizable negative impact on its esports business. Fortunately, the company said its gaming business could get through the crisis relatively unscathed.
MTG owns both ESL and DreamHack, two of the biggest names in esports. It also owns the online game portal Kongregate and mobile game studio InnoGames. MTG also owns Zoomin.TV, a video content company that brings in roughly 5 billion views per month.
MTG said 40 percent of its 2019 revenue came from esports. Due to a drop in spectators as a result of COVID-19 stay-at-home measures, MTG estimates its esports business will see a 35-45 percent decline in revenue for the first two quarters of 2020 compared to the same time last year. In Q1 alone, the company saw esports revenue decline by 25 percent compared to Q1 of 2019.
In its report, MTG wrote: “Government policies to contain the spread of the coronavirus have had a considerable impact on MTG’s esports vertical, which is built around large live events with media rights, brand partnerships, and many attending fans who purchase tickets and merchandise.”
MTG hopes that moving events to digital platforms will offset some of the pandemic-related losses. Unfortunately, the company says, it has been unable to recoup most event costs so far due to last-minute postponements and cancellations. In the second quarter, however, MTG says they will save about $15 million in expenses by not holding events.
Moving forward, MTG anticipates that its planned esports events will resume in Q3 and continue through the end of 2020. Its assumption is that its esports business will recover as live events are permitted to resume.
MTG’s non-esports businesses are so far relatively unscathed. The company said that Congregate and InnoGames have continued to see strong player numbers throughout the pandemic. As this sector comprises 60 percent of MTG’s business, it is expected to help mitigate losses from esports.
Finally, the company revealed that it had roughly $179 million in cash reserves at the end of 2019, which is enough to cover 40 percent of expenses carried over from last year.
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