Good afternoon, and welcome to MTG's Interim Report Presentation for the Second Quarter. My name is Lars Torstensson. I'm responsible for communication and IR here at MTG. Joining me on this call is Jurgen Mattson Lindeman, our Group President and CEO and Maria Reddin, CFO of MTG as well. We will start with a formal presentation followed by a Q and A.
Please keep in mind that questions are only enabled for those participating through our dial in. Our webcast is listen only. That concludes my introduction. Please Jorgen, can you take us through the presentation of our quarter?
Yes. Thank you, Lars, and a warm welcome to our Q2 results conference call. I hope everyone on and off this call is doing okay despite continuing difficult circumstances. The corona pandemic is still heavily affecting the world and our industry. As expected, it also had a clear impact on MTG in the Q2.
I must say I continue to be very impressed with how our companies and our teams are performing under these uncertain and extraordinary circumstances. The safety of our employees, teams, fans and partners remains a priority as the pandemic remains very real. We have, during the quarter, made relevant long term operational adjustments in both our e sports and gaming verticals, invested to move the business forward, taken a broad range of other proactive actions for the long term, which includes measures to preserve financial health and investing into new opportunities. We see clear positive results from our efforts, which will make us even stronger and our products even more relevant as we eventually move towards a more normalized business environment. So let's move to the highlights of the quarter.
If you go to the next slide, we delivered a record high performance in the game vertical, both in respect to revenues and profitability. This as we have seen more people enjoy our games and also spending more time and money on them while playing during the lockdown. InnoGames was the key driver of growth. On the back of marketing, the company saw a strong inflow of users combined with reactivations of old customers and also overall increased activity within the user base driving increased spending. It should be noted that the operational trends that peaked in April May was more normalized as we entered into June, much because of societies opening up ahead of the summer.
Our e sport vertical continues to deliver on strategic objectives to professionalize the commercial part of e sport by onboarding more partners to our tournament and performed better than anticipating compared to the financial guidance for the first half of twenty twenty that we gave earlier this year and significantly improved losses compared to previous quarter and last year. We saw an increase of media partners in the quarter, and ESL enjoyed close to 50% increase in media revenues, growth in ESS revenue and stronger performance from our online BOC product, supporting the operational development in the quarter. Moving from revenues to cost control. Equally important, both ESL and Dream Act delivered on our own expectations in the quarter, reducing costs significantly, mostly related to events becoming online, but also reviewing the fixed cost base, taking the opportunity to review our organization setup and how we operate. Throughout the history of MGG, we have been prudent on our capital structure.
So we are ready to capitalize and invest in changes in the landscape and in consumer behavior with which we see these days. Therefore, it is pleasing that we have been able to maintain a very strong cash position throughout the coronavirus pandemic. To move on to Esports, you can see that the revenue for the Esports vertical has been negatively impacted by the pandemic, and we have quickly adapted and changed to ensure business continuity and performance and delivering on our strategic agenda. This has been done primarily by successfully converting live and physical Esports events to online, making sure that we show that the show goes on in a way that is responsible towards all our stakeholders. Sales declined by 18% in the first half compared to our assumption of a decline between 25% 35% with owner operating seeing a decrease by close to 35% in the quarter.
The positive end was Esports services that grew with 15%. Equally good when looking at the revenue mix was MediaRise that grew by almost 50% for ESL in the quarter, providing growing reach for the vertical. Also, our emerging B2C product showed good development. In the quarter, we made sure that Esports Entertainment Forum continued and expanded its online presence. DreamHack was able to follow through with their market property, but not their summer festival, while ESL had a busy quarter with 4 master properties.
The fans have been very engaged leading to all our 5 master properties Overall, e sport has proven in the Q2 that it is compelling and convincing media product and not to forget one of the few sports which continues to be live when many other sports unfortunately have to come to a pause. During and following the end of the quarter, we have secured several new publisher deals. Dreamhack also teamed up with Epic Games to launch a new Fortnite tournament series. This tournament will be performed as an open tournament for all North American and European players with a multi price pool of $250,000 and an aggregated price pool of $1,750,000 For Esports Services, several key deals have been closed. One big highlight is Dreamhack's agreement with Cionics to be the production partner for Rocket League Championship Series X.
OwnerOperating continues to be the biggest part of the revenue. However, our revenue pipeline is taking a hit due to many brand partners are holding back on their spendings due to the impact of the pandemic we had on their business. On the positive end, we still have been able to secure new contracts even though the scope has not been the same as under normal circumstances. Among them were a contract with Mastercard and Barclays Bank for our U. K.
National League of Legends Championship tournaments with BBC Sports as a broadcasting partner. Telia Company joined as earlier mentioned as sponsor for the Nordic Video Production tournament, just to mention a few. Asset media revenues has really developed well in the quarter. On Media Partnerships, we have seen solid progress across the quarter with Twitch, Huya and BBC Sport deals as a highlight. Let us take a closer look at our B2C services that had a good development in the quarter and is an emerging revenue stream for us.
If you go to the next slide. Our B2C part of the business have seen an increasing interest amongst fans to play online and participate small amateur competition as a result of the pandemic. On the back of this increased momentum, we assume that the B2C will come close to SEK 100,000,000 revenue in 2020, which makes us a relevant player also in this space. As a result, when looking at our B2C business, such as ESL Play and our Counter Strike subscription services here and our partnership with Sony PlayStation, they have all seen a record breaking engagement from users during the quarter. And during the pandemic, Dream Hackers released a new series community Clash tournaments in multiple titles such as League of Legends, Valorant and Counter Strike.
We will continue to develop and invest into our B2C experience and further online capabilities to make us even more relevant to fans also when not arranging large and world leading e sport events. ESL broader B2C platforms, ESL Play and ESL Mobile are being transformed into a new multiplatform hub system. The hub system will have a toolbox that allows for a more scalable B2C product, leveraging the unique ESL experience and transforming the ESL B2C product to a story and tech focused community builder. The first standalone hub would be released for beta testing already in August. Today, we already offer advertisement, publisher funded and subscription based B2C products being one of the global leaders in this segment.
There is a clear opportunity and focus to further leverage our strong e sports brand, ESL and Dreamhack, through coordinated events and new storytelling through our new and soon to be released multiplatform hub system. If we then move on to the gaming part, the gaming vertical delivered a record quarter with an organic revenue growth by 15% and adjusted EBITDA by growing by 13%, including significant investment into marketing. There's a coronavirus effect when it comes to the increased overall time spent on mobile games, downloads and use of browser games when looking at the reach for the lockdown in variation in various countries and following a more open society. InnoGames showed strong performance in the quarter at the same time as investing heavily into marketing to support future growth. The positive development was driven in part by effects of the ongoing coronavirus pandemic, which led to increased gaming.
This resulted higher daily active users in DAU. Average revenue per daily active users increased up DAU growth by 10% 17%, respectively, compared to the same period last year. In June, the operational trend started to normalize and lockdowns globally were gradually rolled back. However, we expect that the DAO KPIs will remain on an elevated level also going forward. Kongregate was impacted by 2 third party games no longer being part of the games portfolio in the quarter as part of the company's focus on long term profitable partnership.
The company introduced 3 new games to the market and won additional title, Teenage Mutant Ninja Turtle, will be released during the second half of the year. Given to InnoGames, Kongregate has been negatively affected by the pandemic due to lower ad spend and their games have more of a communal character. In the gaming vertical, we have continued to develop existing and new gaming product pipeline. And even though home office, we have not experienced any productivity loss. CombiGate launched 3 reskins of Isle Frontier and preparing for the launch, as I mentioned, of Teenage Mutant Ninja Turtle in Q3.
Inogenes tried 2 new games in the quarter with promising results and have another 2 coming up in the second half of the year, and current plan is to go live with the first game in Q1 2021. So with that said, over to you, Maria, to walk us through the financials.
Thank you, Jurgen. We ended the quarter with higher sales than previously anticipated on the export side, driving overall group sales to SEK 1,100,000,000. Dollars Sales were flat year over year off on an organic basis as there was only minor impact this quarter from foreign exchange rates. As we're seeing on the Q1 call, gaming had a very strong quarter and increased its proportion of revenue contribution in the 2nd quarter and accounted for nearly 70% of the turnover, which is also in line with the outlook for the remainder of 2020. Adjusted EBITDA almost doubled year over year with improved performance in both verticals combined also with lower operational and central cost.
And if we then look further into the reduced losses in Esports, we delivered on the communicated $150,000,000 savings target, this primarily through COGS savings as we moved all tournaments online, while also incurring limited costs sub costs in this quarter compared to Q1. We also ensured that we had limited one off fixed cost savings in the quarter. The financial performance in the quarter was further positively impacted by the growth in Media Rights providing a more favorable revenue mix combined with the positive ESS developments in the quarter. As I just mentioned, Eastport did benefit from temporary savings in Q2 and we do expect the cost savings will continue also in H2 as long as we run events online only. And we are at the same time working on identifying more permanent savings as we are reviewing our way of working within ESL and Dream Act and we will come back to you with more details as we are computed at work.
The EBITDA adjustments in the quarter amounted to negative DKK 63,000,000 to be compared with negative DKK 27,000,000 last year. And as you might have noticed that the cost for LTIP was again elevated this quarter and this follows the strong results that we see in the gaming vertical on back on the coronavirus pandemic. Depreciation and amortization was slightly higher in the quarter compared to last year, but it's reflecting higher depreciation within the gaming segment as we both launch and acquire new games, which we are depreciating back off, partly offset by lower depreciation in esports and the amortization on the purchase price allocation was flat in the quarter. Net financial items were adverse in the quarter. This is predominantly driven by exchange rate changes and they are mostly unrealized.
You should remember that we have our cash balance predominantly held in euros, which means that the recent strengthening of the SEK, we do see a negative impact in this quarter. This is therefore reversing the positive effect that we saw in Q1. If you then can turn the slide to the cash flow statement. I'm back on the strong financial performance, the group reported improved net cash flow from operations of $121,000,000 This is driven by Innogains, but also the much improved performance within the esports vertical. CapEx was lower in the quarter compared to last year, which was mainly driven by Kongregate's acquisition of Bitters last year.
There are currently 6 games in development within both Inner Kings and Kongregate, and we also did invest in studio build up, the BBC platform development within ESL. The 2019 dividend to the interlinked minorities was paid in the quarter and subsequently reduced the group cash position. If you exclude this dividend, the group did have a total net positive change in cash in the quarter. The group remains well funded with a net cash position of $1,600,000,000 as of Q2 2020. The gaming continues to be the cash flow contributing entity, and we are working very focused with the esports to optimize the current cost structure and also to minimize the cash outflow.
So that concludes the financial review. And back to you, Jurgen.
Yes. Thank you, Maria. And if we take the next slide and we look a bit ahead, we expect that the ongoing corona virus pandemic will continue to impact our 2 verticals. But again, in different ways, e sports will see further conversation during the remainder of the year with meteorites continuing high double digit growth rates. Even though brand sponsorship as a contributor is impacted in the current environment, the interest around Esports remains and with respect further strategic partnerships to be secured for the long term.
Most e sports events will remain predominantly online for the remainder of the year, and our expectation is that we will be able to host physical live event as of 2021. If and when this, we can be done under safe condition for fans, teams and partners and employees. It should be noted that the Q3 only has 1 market property, something that, of course, would impact the short term revenue development, while the Q4 will be very intense with as many as 6 market properties with one being the CS GO major. We have moved as many events as we could into Q4 or beginning of 2021 to cater for a prolonged pandemic environment. As a result, the seasonality in the second half of the year will be significant.
Looking at the revenue composition, our view is that owner operated will sequentially improve versus Q2 in second half fueled by media rights offsetting some of the decline we are experiencing in brand partnership. Further, contrary to the highest growth experienced in first half in ESS revenue, we do expect a higher decline of that revenue stream in the second half. Gaming, on the other hand, would likely operate at an elevated performance level, thanks to the strong inflow of customers that occurred in the second quarter. That said, we expect a more normal growth pattern for the remainder of the year with marketing investment being more balanced versus last year. If we then move on to the guidance on the back of this, we are providing new guidance for the second half of the year.
This new guidance reflects eSports remaining online, as I said, for the rest of the year without any physical live events. It also takes into account maintained or even increased run rate savings that we saw in the Q2. Last but not least, guidance for the second half also reflects the strong performance of gaming providing support for the overall group's operational results. So to sum up things, solid quarter despite the pandemic, record delivery by gaming and relatively strong performance by our e sport vertical. Looking forward, we expect e sport to remain online for 2020 and physical events to come back in 2021.
We continue to on our strategy, and we see we have an opportunity to move our positions forward in both our verticals. That's despite the challenging circumstances we are in a strong position that allow us to plan ahead. We continue focus on business continuity, operational efficiency and sizing of new business opportunities. So that concludes our formal presentation. So now over to you Lars from Q
and A. Thanks, Erion. That ends our formal presentation for the Q2 of 2020. We are now ready to take any questions that you might have. So operator, could we have the first question, please?
Thank you. Ladies and gentlemen, we will now begin the question and answer session.
So operator, do we have any questions? I can see that we have one from Tom at Citi.
Your first question comes from the line of Tom Singlehurst. Your line is open. You may ask your question.
Hi, everyone. It's Tom here from Citigroup. Thank you very much for taking the questions. I had a couple of questions on esports. Firstly, sort of looking backwards, you mentioned that there had been a little bit of weakness in sort of sponsorship revenue.
I suppose that makes sense on one level because I guess a big part of the experience is the live environment. But I'm just interested why it wasn't necessarily able you weren't able to transfer that revenue line to sort of virtual environment. That was the first part of it. And then the second question was, the Q3 makes perfect sense. Markets haven't opened up and large scale events unlikely to happen anytime soon.
But is there a chance that any of those master properties scheduled for the Q4 will end up happening in person? I'm going to start with those 2, and I'll follow-up.
Yes. Thanks, Tom. Very good questions. I'm going to be the boring guy here and step in and repeat the questions just to make sure that everyone hears them. As you said, sponsorship weakness to be expected when we move from live to online, but explain why that is.
That's a question for you, Jorgen, for sure, on the sponsorship side. And when we will get back to large scale events, if that's going to happen in Q4, is the other question, I guess, that got to Maria and to reason around. But if you can start, on those 2.
Yes. No, it's of course, there are different factors, particularly when it comes to the sponsorship part as well. Just the fact that we didn't have any festivals. We couldn't host any festivals, obviously, that is a big part of sponsorship revenue disappearing. And then obviously, as we said as well, that some of the pipeline as well, some of the money that I would expect it to come in didn't materialize.
Also, the way when you have a brand partner or sponsor, they also normally would like to see activation at the event. Obviously, we couldn't give them that either. At the same time though, as you can see as well that we were live and we had our events taking place and with extremely high ratings. And then, of course, have some of the sponsors that we managed to keep despite that they didn't get the activation that they eventually needed. At the same time, as we also discussed, we have seen very strong interest now for the media partners side.
And that is important because the more media partner you get on board, the bigger reach you will have. The bigger reach, you should obviously have a more commercial long term interesting product. So when things hopefully will normalize again and brand partners will come back, then obviously you will have a very strong revenue when it comes to the media partner and then you also then see the brand partners coming in. So in all fairness, it is a pity just to be very clear. At the same time, we are very happy to see that this online opportunity has created such a bigger reach for us.
So it has created so much more interest for the media product. You saw also the Hulu announcement this morning. And when it comes to the last question, Lars, sorry, what did you we didn't repeat that.
No, I did actually. But it was regarding the possibility of having live fiscal events in Q4. Yes.
And that, to be fair, we should call around to the presidents in Europe and understand when that is possible. We don't know, Tom. We simply don't know. I think what we have said to you is that we are planning for online events for the second half full. We don't even plan for any physical events in the second half on the outlooks right now.
We manage to the event, but not big events with Geists' retailers.
I think it's from our perspective, it's always good to have a more prudent approach to this, Tom. As you know, it's very hard to predict when these societies open up fully, as you I'm sure you can understand. So that's why we keep it as it is for now until we have more certainty around physical events or not. Okay. I'm going to let you maybe want to follow-up.
Yes, please.
Yes. Actually, a couple of follow ups, if it's okay. I mean the first one, just I mean I suppose the point I was trying to get to with the Q4 was more about, should we I mean, the cost saves and therefore the EBITDA guidance, I assume it's vaguely conditional on them not taking place in a physical setting. So I was trying to gauge whether actually even if there was the opportunity to run them physically. You might still choose to run them virtually because of the planning that you put in place.
So that was one clarification there. And then the second sort of follow-up question was just more on the sort of strategic development of the group. I mean, obviously, Juergen, sad to read that you're deciding to step sort of step down. But I guess there's still quite a lot sort of unfinished in terms of the portfolio structure and the strategic direction of the group. But I'm just wondering whether we should expect a resumption of some of the sort of strategic initiatives now that maybe the sort of COVID related crisis is slightly less acute?
Tom, good question. I think on the guidance side, that's for Maria when it comes to what we have assumed in our guidance when it comes to the second half on Esports and fiscal and non fiscal events. And then of course, the flowers sent to you, Jorgen. I guess you would like to answer yourself.
Yes. I'll take the guidance and a fair question. So what we have assumed, to point is that we will continue to run our schedule online with selected. We're going to have 3 studio events the way we are forecasting it right now. And I think the question will be for us whether we can actually hold those studio events because that will require teams traveling as well even though we will have no audience there.
So with the studios we can do more activations and that's why we would like to be able to do the studios if possible. And while we have said that already now is because we want to provide clarity to both partners and teams and our team internally as well. And on back of that, we have then set the guidance. So that's the way you should look at it. And I think that if you ask me what the risk is rather than we won't be able to hold the studio events, I don't expect us to have any fiscal event this year whatsoever even if the regulation change.
And Jorgen? Yes. No, when it comes to the strategy, that is quite clear as also we are laying out in the reports, to be fair, that we are saying that management and the MSG Board believes that long term there is a lot of merits in having 2 pure play companies, a pure play gaming company and pure play e sport company. At the same time, what we are saying as well is we only want to have that obviously when you can present 2 strong equity stories. So right now, what we are doing is that we are delivering on the strategy for each of the verticals.
And the verticals the strategy for the e sport part is to commercialize the sport, is to develop the revenue streams. So that is not changing. That is a thing which we all the team works on and works very hard on. And as you can see in some of the revenue streams, it's actually going very well and particularly in the media part right now. So that has not changed and will not change.
So we would like to professionalize the commercial part of Esports. And then when it comes to the gaming part, that is the same as well that we expect the studios to over time, of course, to deliver and produce new exciting games. That is why we are buying a game studio. Now we are fortunate, of course, that we have such a strong performance in InnoGames as well. On top of this, we have very strong organic growth in the quarter and also looking, as we said, that the Dow will continue to be fairly strong throughout the second half.
So nothing has changed when it comes to the direction of the company. Nothing has changed when it comes to the strategy. We know exactly what we would like to achieve. Yes, COVID has given some bumps on the road. Of course, it goes without saying.
At the same time, it looks very healthy on the gaming part, to be fair. It has helped a lot in the game vertical and then also has helped a lot on the e sport and get that broader out due to much more increased gearing. I hope that it's very clear. So there's no change.
That is very clear. And just one final follow-up. Once again, the strategic review of gains, is that still sort of technically paused whilst the disruption works
through? We have there's nothing as pause you can argue. We are continuing to explore different opportunities. I think interesting, of course, now is that the gaming business is doing so much better. So that is, of course, very fortunate for us.
We still believe long term that there's a merit in having 2 strong equity stores, one being Esports and one being Gaming. But for the time being now, we could not execute on that until we have 2 strong equity stores.
So operator, could we have the next question, please?
Yes. Your next question comes from the line of Jari Engholm from Nordea. Your line is open. You may ask your question now.
Not sure if that's me, but can you hear me?
Yes. We know it too, Erik, so no problem there.
Yes. This is Erik Hindorn from Nordea. Yes. So a question on the B2C in esports. Can you elaborate a bit on how you expect to increase monetization here?
And how do you expect to sort of differentiate your platforms from the matchmaking ranked systems that most publishers already have in their games?
Yes, there is. No problem at all, Jorgen. I like it when you're taking those questions as fast as you do, but just for the benefit of the others listening in. Our B2C platform, how to make that competitive, especially against in game features that is provided by the publishers already? Over to you, Jorgen.
Yes. I think Blocket, as you can see as well from also when we look at the revenue that we are generating, they're already we are actually extremely competitive already. And we do also, as you can see from the slide, having matchmaking functionalities and also now we're enhancing with a more story driven and tech toolbox in order to create these different B2C hubs, which, of course, should serve the communities. ESL brand, DreamHack brand, what they stand for, the opportunities that we are having with our tournaments to integrate the B2C part into that as well is quite unique in all sense. So we will have an opportunity to create a very strong ecosystem, much stronger than we have today.
Today, we have the subscription business, which is ESEA. When you are playing well on in our counter strike ESEA product, you can actually qualify to come into our tournaments today. So that is, of course, a synergy and an interesting opportunity, which we can deliberate or can work more around. The ESL Play product is already now very strong and features more than 100 games and range of tournaments every day. So there is the storytelling due to the brand like there is a lot of opportunities to enhance that more and then experiment a bit more with the storytelling as well.
What you don't know you see don't know exists, you don't look for. And therefore, there's a lot of stuff that we need to do in order to understand how to enhance the viewer experience, how to what to what put behind the paywall, what do you want to do with advertisement, what kind of publisher deals can we make in order to support our pitches to them as well. So there are so many things we can do around the B2C, which we don't do today. I think the Sony PlayStation partnership integration is a prime example that when you have your Sony PlayStation, you go into the ESL infrastructure and you play tournaments through that. And that is a very strong partnership where we then both can monetize on the customers coming in.
So there's a range of things which we haven't explored today, which we, of course, will explore and where we have also had quite a dedicated department working on right now.
Okay. That's very clear. Just a follow-up on another question on esports then. I think you said that you're seeing some weakness in Esports services into H2. What is driving this versus H1?
Because I guess you were operating this online in H1 as well.
Yes. Thanks, Erik, for that one. It's when it comes to the Esports guidance, why we see some slight weakness in second half versus first half when it comes to Esports development for you, Maria, to answer. Yes,
the Esports services specifically.
No, I'm sorry about that. Thank you, George.
All right. No, I think it's fair to comment also on the Esports in general because I think if you look at the Esports in general, I mean, you should remember that Q1 was I mean, the corona pandemic impacted 1st in March, which meant that even though Q1 was a quiet quarter this year, we actually could execute our events in line with expectation for January February. And that means that if you look in the second half versus Q2, you actually see an improved projection, and especially in our owner operated performance. If you then look isolated on the Eastport services, as you do know, some of these contracts that we do for extended period of time and some are for more sort of one off projects. And what we've done and secured now in both Q1 and Q2 is a very strong growth on back of some interesting partnership deals that we've done with both Supercell and Epic.
And also we did a very interesting charity work, Cambridge Wells Board in Q2. So taking that together, I mean, we saw a very strong growth in the ESS side in H1. And that is currently not obviously in the pipeline for the second half of the year. On a positive note, however, we do see an improved projection on our owned and operated revenues that should show an improved performance, especially then in Q4 because if you see a schedule, it is heavily skewed to Q4 where we're going to have 6 properties whilst only having 1 in Q3. So that's the way to think about it.
Hopefully, that clarified your question.
Would you like to follow-up, Erik?
Yes, sure. On gaming then, can you talk a bit about the release slate for Inogenes and Skolgrut? What is the timing here? And when do you expect this to have results? Is there any particular game that stands out and so on?
Yes. When it comes to the gaming portfolio, definitely Maria sitting on the board of InnoGames who can elaborate on that one. So Maria, when it comes to the portfolio of games to be released.
Yes. As you may have saw, I think you already mentioned it, well, we launched 3, you could argue, reschedules of 1 of our IDA games in Kongate in Q2. And I think that the bigger release that we have coming up is Teenage Mutant Ninja Turtles, which is coming up now in the second half of the year, which we look forward to in Kongregate. And then we have yet another bigger release coming up in early 2021 for Kongregate. I think there is InnoGames that has a bigger sort of development agenda.
They have actually 4 games in development. They've now put 2 testing into what we call retention testing in Q2 with very successful results. And we're having yet 2 other ones that's getting into retention test in the second half of the year. And for the 2 first one, if all go ahead. According to plan, we will put at least 1 of them in full live mode in Q1 next year.
That's the plan.
All right. Thank you. And just a final question then on the strategic review of gaming. You are sort of exploring 2 different paths there with the listing and the divestment. Could you if you were to do a listing, could perhaps do some look to do some M and A within gaming before this?
Or would you list the gaming as it is right now?
Thanks, Erik. So when it comes to potential listing of the gaming asset, would that then include potential acquisitions ahead of that or if the listing could be done as is, I should say?
Would you like to elaborate? Yes. No, definitely. And it has always been the case, you can argue, that we wanted to be acquisitive when it comes to the gaming part. So we have also, as you can see, the cash to go out and become acquisitive when we find what we call what companies, the quality companies.
So nothing prevents us from being that or we are in the market and we are looking at different opportunities that also goes for e sport. We have always looked at areas which can accelerate our relevance in either gaming or e sports. So that can easily happen ahead of a potential listing when we are ready to do so. Okay. Thank you,
Derek. Thank you. And operator, can we have the next question, please?
Yes, sir. Your next question comes from the line of Martin Arnelis. Your line is open. You may ask your question.
Hi, everyone. This is Martin here with DNB. My question is on gaming in the second half. And thanks for providing the outlook here in these strange times. But what kind of gaming revenue do you pencil into that EBITDA guidance for the second half?
So hi, Martin, and thanks for that question. Reference to assumptions made in the when it comes to gaming when it in our guidance for the second half, Maria, that's straight up your alley, so to speak.
No, we didn't, as you could probably read then, give the direct reference to guidance on revenues per game. And what we said was that you should expect a more normalized growth trend going forward. We come in on elevated levels, of course, on the Dow levels. I mean, you will always see the seasonality effect that you see in the summer. So of course, it will drop until it starts to come back again after summer holidays.
But what we so we put a lot of marketing efforts now in Q2 and we should see that benefit in the second half of the year. But what we're not expecting to see is that hype that we had in the increased activity levels that people spend significantly more time in front of the computer, therefore also spend more. So the ARPDAU increased quite significantly in the quarter and that we don't expect going forward. What we also said and Jorgen, I think mentioned in the script was that, I mean, we increased marketing investment quite significantly in Q2, which would benefit us in the second half of the year and also, of course, the year to come afterwards, of course, stay. But you should not see the same elevated marketing effect also in second half, but it should be more balanced versus last year.
So let's hope we can help you a little bit.
Any follow-up?
Yes. Just it sounds like it's fair to assume that it has normalized a bit in July and it makes a lot of sense, of course. And then on the revenue outlook for next year, given that the base is sort of more lowered now in 2020 and if we're back to more normal times in the first half in next year, what kind of growth rates should we expect? If you can just elaborate on the drivers.
Martin, it's of course a very interesting and also relevant question. But we will refrain from placing any guidance or outlook statements with reference to 2021. I think we are living in uncertain times, as you know, and we would like to just keep the guidance for the second half, and then we'll see how things develop. And we will keep you informed if how things look also when the year evolves. So unfortunately, no elaboration or guidance for 2021 today.
Okay. Fair enough. And then a question on the cost savings. I guess that some of that is temporary, and you mentioned new ways of working. Can you give some more color on the savings?
Yes. So cost savings, once again, Maria, that's your area of expertise.
Yes. Noah, you saw incurred $150,000,000 in line with our expectation for the second half sorry, second quarter. And I'd say the vast majority comes from the COGS side of us actually moving physical events to online only, no travels whatsoever, not even studio production. There was a small part of fixed cost savings in that as well, so that was more a one off initiative characters, which meant that they are not sustaining savings. And what we're working on is to see how can we work differently and be more efficient and lean structure at the Esports Group and find savings there.
So that's what we would like to come back to when we conclude that. And as I also said, I mean, as long as we keep the formats online, we have found a new way of working there, we will be able to see that run rate savings on the COGS side as well going forward into Q3 and Q4.
Great. Excellent. Thank you, Maria. And just finally, Jorgen, can you sort of comment your decision to leave the company, if you may if I may ask you?
Yes. Definitely, I write in the release, it is straightforward. I think 26 years in the same company, you can argue, is a period, to be fair. And what is important for me, of course, is since I've spent half of my life in this company is that we put in place a management team also, which is long term for the company. So succession planning here is very important for me to make sure that we do that right.
And I think that is a great moment right now. You see the companies are doing good. They are planning ahead. And also for me personally, I think it's also time for me to think about something else in old fairness and one day a new chapter. But again, I'm the CEO of the company until that succession is in place.
I have a long notice period. So there's no extraordinary thing here, to be fair. It is just 26 years, in all fairness, a time spent in the company.
Thanks a lot, Jorgen.
Thank you, Martin. Operator, do we have any other questions?
Yes, we're just taking the names for it. And by the way, we have one question. It's coming from the line of Oscar Harrison.
Hi, Oscar.
Your line is open now.
Thank you. Good afternoon, guys. This is Oscar from Carnegie. A few questions from me. Could you elaborate a little bit on the dynamics on the different revenue streams in esports from actually holding events online?
You discussed it earlier a bit, but some more input on the dynamics there. What is most severely impacted and what is going the other way? Thank you.
So as we move from physical to online events, the characteristics of the revenue streams also changed a little bit, I guess, and especially now when the coronavirus pandemic is very clear. Maria, I know you have talked a lot about this, so maybe you can start with the question.
Yes. No, absolutely. And I would say, I mean, even though those revenue may not be the biggest ones, but the 2 ones that are the most severely is, of course, ticketing and merchandising because they go down to very low levels. And then the 2 other buckets is media rights and the sponsorship revenues. And I think that you're seeing we have actually signed quite some few media rights deals, which has showed the relevance of esports in this also in particularly difficult times.
So that has actually performed quite well. And we've also on behalf of the content that we've delivered, I mean, ESL has actually had an extremely busy quarter having 5 events, so 4 events quarter and with record viewing. So that has actually performed better than our expectations and hence also the better revenues that we saw in the quarter. And the big impact we've seen in sponsorship and it's partially due to, as Jarmus mentioned, the pipeline drying up. We were sort of concluding on the EBIT teaser at the same time as the corona pandemic broke out, which, of course, became difficult times to onboard new sponsors.
At the same time, also not being able to hold any festival is, of course, a significant impact to that as well because their sponsorship is a big part of the revenue contribution. So that is also one of the reasons why sponsorship is getting bigger hits proportion than what Media Rights is getting.
Would you like to follow-up there, Oskar?
Yes. That was very clear actually. And a follow-up on that. What is the impact of the Twitch deal in Q2? You mentioned it in the report.
So what is the impact in Q2? How do you expect it to develop in 2020? And perhaps if you could also shed some light on if that deal scales up gradually in 2021, 2022 given that it's exclusive in those years? Thank you.
Thank you, Oscar. The Twitch deal, it should be said though that we have not disclosed the value of that quite significant media deal. But anyhow, if whatever we can then share, Maria, when it comes to how that deal what it looks like.
Yes. Look, I think what it gives us is reach, which is great. And that will all be tied to Jurgen's point, but I think he talked earlier on one of the questions, give us more sponsorship because what the sponsor wants is a core reach. So they will have time go hand in hand. We signed quite a few sponsors of media rate deals in Q1 and Q2.
Many of those are, you can argue, reach over value, which, again, over time, would give us better sponsorship revenues as well. And I would say, Twitch is both reach and value. And I think that is what you see also in the revenue numbers for Q2. And then going into next year, to your point, it's going to go exclusive, which means we're going to see a ramp up in value in 2021 and onwards.
There we go, Oscar. Any follow-up?
Yes. Thank you. Actually a few more, if I may. Stop me. But the first one, just Q4 here ESL 1 in Rio, the Delta 2 tournament will that still be major?
And will it still have $2,000,000 price pool? Or does that change in any way?
So looking at the event schedule then for Q4 and then road to Rio or major in Rio when it comes to CSGO, if it's going to keep that status or not?
Yes. That's what we currently plan for. That's why I think I said it's whether 3 of our events even though everything is going to be held online, it's going to be studio productions and the Rio event is one of those that we plan to hold as a studio production. So hopefully, we will be able to do that. That will, however, be Teams and flying into a production hub.
But there is still not going to be any audience there. So that's the plan and the price money remains as well. And as you may see now in the quarter, we also have the road to reuse so that we have the warm up going into the CS:GO major.
Great. And also we've seen in this quarter, I mean, a lot of companies actually reporting positive earnings effects from government support and furlough schemes. Could you comment if you have had any impact? And if that's possible to quantify as well would be really helpful? Thank
you. Yes, a lot of questions for you, Maria. So now to Kurzarbeit and furlough then.
Yes. I learned the new word this quarter, Kurzarbeit. So we've had furlough in our different esports companies, not in gaming. So in gaming, we've had production up and running 100%. And we have approximately DKK 10,000,000 benefit in the quarter from furlough.
Very clear, Orest.
And one final question on gaming then, a question on ad revenue and corresponding loss of user acquisition costs. Has that normalized now? Or should we expect the normalized performance from Kongregate in the second half?
So when it comes to ad spend and not in app purchases, I guess then, Oskar, so it's a bit different to Congregate, that is normalized or what does it look like?
Yes. No, you're absolutely right. That is starting to normalize now in June, July. So we should not see any significant negative effects from that. But what you should expect is an impact for Coguiz for the full year.
It's the 3rd party partnership with the HyperHippa games that in its totality expired as per year end 2019. So you're going to have tough comparisons for Q3 and Q4 also for Kongregate due to that reason. But otherwise, from a corona pandemic impact, that should be normalized.
Excellent. That's it for me. Thank you very much.
Thank you, Oscar. Operator, do we have any more questions?
Yes, sir. Your next question comes from the line of Stefan Billing. Your line is open. You may ask your question.
Thank you. Stefan Billing from Kepler Cheuvreux here.
I have a couple
of questions. One is if you could say something about the audience measurement development. I think when you struck the deal with Nielsen a year ago, you said that you probably could start sharing some like for like numbers at this point. So that's one question. The other question is if you could share some things about how media rights have been growing and what share of revenues within owned and operated media rights represent right now?
Thank you.
Okay. I guess it's for you, Jurgen, when it comes to audience measurement and Nielsen, how that is developing. And then when it comes to media rights as part of owned and operated, it's more for you, Marja.
So if
you start with you, Jorgen.
Yes. But the average media audience or the AMA is the partnership with Nielsen is up running, and that is something that we are now getting into our presentations, preparing for the upfronts here coming into 2021. So we are on we will be on the market now here in August already with key figures from the partners that we are measuring right now. And of course, as we onboard more and more partners, we will then, of course, have a much stronger set of data. So that is that is not to say that everything is flawless.
It takes some time for some partners to make sure that we get the right data and so forth. But that is in development, and that is developing in the right way. It's quite important for us. And luckily, as you can see as well, we have increased the viewing, so the AIM figures are better. And then when it comes to the media rights as such, Jember, we have seen strong traction.
Obviously, it is a simple word, meaning that when you have a TV channel having its best year ever, the best year best day in 20 years, of course, there are rumors because that shows that the product can move the needle. And that, of course, is helping the MediaRite sales as we're having right now. So we are growing. And as I said, also in just Q2, I saw that we saw that ESL very close to growing 50% of the media rights. And I've also said that we will see that in Q3 and Q4.
We will see very high double digit revenue growth in the media part. It's good news. I think also for many reasons, first of all, we're happy that we are making bigger deals, also the one we announced this morning with Huya. But also the fact that we get a bigger reach and we get more on board so we can have even stronger AMA figures or stronger Nielsen figures. So everything in that direction goes actually according to plan.
And Stefan, just I think you maybe should mute if you have some background noise there, but thank you. And Maria, then when it comes to Media Rights as part of the owned and operated revenues.
Yes. No, we don't break that out unfortunately. But what we have said is that sponsorship is the biggest contributor into the owned and operated revenue bucket and then media rights comes thereafter. And as Jurgen mentioned, I mean, ESL grew very strong in media rights in the quarter. In the States, we just need to bear in mind that the Dream Act did not have any real events, which, of course, meant that they had very few media rights in the quarter.
But overall, the trend looks very good on media rights, which is very
encouraging. So Stefan, that is maybe not the exact stats that you were looking for, but some indication at least how things are developing and let's continue to discuss. Do you have any more questions, Stefan?
No. Thank you very much. Sorry for the noise.
No problem at all. Yes. Operator, we do not have time for more than one more question, if there is. Is there any other questions?
There are no further questions at this time. Please continue.
Okay. Thank you very much. In that case, that concludes the presentation for MTG's Q2 2020. We look forward as always to stay in touch, and we will release the next quarterly report on the 4th November. So until then, have a great day, and stay healthy.
That concludes the conference call for MTD. Thank you, and have a great day.
That does conclude our conference today. Thank you all for participating. You may all disconnect.