Ladies and gentlemen, thank you for standing by, and welcome to the Modern Times Group Q4 2019 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you the conference is being recorded today. I would now like to hand the conference over to your first speaker today, Lars Torstensson. Please go ahead.
Thank you very much, good morning, everyone, and welcome to MTG's interim report presentation for the fourth quarter of 2019. My name is Lars Torstensson, and I'm responsible for communication and IR here at MTG. With me today, I have, of course, Jørgen Madsen Lindemann, our Group President and CEO, and Maria Redin, CFO at MTG .
We will start with a formal presentation, as we always do, followed by a Q&A. Please keep in mind, questions are only enabled for those participating through the dial-in today. Our webcast is listen only. Without any further delay, please, Jørgen, can you take us through the presentation of our qu arter?
Yeah. Thank you very much, Lars. If I can ask you to look at slide number one. The fourth quarter, together with the beginning of 2020, have been very intensive with a high level of activity and good progress in our business verticals. We continue the pursuit to become even better from a commercial perspective, and our focus is clear: to establish MTG as a global leader in the fast-growing industry of esport and a relevant player in the gaming space. Our belief in tomorrow's entertainment is strong. With our esport products, we are in a pole position going forward.
Throughout 2019, we have made very good progress on executing on our strategy, and there's much more to be done. Let me come back to that in the end of the presentation. Let's first have a look at the quarter. You go to slide number two, you can see that operationally, our two business verticals, esports and gaming, have shown good progress and delivered 16% sales growth, record levels for a single quarter and for a full year, which we of course are pleased about. Esports sales grew by 15%, with owned and operated seeing an increase by 21%.
The positive development was driven by continued growing interest among fans, leading to a particular growing sponsorship revenue. An additional contributor was the new category sports games. We then move to slide number three, you can see that the last two years have been on a transformation journey with our esports properties, leaving non-strategic work-for-hire to focus on building our owned and operated properties, our own IP product, and to work closely with selected important strategic focus partners on the ESL products.
We have delivered a quite impressive transformation of the revenue mix and can in 2019 demonstrate 67% of our revenue coming from our owned and operated products, meaning more long-term revenue build-up, an increase of 63% versus 2017, where we kicked off the transformation journey. Looking at the key revenue components, sponsorship we have grown more than 100% since 2017, and media rights has grown 54% since 2017. All in all, we have 25% more esports revenue than we had when we began the journey in 2017.
We have had good traction on the strategy, making esports more commercially professional and building long-term sustainable revenue and future profits. If we move on to slide number four, we can see that gaming had a very solid quarter, with revenues growing by 17%, driven by both InnoGames and Kongregate. Our largest title, Forge of Empires, continued to do well on the back of successful Christmas campaigns.
The positive operational trend has continued going into the first quarter, which to some extent is expected as we typically Q1 goes up against less competition from a marketing perspective. This is very promising as we are seeing our largest game, Forge of Empires, performing well also in the beginning of 2020. Our VC fund investment of SEK 14 million in the quarter is one more company we invested in and one follow-up investment. In the quarter, we also announced the sale of Zoomin.TV to Azerion. The new organizational structure was put in place at the MTG headquarter.
This organization that is fit for purpose will lead to significantly lower central costs, I will let Maria talk about that in her part of the presentation. Let's touch upon the subject on our relationship with Huya. While our plan to create a joint venture together with Huya did not materialize as we would have liked to see, we still believe in the logic of this transaction and its potential. An expansion into important Chinese esports market continues to be the priority for MTG, therefore, we are looking forward to sizing existing and new opportunities in the near future.
This is also true for our view on expansion elsewhere, partnerships, and joint ventures that can help accelerate our expansion and increase the relevance of our products. If we move to slide number five and the esports business, you can see that ESL held the DreamHack Masters in Beijing, in Hamburg, and Odense during the quarter. Beijing is actually our first real attempt to enter the Chinese market with a standalone product. This turned out very well in terms of viewership, and the event was also very well attended.
By comparing ESL's key performance indicators to the same properties last year, it is clear that the esport business has positive momentum. Most KPIs for marked events increased sharply versus the same event one year ago, demonstrating that the properties are relevant, the audience is growing very fast, and that our esports teams are on the positive journey of transforming esports into an established sport. DreamHack this phase increased during the fourth quarter as a result of DreamHack Masters in Melbourne, DreamHack Winter in Jönköping.
At DreamHack Winter, we hosted Epic's AAA title Fortnite for the first time, and we look forward to further build on this relationship with Fortnite at DreamHack Anaheim here in Q1. DreamHack also had a significant own event in Atlanta, as well as in organizing another season of its successful DreamLeague. At DreamHack, we have created a new category for esports named Sport Games. I'll get back to that new entity on the next slide. During the period, investment was made into both a new commercial organization and new tournaments.
This had an adverse effect on the EBITDA development of the quarter, but we do expect this new category in esports to deliver interesting growth opportunities going forward. The adjusted EBITDA loss of minus SEK 55 million in the fourth quarter was a deterioration compared to last year. During the period, investment was made into a new commercial organization and new tournaments, as I mentioned. This had an adverse effect on the EBITDA development of the quarter, as I just said.
A lot media right opportunity that amounted to SEK 20 million in Q4 and SEK 55 million for the full year, which we didn't make up for by onboarding new media partners, was one of the key reasons for the EBITDA development. At this stage, we are fine with prioritizing audience reach over revenue in order to continue to build the sport in relevance, then in the near future, capitalize on the media part through valid data. We're looking forward to presenting the findings from Nielsen on tournament viewership to our partners. This will help us to earn a space with the products or schedule.
Demonstrating the media value of esports is just a matter of time, since we can see the interesting demographic is there. According to Nielsen, esports can demonstrate 88% of the audience between 15 and 44 years old, which is also confirmed by the interest of sponsors of the products. The focus going forward for the vertical is clear, is to continue to commercialize the growing audience of the esports, thereby making the sport commercial competitive.
If you move to slide number six, we can see that the level of activity in our esports vertical continued to be high, with several important announcements, all of them making our ESL and DreamHack franchises even stronger. As said, we are investing into a new category in esports that we call Sport Games, which is to focus on traditional sports in a digital format, consolidating existing properties such as eSuperliga and eAllsvenskan.
In the quarter, we created two new tournaments in this category, the eDivisie, together with the Eredivisie, and the European Tour, we then launched an esports tournament called the eTour. On the so-called generational esports games, I'm very glad to mention that we enhanced our partnership with Valve this year and are given the opportunity to run two Dota 2 and one CS:GO Major in 2020. We're currently having more than 40 publisher relationships as we speak, sharing our insights into what makes a great esports game or not.
We are excited about our new long-term strategic partnership with Blizzard around their two epic titles, StarCraft II and Warcraft III: Reforged. These two titles will be part of our ESL Pro Tour format. If we move on to slide number seven, then of course, I have already touched on the subject, but our properties, especially on the master level, continue to grow and build fandom around them.
As discussed with you earlier, we are on the path to build long-term sustainable properties, and the first years of operation are investment by building the sport to demonstrate audience which you can capitalize on going forward and demonstrate the relevance we can contribute as a commercial partner. Therefore, it is encouraging to see that the viewership develops in a good manner. The IEM Beijing is a good example of this. We have been moving from being hosted to our own facility now as the interest has been growing.
The property is still loss-making, but as you can see on this slide, the KPI for watched hours and viewers are excellent. The necessary foundation to have a stronger commercial pitch based on the data from 2019 when we return to China in 2020. If we then move on to the next slide, number eight, let's talk about the gaming performance. Before we do that, let's recap on our strategic review. In October 2019, we announced the review of our gaming vertical. The purposes of this is based on a range of interactions with different parties to evaluate the best ways to create and crystallize value for shareholders.
The process could result in a joint venture partnership for our gaming vertical to enhance its competitive position and to access capital and to access new geographies. It could also result in MTG becoming a global pure-play esports company, dedicated more resources to capitalize on the global rise of esports from our already leading market position through our ownership of ESL and DreamHack. We are currently in the process, and we will inform the market as soon as there is a conclusion.
If we then move on to slide number nine, we can see that InnoGames achieved good growth in the quarter, but also noticed some disappointment with new game launches. The year ended with strong development of its existing games portfolio, especially the Forge of Empire. Improved customer lifetime value throughout the year has provided us with an opportunity to invest in marketing for future growth, which paid off during the fourth quarter. In order to secure the best possible position going into 2020, InnoGames has been working in parallel with developing new games.
The result is four exciting new games to be introduced to the market across 2020, games that will be mobile first. Kongregate executed well on its new strategy and operating model in the fourth quarter. The turnaround is clear thanks to an increased focus on valued publisher relationship, rolling up and developing successful IPs, and by tightening up the scope of the portfolio of games. As a result, Kongregate ended the year on a high note with a strong momentum going into 2020. If we move on to slide number 10, you can see that EBITDA grew a strong 64% in the quarter.
Kongregate posted double-digit improvement in adjusted EBITDA. This was mainly thanks to Kongregate's newer title, "Idle Frontier," which continues to demonstrate positive results. In addition, Bit Heroes IP continued to report robust development and both net sales and game profit grew. InnoGames adjusted EBITDA improved compared to last year. This was partly driven by lower marketing costs and by the performance of "Forge of Empires." "Forge of Empires" continued to grow, as mentioned, supported by improved in-game features and the relative high marketing investment in prior quarters.
InnoGames' portfolio of classic games continued to record solid performance, and "War Lord" saw positive traction from its holidays campaign. ARPDAU At constant currencies increased by 14% year-on-year, mainly driven by better in-game monetization. "MAU and DAU" was down due to the Kongregate and the phasing of our third-party publisher relationships. This trend will continue in 2020.
Moving on to slide number 11. Our gaming vertical has a really strong and exciting gaming pipeline in the making. As already mentioned, InnoGames has four new games planned, all mobile first, that will be introduced to the market in 2020. These games will be soft launched across the year to ensure that resources are being deployed in the best possible way and to yield the highest return. Kongregate is equally active going into 2020. Four new idle titles based on the same game engine, improving time to market significantly.
Last but not the least, the title you have all been waiting for, the "Teenage Mutant Ninja Turtles" that will be promoted together with Nickelodeon. All in all, five new games IP from Kongregate planned for 2020. That concludes my comments. I will now hand the call over to Maria to take you through the numbers in more detail.
Thank you, Jørgen, good morning, everyone. If you could then turn to slide number 12. As we've gone through the sales and the EBITDA developments for the group and segments, I would rather like you take you through the rest of the income statement in a bit more detail along with the cash flow. If we start with the EBITDA. The group-adjusted EBITDA amounted to SEK 84 million, and this includes SEK 11 million from the application of IFRS 16, which is then compared to the corresponding period where we did not include it.
This IFRS 16 adjustment is lower than previous quarters, and this is due to the sale of Zoomin.TV. The adjusted EBITDA margin for the quarter was 7% or 6% when excluding the impact on IFRS 16. The margin improvement in the quarter was driven by the gaming vertical, which reported lower marketing expenses and high sales from the successfully executed in-game event at InnoGames, and the new game launches from Kongregate, in addition to improvements to Kongregate's overall business operation. Esports adjusted EBITDA margin declined.
This is mainly as a result of higher investment costs of events within ESL and the launch of DreamHack Sports Games that Jørgen described. The adjusted EBITDA reflects the underlying performance of the businesses. As announced, we had extraordinary costs in the quarter of SEK 191 million. This relating to redundancy costs from the efficiency programs at the headquarter in ESL and also further write-down of assets. We then break down this SEK 191 million, it is reported SEK 19 million in items affecting comparability and SEK 93 million as impairment of previously capitalized costs.
Further adjustments to the EBITDA amounts to SEK 11 million in costs relating to LTI programs and SEK 4 million relates to M&A transaction costs. Group central operation impacted the quarter by SEK 37 million. The early announced restructure program is progressing well, and cost reduction will start to materialize in Q1 and onwards. As stated, we will then have a full run rate of approximately SEK 600 million by 2021 when savings are fully realized.
Group EBIT in the quarter was negative SEK 206 million and reflects the increase in items affecting comparability and impairment charges, and the EBIT margin was negative 18%. Net financial items amounted to a negative SEK 23 million, predominantly driven by the exchange rates where we've been impacted by the strengthening of the SEK versus the euro. Group tax charges was positive SEK 22 million in the quarter. Current tax amounted to negative SEK 38 million and deferred taxes to SEK 60 million. Of the SEK 60 million, SEK 32 million relates to untaxed reserves in the Swedish entities.
If I then can ask you to move to slide 13, and we look at the cash flow. CapEx in the quarter was SEK 66 million, mainly driven by the third down payment for the acquisition we did of the Bit Heroes IP, and also the acquisition we made in the quarter of the Surviv.io IP at Kongregate. Apart and beyond acquisitions, most of our CapEx is still in the gaming vertical where we capitalize game development costs up until the game goes live, thereafter all development costs are expensed, and thereafter also the pre-launch CapEx starts to get depreciated.
In the quarter, we invested around SEK 14 million in our VC fund in two companies, one new portfolio company and one follow-up investment. So far, MTG has invested and committed approximately SEK 221 million in 19 different companies to complement its majority stake investments in ESL, DreamHack, Kongregate, and InnoGames. Cash flow from continuing operations was an outflow of SEK 34 million in the quarter, which reflects the losses in our esports operation. Though offset by a strong quarter in the gaming vertical, we have this quarter extraordinary high tax payments.
This relates both to taxes in arrears as well as prepayments for 2019, negatively impacting the cash flow. We ended the quarter with a net cash of SEK 1.8 billion. That concludes my comments. Thank you, and I will now hand back to you, Jørgen.
Yeah. Thank you very much, Maria. If you can turn to slide number 14. If we look a bit at 2020, we have several strong growth levers and focus areas in both esports and in gaming. Firstly, we expect to see our gaming portfolio companies introduce no less than nine new exciting games to the market, covering a total of four genres, and all of the games will be mobile-first games.
Secondly, we have started our strategic relationship with Nielsen, which will help us to build, improve, and validate the commercial relevance of the products and start to increase monetization on media and sponsorship rights from esports. We expect continued increasing interest for the new ESL Pro Tour format from fans and commercial partners and establish new relationship with publishers. One example of this is the latest partnership with Blizzard. Another example is the partnership with CSPPA, the Counter-Strike Professional Players' Association.
Last but not least, we have been working with the best Counter-Strike teams in the world in a structured manner since 2016, and we are expecting to extend and expand that partnership very shortly. Speaking of our esports calendar, we're looking at a very nice and intensive and exciting first half of 2020, especially Q2. This will probably be our busiest quarter ever, with tournaments ranging from national championships to the cathedral of Counter-Strike in Cologne. I believe this hectic schedule in a very good way shows why we are convinced that DreamHack and ESL are the world's best esports assets.
Through these levers, we have the opportunity to further establish and build on MTG as a global esports leader and to capitalize on the exciting journey for the gaming industry, providing the future of entertainment products. Now onto the last slide number 15, and let me summarize the fourth quarter. Throughout 2019, we have continued to develop our business verticals, esports and gaming, with an emphasis on becoming even more commercial and product relevant. As demonstrated earlier, we are well on track.
As a result, we have seen both increased sales to record high levels and improved operational performance. From a strategic and product perspective, additional important milestones have been achieved. One highlight is our new publisher deal, which we mentioned with Blizzard. In addition, we have prolonged media and brand partnership agreements related to the new ESL Pro Tour circuit for CS:GO. The fourth quarter of our esports vertical show a high level of activity, including four market properties.
Fans showed strong engagement in all of the properties with improved operational metrics as a result. In total, the esports revenue grew by 15%, driven by our owned and operated, which grew a solid 21%. Both InnoGames and Kongregate achieved good growth in Q4. The year ended with strong development of InnoGames' existing games portfolio, especially Forge of Empires, and Kongregate executed well on its new strategy and operating model in Q4 2019.
The turnaround is clear, thanks to an increased focus on direct publisher relationships, rolling out and developing successful IPs, and by tightening up the scope of the portfolio of games. As a result, Kongregate ended the year on a high note with a strong momentum going into 2020. Last but not least, the strategic review is ongoing, and we will inform the market as soon as we can conclude the process.
All in all, we are making good progress executing on the strategy, fully committed to our mission of becoming a global leader in esports and gaming. Hence, looking forward, MTG and its portfolio companies will continue to have long-term sustainable growth and to show improved operational leverage. That concludes my comments, back to you, Lars.
Thank you, Jørgen, that ends our presentation for the fourth quarter 2019. We are now ready to take any questions that you might have. Operator, could we have the first question, please?
Thank you, ladies and gentlemen. If you would like to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you'd like to cancel that request, you can press the hash key. That's star and one to ask a question. The first question today is from the line of Tom Singlehurst from Citi. Please go ahead.
Hi, it's Tom here from Citi. Thanks for taking the question. I mean, obviously a lot to talk about in terms of the operational performance, but I had a couple of questions just on strategic positioning, if it was all right. The first one is, in the aftermath of the sort of Huya transaction sort of unwinding a bit, can you just talk about your sort of philosophy towards sort of getting some form of minority investment within ESL? Is that now 100% off the agenda and we should focus on the sort of esports division as is?
Linked to that, the second question is, obviously in the last few days, few weeks, we've seen some alignment elsewhere in the industry. I'm in particular referring to the Activision and Google tie-up. I'm just wondering from your perspective. How does that make you feel about esports? Do you feel that you have to be aligned with a particular streaming platform or a particular publisher, or are you comfortable being truly independent and being agnostic? Thank you.
Thank you, Tom. Just to repeat the question, the line was maybe not the best one, but when it comes to strategic partnerships in the aftermath of the Huya announcement that we did a couple of weeks back, is our relationship with them 100% off, or is there still a dialogue ongoing? That was the first question. The second question is, following the announcement from Activision and Google/YouTube on their relationship on the Overwatch League, the need of something similar from a ESL DreamHack perspective, a digital stream partner. Jørgen, I guess those both are yours.
Yeah. When it comes to the strategic partnership, I think that is something we have been very clear that is something that we would like to see, not only in China, but in parts of the world where we feel that we can find a partner who can help us accelerate our products and become an even more relevant player in the area. China is a fantastic esport market. We have been looking for some time for a potential partner, and therefore, we were very happy when we started to discuss with Huya, they are a fantastic company and also very relevant in the esports market in China.
Unfortunately, at this stage, we couldn't agree on some of the commercial parts, some of the risk parts of the agreement, but that doesn't prevent us from having a commercial relationship, which we already have. Huya is distributing or was distributing our Beijing event, did that extremely well, and also lately they were distributing our Dota 2 tournament from Live Stage at the DreamHack event as well. We will pursue new opportunities for strategic partnerships around the world, and therefore minority partnerships or strategic investments into ESL is definitely not off the table.
On the contrary, I think we are very open to talk to strategic players who can help us accelerate our products in different parts of the world. When it comes to the Overwatch and YouTube, I think we also some time ago had an agreement with YouTube on some of our products, and we have an agreement with Twitch on our products and Facebook and others. We are already today dealing with both global digital distributors, but also, of course, local, as you know.
We have a range of local partnerships, and that is also what Nielsen should help us execute on, is, of course, to get more data so we understand how relevant we can become for local partners as well. When we see the partners locally we already have teamed up with, they see extremely good traction on our products. That is something that we would continue to pursue, a lot of local partnerships, but that would not prevent us from engaging in global partnerships, which we already today are having, as I mentioned, both with Facebook and Twitch and others.
Tom, would you like to do a follow-up?
I think that's okay for the moment. I'll come back if anyone has any questions. Thank you.
Thanks, Tom. Appreciate the questions. Operator, could we have the next question, please?
Yes. The next question is from the line of Oscar Erixon from Carnegie. Please go ahead.
Thank you. Good afternoon, guys. Yeah, a follow-up question there on media rights. What types of global agreements are you looking for? I mean, what are the relevant players? Is it YouTube, Facebook, Twitch? Are those the main players that you're looking to? Thank you.
Thanks, Oscar. Just to repeat the question, what type of global partners are we looking for when it comes to digital distribution?
I think you mentioned them very well. I would add Huya, of course, to that equation as well, which is a global distribution partner as well. That is one way to go is, of course, to have a global partner for some relevant products. Then you might find games which are more relevant in parts of the world where you want a regional partner or where you can capitalize better on a local partner.
It will be individual partnerships depending on interest of the games in the different parts of the world, and also, of course, for us to understand what commercial opportunities are we having with our products in different parts. Today we have good relationships with the ones that you mentioned. Again, it doesn't prevent us from having relationships with others, which we are pursuing.
Would you like to follow up, Oscar?
Yes, another question on gaming. Could you say something as well about the strategical review that is ongoing? Obviously, "Forge of Empires" is performing well, "Kongregate" is performing well, but the performance of "God Kings" and also "Warlords," has that affected the value that you see in gaming? Thank you.
Jørgen, I guess that question is for you if there's an update on the strategic review.
Yeah, no, the update is that the strategic review is ongoing, and that is what we say at this stage about the strategic review.
We have to keep it short, Oscar, on that one because it's something that is very much ongoing, as you know. Would you like to follow up with any other topic?
Yeah, just a final question from me then. Warcraft III: Reforged has received quite a negative reaction from critics and users. Has that affected your plans for ESL Pro Tour?
Yes, regarding the Warcraft III: Reforged when it comes to reviews on the game has been quite low when you follow up on how the fans have been taking it. If that question is for you, Jørgen, if you would like to elaborate, I could support on that one as well.
Yeah, no, nothing. Meaning we are about to launch the different products with Activision, and we definitely have all the ambitions in the world to make that a super successful esport game. Full speed.
You will see that also now when we launch the Pro Tour for both StarCraft and Warcraft, that Warcraft is very much in play when it comes to the scheduling for next year. It should be said that that is, of course, building a new esports scene for Warcraft which has not been that strong before, while StarCraft is to maintain a very strong esports scene that has been a highly appreciated game for many years. There's not been any change to our view on Warcraft.
Got it. Thank you very much. This is for me.
Thanks, Oscar. Appreciate the questions. Operator, could we have the next question, please?
Yes. The next question is from the line of Erik Lindholm from Nordea. Please go ahead.
Yes. Hi, guys. A couple of questions from me. I'll start with, you signed a number of media rights deals recently, such as the Blake Broadcasting deal and the Maincast deal in Russia. Can you comment on how much you expect these to contribute in aggregate in 2020? When should we expect this to start contributing?
Thank you, Erik. Our portfolio companies have been announcing media deals recently. Do we have anything to share when it comes to what sort of contribution that is to be expected in 2020? Maybe Maria, for you to start elaborating on, and then Jørgen, if you would like to add.
I think the way to look at that, earlier in the call, we discussed some of those global streaming partners, which is of course higher on the agenda when it comes to streaming esports. I think it's relevant to have the local partners such as Blake, such as Maincast, such as TV 2 and so forth. I think it's important that we continue to make these local partnerships as well, and also in some of those more traditional platforms. It's a nice complement to our overall media strategy that we are continuing to build. I think, again, we are in the early phase, which I think Jørgen also said in his quotes.
It's about delivering the product, delivering Pro Tour, generating the ratings and the audience share, which we're doing together with the new Nielsen tracking, and then we do the next round of media discussions and see the gradual wrap up.
Erik, would you like to follow up?
Yes. I'll take another question on another topic. Can you say approximately what level of UAC you had in relation to net sales in gaming in Q4, and what you expect in gaming for 2020?
Sorry, Erik, what KPI were you asking for there?
User Acquisition Costs.
User Acquisition Cost. Thank you. For the gaming asset.
Yes, exactly. Yeah.
Maria, it's up your alley.
Yeah, no, we have never actually broken down the specific percentage on marketing spend going in as part of net sales. The way to think about it, you saw the margins went up in the quarter. We did go down a little bit, both quarter-on-quarter and also versus last year on marketing spend. That's always fluctuating a little bit depending on the return you see in the different channels and so forth. Also, we had a strong user momentum coming in from Q3 when we had higher marketing ramp up.
There's nothing material to comment on it. I think each quarter, a little bit depending on how successful we are in different channels and what we see with the return, we sometimes ramp up, and then next quarter it can then go down a little bit. If you look at a longer-term perspective, it remains relatively flat.
Also what we're looking at, how if you take InnoGames and the bigger titles, they had a good performance in Q4, but also look when moving into January in 2020.
We are happy to see the ROAS levels , underlying raw levels. We're happy with the marketing spend we do. We're happy with those levels. I think that's the way to look at it. Then you can quarter on quarter, you can always see a little bit of fluctuations, but over the longer period of time, it is pretty stable level that goes in as a percentage of net sales into user acquisition. What you did see, and it's fair comment of course, it was down a little bit as well because we stopped the marketing on God Kings in the quarter.
All right. Yeah. I think that's it for me right now. Yeah. Thank you.
Thank you very much, Erik. Operator, do we have another question?
Yes. The next question is from the line of Martin Arnell from DNB Markets. Please go ahead.
Hi, guys. My first question is on InnoGames. Can you just explain the difference in the new game titles for this year versus the most previous ones?
Yes. Gaming pipeline when it comes to if there's a difference when it comes to the style of the game versus what we have launched earlier. Maria, you across the InnoGames, maybe you could start.
I think that what we've been doing is, of course, to learn from the success and the failures we've done in InnoGames, in all honesty. I think the main difference is we have changed and done an overhauling that game when it comes to target process and the go-to-market strategy, they are focusing on the city building theme and the resource management. It stays true to InnoGames' core. The way we look at it now is that we are much more agile in the process, which also will benefit time to market, which will give us an upside.
Okay.
We don't go into specific of the actual games because that is something that fits with the game.
Okay, thanks. Second question I have is on ESL and the reorganization you've done there. Can you explain that a little bit more in detail and what you expect will come out of that and why it should be a positive? Thank you.
We work on the operating model at ESL. You've been very close to that one, Jørgen. Maybe you could start answering that question.
Yeah. This, of course, comes along with the fact that we also now are much more proactive in terms of launching the schedule, the tournaments, and so forth. I think you can say we are better prepared now. We have a better understanding what is needed one year, two year from now. There's a lot of opportunities to streamline processes, to understand different capabilities, what is needed now going forward, with all the product that we have ongoing.
That we have done, and we have onboarded quite interesting new executives as well as we also announced lately was Roger, who used to run the EuroLeague. As you know, our commercial officer in ESL is called Thomas, and he used to be the CEO for the team for the Champions League franchise. Of course, when these executives comes in, they also build their own set up, their own organizations, and therefore you will see constantly develop organization. I think that is quite important. Hopefully, as we onboard more partners, that is also affecting how we're going to work.
The idea is to be more agile. The idea is to be more competitive and make sure that we are fit for purpose with these different entity or department that we have in the ESL. That is the reason behind, and that has worked out well for us. Again, this is an ongoing development that will continue.
Thanks, Jørgen. Martin, do you want to follow up?
Just a final question on your growth targets, mid-teens, medium-term growth. In 2020, do you expect it to be second half tilted or more sort of evenly spread throughout the quarters? Thank you.
Just to clear, I know this is a question coming from many of you out there regarding short-term guidance. We are not providing short-term guidance, but when it comes to our long-term view, Maria, maybe you would like to elaborate.
No, I think you actually said it all, Martin. I think nothing has changed when it comes to our long-term ambition. We want to progress here with sort of the mid-teen sales growth. Nothing has changed there. Also to start seeing that operational leverage within our esports operations, which then will bring up the adjusted EBITDA margin. I think we said 10% - 15%, and that remains true. In the mid to long term, nothing has changed.
Okay. Thank you.
Thanks, Martin. Operator, do we have any other questions?
We do. The next is from the line of Stefan Billing from Kepler Cheuvreux. Please go ahead.
Thank you very much. I have a question. If you can say something about the revenue development from mobile esports and city subsidies, how much of esport revenues they represent and your view on the opportunities in these segments going forward? Another question, if you can specify how much sponsorship revenues grow in Q4. Thanks.
The question is regarding revenue development for mobile esports. Also we have been mentioning that from time to time, city subsidies, that can be a component.
Yeah.
Jørgen.
Yeah, I think mobile esports, you can say has come as a positive surprise to us. I think what we also discussed was it would render around 10% of the revenue in 2019, and 2017 was very little. That has been quite an interesting product for us. Also a way for us, of course, to utilize our events better. When we have eventually a big Counter-Strike tournament in the afternoon, we might have a mobile tournament, like we had in Hamburg or like we had in New York earlier in the day. That we give the fans more, the esports fans more, and that is of course to the benefit of all parties. That's a positive for us.
When it comes to the state or the city subsidy, I think important for us is of course that we not only get subsidized, and that is of course more, that would be more professionalized. We have more case stories now, what do we actually bring to the city when the circus of ESL and DreamHack comes to the city. There we will be over time, more sophisticated. We are already now have teamed up with people who are used to have that discussion, what is the tourism economy?
What does it mean when you can get X amount of thousands of people into your city? That is something we are getting more sophisticated about. One thing is money. The other thing is, of course, the support from the city, because obviously, particularly around DreamHack festivals, we would like to do more. I have seen when I was traveling around with the Champions League circles or whatever, you had big festivals, you had big the square, you had big Champions League parties and so forth.
That is something we going forward, of course, will discuss with the cities. We are getting more refined, and we are also getting higher subsidies, because that we have more case stories. You had a third. Was there a third question or was it those two?
That was those two. Stefan, if I didn't miss any, would you like to do a follow-up, Stefan?
Yeah. You missed my question on sponsorship growth in Q4.
Yes, sorry. I think in general we had very strong growth of sponsorship in the fourth quarter. It worked very well for us. I think what I have also tried to explain and what we talked about at the beginning is, of course, the development that we're having right now when it comes to the journey, when it comes to the transformation around going away from becoming a work-for-hire company more to a more strategic company with own IPs, and then therefore also long-term sustainable revenue.
That I think is a good slide, is the one that we had in the beginning where we talked about how has that actually developed the revenue streams from 2017 when we initiated that journey, until today. If you just look at the fourth quarter, you will see that sponsorship was 10% higher in the fourth quarter than it was in the fourth quarter 2017. That is quite an asset in the same course of media rights was up, well, it doubled. If you look at the full year basis, sponsorship more than doubled since 2017, and media right is up some 50%+ .
That development, of course, is something we are very happy about. We have not given our specific target or specific figures for the growth in the quarter, but it was a very good quarter for sponsorship in Q4.
Stefan, would you like to follow up with another question?
That's it. I think you mentioned 42% in Q3, so that's why I had the question on the year-on-year growth.
We could maybe be a little open and say we are close to that level currently as well.
Thank you very much.
Thanks. Operator, could we have another question, please?
Yes. The next is on the line of Oscar Erixon . Please go ahead.
Yes, I'll take the chance to ask two follow-up questions as well. You mentioned in the report that Warlords had a pretty strong holiday season. Should we interpret that as that you will actually invest further in Warlords, in user acquisition costs in development, and that God Kings, on the other hand, is now not in focus? Thank you.
With reference to Warlords having a good Christmas campaign or holiday season campaign, does that mean that we will continue to invest in Warlords, Maria?
Yeah. Absolutely, we will continue to invest in Warlords, but we are scaling it down a little bit and we are changing the focus from what we initially planned to. As you may have seen as well in the write-down release, that we are not writing down the full value, we are writing down half of the value because we do still see a good potential in Warlords.
I think what was successful in Q4 and the Christmas campaign, which was positive, is that we took some of the features and campaign activities that worked very successfully in Forge and applied that in Warlords with a very good return. We would simply work with the games differently going forward. We will have a smaller team on it, and we will spend less but still efficient marketing on behalf of Warlords.
How would we manage God Kings going forward?
God Kings, we will not do any marketing anymore behind, we still have a very loyal fan base that like the game. We will keep the game for them, so they will enjoy the game. Of course, hence there will be limited revenues coming into it, and that's why we wrote down the vast majority of God Kings.
Thank you, Maria. Oscar, you had two questions, I believe.
Yes, you're right. A question on esports as well. I still haven't seen a press release on Dota 2 and ESL Pro Tour about that schedule coming together. Could you shed some light on that and also discuss the majors that you have upcoming now in 2020? Is it both CS:GO in Rio and Dota 2 in Los Angeles? Thank you.
Thanks, Oscar. Dota 2 in ESL Pro Tour format around Dota 2, the majors. That's you, Jørgen, I believe.
Yeah, as you correctly say, we have announced the different events, the majors that we're having. We had a live city event with DreamHack here in January, it was a Dota 2 major, and we are having the Los Angeles event, hopefully in Q2 as well now. We have the Counter-Strike event in Rio. That is the enhanced partnership that we are having with Valve. On the Pro Tour, we have a lineup and also we have the team for DreamHack. They also have their own product called DreamLeague, which is also a Dota 2 product.
That is ongoing. It is not the same scale at this stage as the Counter-Strike Pro Tour and not as, what you can say, as big right now with player union commitment and fixed big schedules and so forth as the Counter-Strike Tour. That's just something we're working on, but we will have a range of Dota 2 products out there as well. The aim is to make a super relevant Dota Pro Tour as well, when announced then.
Okay. Thank you very much.
Thank you. Thank you, Oscar. Operator, do you have another question for us?
Not at the moment. Just a reminder that star and one on your keypad if you would like to ask another question. No questions coming through currently.
Okay. Thank you very much, operator. In that case, thank you very much for all the relevant questions being asked. This concludes the question and answer session for our Q4 2019 interim results. We look forward to staying in touch until we release the next quarter report. With that said, Q1 2020 will be presented the 28th of April, together with our Capital Markets Day that will be held in New York. We look forward to see as many of you as possible there to go through all the good stuff happening at MTG. With that said, have a great day and see you soon. Thank you.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.