Ladies and gentlemen, thank you for standing by, and welcome to 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. 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 Thorstensson.
Please go ahead.
Thank you very much, and good morning, everyone, and welcome to MTG's interim report presentation for the Q4 2019. My name is Lars Thorstensson, and I'm responsible for Communication and IR here at MTG. With me today, I have, of course, Jurgen Matzen Lindeman, our Group President and CEO and Maria Reddin, CFO at MTG. We will start with the formal presentation, as we always do, followed by Q and A. Please keep in mind, questions are only enabled for those participating through the dial in today.
Our cost is listen only. So without any further delay, please, can you take us through the presentation of our quarter?
Yes. Thank you very much, Lars. And if I can ask you to look at Slide number 1. The Q4 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 conversion perspective, and our focus is clear to establish MBG as a global leader in the fast growing industry of e sport and a relevant player in the gaming space.
Our belief in tomorrow's entertainment is strong. And with our e sport products, we are in a position going forward. Throughout 2019, we have made very good progress on executing on our strategy, and there's much more to be done. But let me come back to that in the end of the presentation. So let's first have a look at the quarter.
If you go to Slide number 2, you can see that, operationally, our 2 business verticals, e sport 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 our operators 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. If we then move to Slide number 3, you can see that the last 2 years have been on a transformation journey with our e sport properties, leaving non strategic work for hire to focus on building our own and operated properties, our own IP product, and to work closely with selected important strategic partners on the ESS products.
We have delivered a quite impressive transformation of the revenue mix and can in 2019 demonstrate 67% of our revenue coming from our owner operated products, meaning more long term revenue buildup, 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 meteorite has grown 54% since 2017. All in all, we have 25% more e sport revenue than we had when we began the journey in 2017. So we have had good traction on the strategy making e sport more commercially professional and building long term sustainable revenue and future profits.
If we move on to Slide number 4, we can see that Gaming had a very solid quarter with revenues growing by 17%, driven by both InnoGames and Compligade. Our largest title, Forge of Empire, continued to do well on the back of for Christmas campaigns. The positive operational trend has continued going into the Q1, which to some extent is expected as we typically in Q1 goes up against less competition from a marketing perspective. Still, this is very promising as we are seeing our largest game, Forge of Empire, performing well also in the beginning of 2020. Our VC fund investment of SEK 14,000,000 in the quarter is one more company we invested in and one follow-up investment.
In the quarter, we also announced the sale of XUMIN to Assyrian. Also, the new organizational structure was put in place at the NTG headquarter. This organization that is fit for purpose will lead to significantly lower central cut, but I will let Maria talk about that in her part of the presentation. Let's touch upon the subject on our relationship with Gruha. While our plan to create a joint venture together with Gruyere did not materialize as we would like to see, we still believe in the logic of this transaction and its potential.
And expansion into important Chinese e sports market continues to be the priority for MTG. And 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 our increase the relevance of our products. If we then move to Slide number 5 and the Esports business, then you can see that ESL helped the market properties in Beijing, in Hamburg and UHNZE during the quarter. Beijing is actually our first real attempt to enter the Chinese market with a stand alone product.
This turned out very well in terms of viewership, and the event was also very well attended. When comparing ESL's key performance indicators to the same properties last year, it is clear that the e sports business has positive momentum. Those KPIs for market events increased sharply versus the same event 1 year ago, demonstrating that the properties are relevant, the audience is growing very fast and that our e sport teams are on the positive journey of transforming e sport into an established sport. DreamHack net sales increased during the Q4 as a result of DreamHack Masters in Melbourne, DreamHack Winter in June Shubbing. At DreamHack Winter, we hosted FX AAA titled Fortnite for the first time, and we look forward to further build on this relationship with Fortnite at DreamHack and I'm here in Q1.
DreamHack also had a significant open event in Atlanta as well as in organizing another season of its successful Dream League. At DreamHack, we have created a new category for e sport named sport games. I'll get back to that new entity in the on the next slide. But 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 e sports to deliver interesting growth opportunities going forward.
The adjusted EBITDA loss of minus SEK 55,000,000 in the 4th quarter was a deterioration compared to last year. During the period, investment was made into new commercial organization and new term ends, as I mentioned. This had an adverse effect on the EBA development of the quarter as I just said. Also a lot of media ride opportunity that amounted to €20,000,000 in Q4 €55,000,000 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 and then in the near future capitalize on the media part through valid data.
Therefore, we are looking forward to presenting the findings from Nissan on tournament viewership to our partners. This will help us to earn a space with the products or schedule. Demonstrating the media value of Eastport is just a matter of time since we can see the interesting demographic is there. According to Nielsen Eastbourne can demonstrate 88% of the order is between 15 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 e sport and thereby making the sports commercial competitive.
If you move to Slide number 6, you can see that the level of activity in our e sport vertical continues to be high with several important announcements, all of them making our ESL and DreamHack franchises even stronger. Instead, we are investing into a new category in e sport that we call sport games, which is to focus on traditional sports in a digital format, consolidating existing properties such as A Super League and ER Svenska. In the quarter, we created 2 new tournaments in this category, The Dutch eFootball League together with the Dutch EZWISE and the European Tour and Golf, we then we launched an e sport tournament called the e Tour. On the so called generational e sport games, I'm very glad to mention that we enhanced our partnership with Vitals this year and are given the opportunity to run 2 DOTA 2 and 1 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 e sport game or not.
Therefore, we are excited about our new long term strategic partnership with business around their 2 epic titles StarCraft II and Warcraft III Reforged. These two titles will be part of our Pro Tour format. If we move on to Slide 7, then I also 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 1st years of operation are investment by building this board 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 Q1 shift develops in a good manner.
The IEMP gene 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 watch hours and viewers are excellent. The necessary foundation to have a strong 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 8, let's talk about the gaming performance.
But before we do that, let's recap on our strategic review. So on October 2019, we announced the review of our gaming vertical. The purpose is of it 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. Would also result in MGG becoming a global pure play e sport company, dedicated more resources to capitalize on the global rise of e sport from our already leading market position through our ownership of ESL and Dream Act.
We are currently in the process, and we will inform the market as soon as there is a conclusion.
So for example, on
to Slide number 9, 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 Force 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 Q4. In order to secure the best possible position going into 20 20, Innogames has been working in parallel with developing new games. The result is 4 exciting new games to be introduced to the market across 2020, games that will be mobile first.
Amalgate executed well on its new strategy and operating model in the 4th quarter. The turnaround is clear, thanks to an increased focus on private 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 then move on to Slide 10, you can see that EBITDA grew as strong as 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. Inogen's adjusted EBITDA improved compared to last year. This was partly driven by lower margin cost and by the performance of Force of Empire. Force of Empire continued to grow, as mentioned, supported by improved in game features and the relative high marketing investment in prior quarters.
Inogen's portfolio of classic games continues to record solid performance and Wall also saw positive traction from its holidays campaign. Updau at constant currencies increased by 14% year on year, mainly driven by better in game monetization. MAU and DAU was down due to the complicate and the phasing of our 3rd party publisher relationships, And this trend would 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 4 new games planned, all mobile first that would be introduced to the market in 2020. These games will be soft launched across the year to ensure that resources are being deployed a best possible way and to yield the highest return. Kongregate is equally active going into 2020 for new idle tiles based on the same game engine, improving time to market significantly. And 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. So all in all, 5 new games IPs will congregate plan for 2020.
So that concludes my comments. I will now hand the call over to Maria to take you through the numbers in more detail.
Thank you, Georgi, and good morning, everyone. So if you can then turn to Slide 12. As we go through the sales and EBITDA development for the group and segments, I would rather like to take you through the rest of the income statement in a bit more detail along with the cash flow. So if we start with the EBITDA, the group adjusted EBITDA amounted to SEK 84,000,000 and this includes SEK 11,000,000 from the application of IFRS 16, which is then compared to the corresponding period when we did not include it. This IFRS 16 adjustment is lower than previous quarters and is due to the sale of Xumin.
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 on the successful executed in game events at InuGain and the new game launches from Kongregate in efficiency improvements to Kongregate's overall business operations. Esports adjusted EBITDA margin declined. This is mainly as a result of higher investment cost of events within ESL and the launch of DreamX Sports Games as Jorgen described. The adjusted EBITDA reflects the underlying performance of the businesses.
And as announced, we had extraordinary costs in the quarter of SEK 191,000,000 dollars This relating to redundancy costs following the efficiency programs at the headquarter in ESL and also further write down of assets. If we then break down this $191,000,000 it is reported $19,000,000 in items affecting comparability and $93,000,000 as impairment of previously capitalized costs. Further adjustments to the EBITDA amounts to $11,000,000 in costs relating to LCI programs and $4,000,000 related to M and A transaction costs. Group Centre operation impacted the quarter by 37,000,000 The early announced restructuring program is progressing well and cost reduction will start to materialize in Q1 and onwards. And as stated, we will then have a full run rate of approximately $600,000,000 by 2021 when savings are fully realized.
Group EBIT in the quarter was negative $206,000,000 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 $23,000,000 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 $22,000,000 in the quarter. Current tax amounted to negative $38,000,000 and deferred taxes to $60,000,000 Of the $60,000,000 $32,000,000 relates to untaxed reserves in the Swedish entities. So if I then can now get to move to Slide 13, and we look at the cash flow.
CapEx in the quarter was SEK 66,000,000 dollars mainly driven by the 3rd down payment for the acquisition we did of the Bit Heroes IP and also the acquisition we made in the quarter of the survivio IP at Congregate. At Valentine's Day on acquisitions, most of our CapEx is still in the gaming vertical, where we capitalize game development costs up until the game goes live, and thereafter all development costs are expensed and thereafter also the prelaunch CapEx starts to get depreciated. In the quarter, we invested around SEK 14,000,000 in our VC fund in 2 companies, 1 new portfolio company and one follow-up investment. So far, MTG has invested and committed approximately $221,000,000 in 19 different companies to complement its majority stake investments in ESL, Dream Act, Congate and Innovate. Cash flow from continuing operations was an outflow of SEK 34,000,000 in the quarter, which reflects the losses in our esports operation.
And though offset by a strong quarter in the gaming vertical, we have this quarter extraordinary high tax payments that 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 1,800,000,000. So that concludes my comments. Thank you. And I will now hand back to you, Jorgen.
Yes. Thank you very much, Maria. And if you can turn to Slide 14. So if we look a bit at 2020, we have several strong growth levers and focus areas in both e sport and in gaming. So currently, we expect to see our gaming portfolio companies introduce no less than 9 new exciting games to the market, covering a total of 4 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 e sport. We expect continued increasing interest for the new ESET Pro Tour format from fans and commercial partners and established new relationship with publishers. One example of this is the latest partnership with Blizzard. Another example is the partnership with CSDPA, the Counter Strike Player Association. And last but not least, we have been working with the best Counter Strike teams in the world in a structural manner since 2016, and we are expecting to extend and expand that partnership very shortly.
Speaking of our e sport calendar, we're looking at a very nice and intensive and exciting first half of twenty twenty, especially Q2. This will probably be our busiest quarter ever with tournaments ranging from National Championship to the Cathedral of Counter Strike in Cologne. I believe this hectic schedule is in a very good way shows why we are convinced that Dreamhack and ESL are the world's best e sport assets. Through these levers, we have the opportunity to further establish and build on NTT as a global e sport leader and to capitalize on the exciting journey for the gaming industry, providing the future of entertainment products. So now on to the last slide, Slide number 15, and let me summarize the Q4.
So throughout 'nineteen, we have continued to develop our business verticals, Esports and Gaming, with an emphasis on becoming even more commercial and product relevant. And 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 purpose based, additional important milestones have been achieved. One highlight is our new publisher deal, which we mentioned with business. In addition, we have prolonged media and brand partnership agreements related to the new VSL Pro Tour circuit for CS GO.
The Q4 of our Esports verticals show a high level of activity, including 4 market properties. Fans showed strong engagement in all of the properties with improved operational metrics as a result. In total, the e sport revenue grew by 15% driven by our owner operator, which grew a solid 21%. For Inu Games, Kongregate achieved good growth in Q4. The year ended with strong development of Inu Games' existing games portfolio, especially Force 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 partnership relationship, rolling up and developing successful IPs and by tightening up the scope of the portfolio of games. As a result, Carnegie 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 e sports and gaming. Hence, looking forward, MGG and its portfolio companies will continue to have long term sustainable growth and to show improved operational leverage.
That concludes my comments. So back to you, Lars.
Thank you, Jorgen. And that ends our presentation for the Q4 2019. And we are now ready to take any questions that you might have. So operator, could we have the first question, please?
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. We've 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 it's going to we should focus on the sort of Esports division as is? And then 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 can you are you comfortable being sort of truly independent and sort of being agnostic?
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. So is a 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 GoogleYouTube on their relationship on the Overwatch League, the need of something similar from a ESL Dreamhack perspective, a digital stream partner. So Jorgen, I guess those both are you, Jorgen?
Yes. When it comes to the strategic partnership, I think that is something we have been very clear that, 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 even more relevant player in the area. China is a fantastic e sport 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, who is 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 of the some of the risk parts of the agreement, but it doesn't prevent us from having a commercial relationship, which we already have. So UIA is distributing or was distributing our Beijing event did that extremely well. And also lately, they were distributing our 2 tournament from LifeSeq, the DreamHack event as well. So 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 in our products in different parts of the world. Then when it comes to the Overwatch and YouTube, I think we also sometime had a for a time ago, had an agreement with YouTube on some of our products, and we have an agreement with Twitch on our products, Facebook and others. So we are already today dealing with both global digital distributors but also, of course, local, as you know. So 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 TBLOC with, they see extremely good traction on our products. So that is something that we would continue to pursue a lot of local partnerships, but that will not prevent us from engaging in global partnerships, which we already today are having, as I mentioned, both with Facebook and Twitch and others. So Tom, would you like to do it for
you? I think that's okay at the moment. I'll come back if you have any questions. Thank you.
Thanks, Tom. Appreciate the questions.
The next question is from the line of Oskar Eriksson from Carnegie.
Thank you. Good afternoon, guys. 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?
Thanks, Oscar. Just to repeat the question, I mean, what type of global partners are we looking for when it comes to digital distribution?
Yes. But I think you mentioned them very well. I would add, of course, to that equation as well, which is a global distribution partner as well. And so that is one way to go is, of course, to have a global partner for some relevant product. And 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.
So 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 in with our products in different parts. But today, we have good relationship with the ones that you mentioned. So that but again, it doesn't prevent us from having relationships with others, which we are pursuing.
Would you like to follow-up on that?
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. Congregate is performing well.
But has the performance of God Kings and also Warlords, has that affected the value that you see in gaming? Thank you.
So Jorgen, I guess the question is for you if there's an update on the strategic review.
Yes. 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. So would you like to follow-up on with any other topics?
Yes. Just a final question for me then. I mean, 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 Reforged that has gotten when the cost of reviews on the game has been quite low when you follow-up on how the fans have been taking it. And just if that question is you, Jorgen, if you would like to elaborate, I could support on that one as
well. Yes. No, there's 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 e sport game. So full speed. Yes. And 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 theme for Warcraft, which has not been that strong before, while the StarCraft is to maintain a very strong esports scene that has been a highly appreciated game for many, many years.
So there's not been any change to our view on Warcraft.
Got it. Thank you very much. That's it 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. Yes, so 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 Mavencast deal in Russia. Can you comment on how much you expect this to contribute in aggregate in 2020?
And when should we expect this to start contributing?
Thank you, Erik. So we our portfolio companies have been announcing media deals recently. And 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 that, really, on. And then Jorgen, if you would like to add.
No. I think the way to look at them is I think that earlier in the call, we discussed some of those global streaming partners, which is, of course, high on the agenda when it comes to streaming esports. And then I think it's relevant to have the local partners such as Blake, such as MainCall, such as TV2 and so forth. And I think it's important that we continue to make these local sort of partnership as well and also in some of those more traditional platforms. So it's a nice complement to our overall media strategy that we are continuing to build.
But I think, again, we are in the early phase, which I think also said in his quote, now it's about delivering the product, delivering brochure, 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, Eric, what KPI were you asking for there?
User acquisition costs.
User acquisition costs, thank you, for the gaming assets?
Yes. Yes, exactly.
Yes. Maria, it's up your alley.
Yes. No, we have never actually broken on the specific percentage of marketing spend going in as part of net sales. But I mean 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. I mean, that's always fluctuating a little bit depending on the return you see in the different channels and so forth.
And also, I mean, we had a strong user momentum coming in from Q3 when we had higher marketing ramp up. So I mean, 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 do with the return, we sometimes ramp up. And then next quarter, it can then go down a little bit. But if you look at a longer term perspective, it remains relatively flat.
But also what we're looking at how if you take Innovations in the bigger titles, they had a good performance in Q4, but also that we're moving into January in 2020.
No, but we're happy to see the raw levels underlying raw levels. We're happy with those. So we're happy with the marketing spend we do. We're happy with those levels. So I think that's the way to look at it.
And 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 the fair comment is, of course, it was down a little bit as well because we stopped the marketing on back of God Kings in the quarter.
All right. Yes, I think that's it for me right now. Thank you.
Thank you very much, Erik. Operator, we have another question.
Yes. The next question is from the line of Maarten Arnell from DNB Markets.
So 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. So 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 are close to any games. Maybe you could start.
Yes. No, but I think that what we've been doing is, of course, to learn from the success and the failures we've done in InuGreens in all honesty. So I think the main difference is we have changed and done an overall overhaul in that game when it comes to the tollgate process and the go to market strategy. They are focusing on the civic building theme and the research management. So it stays true to InnoGames' core.
And I mean 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 upside. We don't have anything specific of the actual gains because that is that's it with the games.
Okay. And 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?
So there's new we've worked on the operating model that ESL You've been very close to that
one, Jurgen. Maybe you could start answering that question. Yes. This, of course, comes along with the fact that we also now much more proactive in terms of launching the scheduled tournaments and so forth. So we I think you're going to say we are better prepared now.
We have a better understanding what is needed 1 year, 2 year from now. So there's a lot of opportunities to streamline processes and to understand different capabilities, what is needed now going forward with all the product that we have ongoing. So 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. And as you know, our commercial officer in ESL is called Thomas, and he used to be the CEO team for the Champions League franchise.
And of course, when these executives comes in, they also build their own set of their own organizations. And therefore, you will see constantly develop organization. I think that is quite important. Also hopefully as we onboard more and more partners that is also affecting how we're going to work. So 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 departments that we have in the ESO. So that is the reason behind. And that has worked out well for us. But again, this is an ongoing development that will continue.
Thanks, Jurgen. Martin, do you want to follow-up?
Just a final question on your growth targets, mid teens, medium term growth. And in 2020, do you expect it to be second half tilted or more sort of evenly spread throughout the quarters? Thank you.
So just to I know this is a question coming from many of you out there regarding short term guidance. So we are not providing short term guidance. But when it comes to our longer term view, Maria, maybe you would like to elaborate.
No, but I think you actually stated out, Martin. So I think nothing has changed when it comes to our long term ambition. We want to progress towards sort of the mid teens sales growth and nothing has changed there and also to start seeing that operational leverage within our Esports operations, which then would bring up the adjusted EBITDA margin. And I think we said 10% to 15%. And I mean that remains true.
So 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. So I have a question. If you can say something about the revenue development from mobile esports and city subsidies, how much of esports revenues they represent and your view on the opportunities in these segments going forward? And another question, if you can specify how much sponsorship revenues grow in Q4?
Thanks. So the question is regarding revenue development for mobile e sport. And then also we have been mentioning that from time to time, you see the subsidies that could be a component. So Jonge? Yes.
I think
mobile and Esports, you can all you can say, has come as a positive surprise to us. I think what we also discussed was the good vendor around 10% of the revenue in 2019, and 2017 it was very little. So that has been quite an interesting product for us. And also product for us. And also a way for us, of course, to utilize our events better.
So when we have eventually a big concert tournament in the afternoon, we might have a mobile tournament like we had in Hamburg or like we had in New York earlier today. So that we give the fans more, these sports fans more. And that is, of course, through the benefit of both parties. So 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, more professionalized.
So we have more and more case stories now what do we actually bring to the city when the circus of ESL and Dreamhack comes to the city. So 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. So that is something we are getting more and more sophisticated about. So one thing is money.
The other thing is, of course, the support from the city because obviously, particularly around Green Hat Festivals, we would like to do more. Like I have seen when I was traveling around with the Champions League Circus or whatever, you had big festivals, you had big Square, you had big Champions League parties and so forth. That is something we going forward, of course, we'll discuss with the cities. But we are getting more refined, and we are also getting higher subsidies because that we have more case stories. And then you had a third, what was the third question?
No, there was
those 2, Stefan, if I didn't miss any. Would you like to do a follow-up, Stefan?
Yes. You missed my question on sponsorship growth in Q4.
Yes. Sorry. Yes. I think in general, we had very strong growth of sponsorship in the Q4. It worked very well for us.
I think what I have also tried to explain and what I 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. And 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. And if you just look at the Q4, you will see the sponsorship was 70% higher in the Q4 than it was in the Q4 2017. That's quite massive. The same because the media rights was up.
And if you look at the full year basis, partnership more than doubled since 2017, and MediaRite is up some 50% plus. So that development, of course, is something we are very happy for. We have not given our specific target or specific figures for the growth in the quarter, but it was a very good call for sponsorship in Q4.
So Stefan, would you like to follow-up with another question?
No, 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 bit 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 from the line of Oscar Ericsson.
Yes. I'll take the chance to answer to ask 2 follow-up questions as well. You mentioned in the report that Warlords had a pretty strong holiday season. Should we interpret that as you that you will actually invest further in Warlords in used acquisition costs in development and that God Kings, on the other hand, is now not in focus?
So with reference to Warlords having a good Christmas campaign or holiday season campaign, does that mean that we will continue to invest in Warlords Korea?
Yes. No, 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. So I mean, as you may have seen as well in the write down release that we are not writing down the full value. We're writing down half of the value because we do still see a good potential in Warlords.
And I think what was successful in Q4 on the Christmas campaign, which was positive, is that we took some of the features and campaign activities that works very successfully in Forged and applied that in Warlords with very good returns. So we would seem to work with the games differently going forward. We will have a smaller team on this and we will spend less but still efficient marketing on backlog orders.
And how will we manage GOTS Kings going forward?
Got Kings, we will not do any marketing anymore behind, but we still have a very loyal fan base that like the game. So I mean, we will keep the game for them, so they will enjoy the game. But of course, hence, there will be limited revenues coming into it. And that's why we wrote down the vast majority of Gokhangs.
Thank you, Maria. And Oscar, you have 2 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. So 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 Delta 2 in Los Angeles?
Thank you.
Thanks, Oscar. So DOTA 2 in a UCL Pro Tour format around DOTA 2 and then the majors. That's you, Jurgen, I believe. Yes.
We have announced, as you're going to say, we have announced the different events, the majors that we're having. We had live seat event with REMAX here in January. It was a 32 major, and we are having the Los Angeles event hopefully in Q2 as well now. Then we have the Counter Strike event in Rio. So that is the enhanced partnership that we are having Bayer.
And then on the Pro2, we have a lineup and also we have the treatment for TMAIC, they also have their own product called GreenLeak, which is also a Stota 2 product. So that is ongoing. It is not the same scale at this stage as this Counter Strike culture and not as what you can say as big right now with player union commitment and fixed schedules and so forth as the counter strike flows. So that's just something we're working on. But we will have a range of Dose 2 products out there as well.
And the aim is to make it a super relevant Dose 2 as well, man announced that. Okay. Thank you very much.
Thank you, Oscar. So operator, do you have another question for us?
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. And this concludes the question and answer session for our Q4 2019 interim results. We look forward to stay in touch until we release the next quarterly report.
And with that said, Q1 2020 will be presented at 28th April, together with our Capital Markets Day that will be held in New York. And we look forward to see as many of you as possible there to go through all the good stuff happening at MTG. But 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.