Ladies and gentlemen, thank you for standing by, and welcome to Modern Times Group Q3 2019 Results Conference Call. I would now like to hand the conference over to Mr. Lars Thorstenson. Thank you. Please go ahead, sir.
Thank you, operator, and good morning, everyone, and welcome to NTG's Q3 2019 interim report presentation. As said, my name is Lars Thorstensson, and I'm responsible for communication at NTG AB. With me today, we have Madsen, Lindeman, our Group President and CEO and Marie Erdin, CFO of MTG AB. Today, we will start with a formal presentation followed by a Q and A. Please keep in mind, questions are only enabled for those participating through dialing, or our webcast is listening only.
So without any further delay, please, Jorgen, can you take us through the formal presentation of our quarter?
Yes. Thank you, Lars, and good morning, everyone, and welcome to our Q3 report. High activity as characterized this quarter at MTG, and I think it's resulting in a solid operational performance and delivering on the strategy for FPG. We are some 7 months in operations since the completed split from Gent Group. And the first two quarters have been a lot of focus on implementing and executing on the trip and buy strategy.
And we are seeing concrete output as a result of the work put in with important agreements and partnerships formed at the house. So let's dive into NTT's Q3 of 2019. So if I can ask you to move to Slide 2. Operationally, our 2 business verticals, e sport and gaming, have shown good progress and delivered 6% growth in the quarter, impacted by sequential seasonality and marketing investment. In this store, sales grew by 12% despite the vertical having 1 less market property in the quarter.
GSL had a strong quarter with its operation growing revenue by 17% year on year, fueled by an impressive 42% growth in sponsorship sales. We have continued to develop a comparison between ESL and 3 Mag in the quarter with the ambition to build the leading global e sports ecosystem, and we have demonstrated what they can achieve working together at scale beyond anything presented by their competitors. For the gaming vertical in Q3 2019, we invested in future growth on the back of improved lifetime value of InnoGames customer base, allowing for increased marketing spend. We believe that spending additional resources on user acquisition today will yield better revenue growth for the games going forward. Our PC fund continues to operate with high activity, and we announced 3 investments in the quarter.
Overall, we believe that the Q3 was solid impacted by sequential seasonality, ensuring that our sole focus on e sports and gaming is yielding results. With that said, let's move on to what we are doing more specifically in the verticals and let's begin with the gaming. So if I can ask you to turn to Slide 3. The gaming vertical was impacted by sequential seasonality in Q3 2019, timing of bigger in game events and investments into marketing. Recorded net sales in the 2nd quarter increased by 2% to S629 1,000,000.
Mobile sales grew stronger by 14% to S347 1,000,000, which was 55% of the total net sales of the gaming vertical. New strategic direction implemented in 2019 for PUBG chain intended to devote greater development resources to a smaller number of existing games with the potential to deliver stronger sales growth continue to yield positive results and Complegate posted double digit improvements in net sales and adjusted EBITDA compared with last year. During the quarter, Complicate released a new title, Heil Frontier, which demonstrated positive early results and Bit Heroes IP acquired in Q2 continue to report good development and sequentially growing mid phase. With improved assumption on customer lifetime value in Innogames, we have seen an opportunity to increase marketing spend to create a foundation for future growth. That resulted in a slightly muted margin development in the quarter.
On the back of higher marketing, we saw early and positive results in the form of improving now for InnoGames' biggest title, Forge of Empires and Elvenar, with a 6% growth in Q3 versus Q2 2019. What is still ongoing with the newer mobile games, Warlord, as its role to improve operational metrics in order for us to scale marketing? The most recent release from Mino James BloodKings, we have not yet seen the expected return from the road map launches. Hence, we are currently evaluating the best way forward for the game. We will then move on to look at the gaming vertical KPIs on Slide number 4.
You can see that daily active users decreased by 5% to 0.7000000% to the previous quarter. The quarter 4 decrease in monthly active users' mile was 4%, mainly due to common games that had small games featured in app store and traffic generated from platforms with no longer uses. Average revenue per daily active user increased to 2 point $9,000,000 or 7% year on year, mainly driven by data in game monetization lower now in congregate and positive impact from currency movement. The top 3 titles have remained unchanged throughout the year, Sports of Empires and El Zanal and Innovation Throwdown. Net sales generated by these titles were slightly lower in the quarter at 68% compared with both preceding quarters and preceding year.
Adjusted EBITDA in the gaming vertical was $180,000,000 and the margin was 19%. Looking forward into the 4th quarter, we are anticipating a stronger performance in terms of both revenue and EBITDA in our gaming vertical following the margin push in the Q3 and improved in game events with InnoGames' October revenue so far being up 8% in euros compared to the same period last year. If we then move on to Slide 5, our Esports service products continue to yield positive results and the business verticals grew by 12%. ESL did particularly well driven by the owned and operated growing by 17%. As a result of the growing fan base and increasing viewership, more sponsors going forward in both our market and general properties.
In the quarter, sponsor revenue grew strongly by 42% compared to the same period last year. Continue seeing sponsors align, increasing their commitments to our properties. Adjusted EBITDA loss of SEK54 1,000,000 was broadly flat year on year. Revenue growth meant that our margin improved somewhat in the quarter. Underlying GSL had lower losses in the quarter.
However, one less property in Dreamhack had an adverse effect on the margin development in the quarter. We continue to invest in 2 channel properties, and we had our first all themed DreamHack Counter Strike Tournament in Valencia that was very well received. Top line growth remains our priority in e sports and both owner operator and e sports services are scalable businesses. So as this revenue stream grows, we expect markets to steadily improve over the coming years. That said, as you can see, we will continue to expand and invest in our e sports verticals, both in the amount of properties and also the geographical reach.
If we move on to Slide 6, within our own and operated, we focus to professionalize the revenue streams around the strong and relevant orders in Eastbourne and we had in the Q3 showed a high level of activity with important pieces put in place to achieve just that. In September, ahead of the ESL 1, New York event ESL and DreamHack announced a new ESL Pro Tour, the world's largest Counter Strike circuit, a unique global product behind DreamHack and ESL circuit, achieved
very well by
the teams and fast and important for the long term commercial focus. As we have stated before, increased access to quantitative data and the production of relevant e sports commercial product is the focus to improve monetization of the sport. That's also why we have announced an comprehensive and strategic agreement with Nielsen, the global measurement and data analytics company. Together, we will deliver relevant and industry standard to our partners, validating the attractive commercial ROI that esports can deliver. If you take a closer look at this particular relationship at some early data points around the esports media and sponsorship product, if you move to Slide 7, you can see that the Nifty partnership will help the e sport industry in general and Nifty G in particular to mitigate and therefore accelerate monetization of this young and attractive e sport fan bases.
Compared to any other sport, this would suggest that e sport is by far the channel, the best channel, if you were the media channel or a brand, would like to reach the next generation of consumers out there. Together with Nielsen, we will help our partners to facilitate the churn of investments to measure media value, to standardize the industry matrix and generate fan insight impact that will support to better monetize ESL and DreamHack audiences. So going forward, all ESL and DreamHack good positions in the ESL Pro Tour and Geraint will be professionally measured by Nielsen. This is a milestone for the Eastbourne Burger and a solid example of how we raise the bar in the e sports industry. If we move on to Slide 8, you can see that Premag and ESL have established several additional publishers partnership with 3, new agreements with UEFA and Konami, Div II and their AAA title in the 8 U.
K, Utah's Football League, Kerez de Vese had the opportunity to arrange 2 large Fortnite tournaments with a combined price pool of $500,000 are just some of the notable achievements from our e sports portfolio companies in the Q3. It also shows how the 2 companies are broadening and keeping their relationship across the vertical. If I can ask you to turn number 9, slide 9, you can see that just 2 years ago, it hardly existed, but mobile e sport has experienced rapid development and attracted many fans. In the quarter, we continued to develop our ESL mobile open to site together with our partners Vodafone and AT and T, holding competition within the titles such as PUBG, FVOLT 9 and Class of Clans. Mobile Esports is now developing to be a meaningful contributor and it now makes up to about 10% of the total revenue in ES7.
To move to Slide 10, you see all in all that Eastmore comes down to what resonates with the fans and the teams. And judging from the performance in our two partner properties in the quarter, we are doing really well compared to competing tournaments. Here are 2 relevant examples from the quarter. Take the ESL one in New York that we have in September and compare it to the Overwatch League final taking place the same weekend. For our content, we are showing impressive user stats and it is it has superior performance and relevance even in fierce competition.
This is proof that the fans are enjoying our events, both in real life and also in digital channels. If you also look at the DreamHack market in Malibu and compare it to a popular franchise such as Ida Legend, once again, the same trend showing that he has had a DreamHack. But we this is really well together. He's attracting large audiences, which makes our commercial products very competitive, not only in the world of e sports but also in the benchmark with other sports where we also will find the commercial dollar. That concludes my comments.
So I will now hand the call over to Maria to take you through the numbers in more detail.
Thank you, Jorgen, and good morning, everyone. If you then can turn to Slide 11. Let me go with the revenue and adjusted EBITDA. Net debt in the Q1 of $156,000,000 or $39,000,000 higher than last year with a 4% positive FX impact and flat organic growth. As Jurgen mentioned, Esports has had a strong quarter, while gaming was more stable, effective in the timing of in game events and marketing investments.
Together, the 2 verticals achieved SEK 56 higher than in the Q3. Growth in Esports and Gaming was, however, partially offset by the adverse movement of SEK 70,000,000 in our other operations, principally Xumi, which reported sales down 42% to SEK 0.2 million. As announced yesterday, we have no divested tubing and we will report a difference in operation from Q4 2019. Please remember also that as a result of the sale, we will book a net loss of approximately SEK 18,000,000 also in the 4th quarter. Adjusted EBITDA in the quarter was SEK 19,000,000.
If we then move on to Slide 12, we will look at the rest of the income statement in a bit more detail. The group adjusted EBITDA included SEKX 14,000,000 due to the application of IFRS 16 compared to the corresponding period last year. Excluding the impact of IFRS 16, adjusted EBITDA was €65,000,000 The adjusted EBITDA margin in the quarter was 2% and 0.5% excluding the impact of IFRS 16. The margin development in the quarter was mainly driven by the gaming vertical, which recorded higher marketing investments and flat sales development following the year over year movements of in game events at Inogen. This was partially offset by significant net margins in countries as a result of its operational turnaround.
Furthermore, the shift of 1 master property from Q3 2019 to Q4 2019 and FEMA had an adverse market impact in the esports vertical. Within adjusted EBITDA, our central operation costs in the quarter were SEK33 1,000,000, slightly lower cost base run rate than we see slide at the Capital Markets Day and versus last year was affected positively by the lower cost volume slate of NAND and NPG. With the announced restructuring program today, we will see this move down even further and we will have a run rate of approximately SEK100 1,000,000 in 2021. Adjusted EBITDA reflects the underlying performance of the business, and we had SEK70 1,000,000 in costs related to the LCI program as well as SEK 90,000,000 in M and A transaction costs that were both excluded. There were no impairments of previously capitalized costs in the quarter, which in that case also would have been excluded from the adjusted EBITDA.
Group EBIT in the quarter was negative SEK98 1,000,000 with an EBIT margin of minus 9%. Net financial items amounted to SEK8 1,000,000, predominantly driven by exchange rate differences, and the group tax loss was SEK8 1,000,000. The net loss on the period from continuing operations thus amounted to negative SEK98 1,000,000. If I could then ask you to turn to Slide 13, and we look at the cash flow and the balance sheet. CapEx in the quarter was SEK 69,000,000, which was predominantly driven by the 2nd down payment for Bit Heroes IC at CombiGate.
Above and beyond the acquisition, most of our CapEx is still within the gaming vertical where we capitalize the development cost up until the game was live, which all the costs are extended and preload CapEx does get depreciated. We invested around SEK10 1,000,000 in our leases funds in 3 companies, 2 new portfolio companies and 1 follow-up investment. In total, MCS invested and committed approximately SEK211 1,000,000 in 18 companies per so far in a decent amount of complementing majority stake investments in ESL, Tremec, 28 and Ebay. Capital from continuing operations was outflow of SEK 33,000,000, of which SEK 5,000,000 is working capital outflow. We ended the quarter with a net cash of SEK 2,000,000,000.
That concludes my comments. So thank you, and I will hand back to you, Jorgen.
Thank you, Maria. Sorry, if I can ask you to turn to Slide 14 and our announcement on a strategic review of our gaming vertical. Historically, our gaming vertical has had a very strong performance, of course, most notably since the acquisition of the 51% stake in Innogyms. During 2019, as I said, we have been approached with a 4 brand strategy of alternatives for us to become even more competitive. The strategic review we announced today is to evaluate the best solution create and crystallize value for shareholders.
The review could result in a joint venture partnership for the gaming vertical to enhance its competitive position and to get access to capital and new geographies. All at MGG fully transitioned to become a global pure play e sport company, dedicated more resources to capitalize on the global rise of esports from our already leading market position through our ownership in ESL and Green Knight. We have the opportunity to establish GTG as a global leader in the e sport industry, and we will accelerate value creation by further combining and extracting synergies in our ownership of the 2 strongest East Coast plant globally, aided by our solid financial position and commercial operational expertise. In the context of the strategic review, we'll also explore an additional listing in U. S, some of the biggest and most important East Coast markets in the world.
After the completion of our strategic review, we assess our financial principles and cash requirements going forward in accordance with the company's strategy of growing organically and through acquisitions. The outcome of the review leads to potential redistribution of any excess cash to our shareholders. Independent and in parallel to this process, FGG intends to implement an operational efficiency program to ensure a right sized and more efficient organization. The program is a result of a comprehensive internal analysis of operations since MPG launch in 2019 and includes the downsizing of MPG's headquarter that will include personal and facility costs. If we turn to Slide 15.
As I said at the start, we have delivered on the strategy with a solid Q3 2019 performance in both our core verticals. Eastport is growing. Both own and auto raised properties and Eastbourne service are contributing. These are getting bigger and better and growing in the eyeballs. And most important of all, these viewers are attracting sponsors and media as well as new publishers.
There's, of course, still a lot of work to be done, but the Q3 showed a lot of progress when it comes to commercially professionalize the e sport vertical. Gaming, we are happy with the development of EngleGate with sales and EBITDA going in the right direction again. Innogates remain a solid performer, and therefore, we're happy to invest more in marketing, which we did in the quarter. And we saw positive results from this investment already in September with both FORGE and Elvenar growing its mostly active users with more than 6% compared to Q2 2019. In the quarter, the LPG leasing front has completed 3 exciting seed and CRA investments into gaming startups.
And lastly, the strategic review we announced today is to evaluate the test route to create and crystallize value for shareholders. We will keep you updated on progress on a regular basis through our coming quarterly report. That was it from our side. So back to you, Jurgen.
Thank you, Jurgen. And that ends our formal presentation for
the Q1 2019. And we are now ready to
take any questions that you might have. So operator, could we have the first question, please?
Thank you. Our first question comes from the line of Oscar Erickson. Your line is open. You can now ask your question.
Thank you. Good morning. First, a few questions on the operational performance in Q3. And first, also a question on God Kings. After Q2, you suggested higher marketing for God Kings.
But now you mentioned that you're reviewing its progress. What could have happened there?
Thank you, Oscar, for that question. The question is around one of our newer games, God Kings,
and our comments around the progress of God Kings.
So Jurgen, would you like
to start with that? Yes. I think the discipline that we're having, which is a good discipline, is of course that we have a range of matrices in QBI, which needs to be fulfilled in order for us to invent heavily in targeting of the game. And that is not the case with cutting. So that is why the staff or the studio is taking the game back and understand and we do know what to do in order to make sure that that better traction on the key KPIs.
So that is also why we did not put a lot of margin behind it because we saw it into the container that we expected. But that is, of course, what you need to do in order to understand if it gets flies or not, is that we need to start marketing.
Got it. And heading over to the strategic review. I mean, in terms of the gaming review, what considerations would you make regarding whether to choose a JV or an outright sale? Is it purely a price question? Or are there any other considerations that you would make?
No. That would be a purely a value decision to say what would bring the most shareholder value, what cash cost would we be most comfortable with. So that is the process that we are initiating. And as I said as well in call, that is on track of a range of inbound calls and discussions with different practice. We've new entry into the space.
We see private equity coming in. We see consolidation in the space as well. We see strategic partnership. And that is also what we obviously have had several discussions with several parties. And that is what I want to make sure that we explore it now and see what happens.
All right. And what would Advances be going for a JV rather than an outright sale given that you so far have quite limited gaming operation in terms of just InnoGames and Compute?
Again, it is something that we would evaluate what the biggest and the best outcome would be in terms of value creation. But obviously, at JP, as I'm also saying, would give us eventually access to capital. It could give us access to an North American market in more detail it is. So East Asia market or whatever. So that could be something which could be meaningful for us.
Or as you say, it could also be a write off sale if that found actually the most value creating price.
Great. And obviously, if it came to an outright sale, you would naturally have quite a large cash position of €5,000,000,000 to €6,000,000,000 to €7,000,000,000 depending on value of gaming. How much cash do you need for esports in terms of organic cash flow needs, also M and A?
That is premature to discuss. And I think what we are saying is that we will be in our cash position based on the outcome of the strategic review. And also, as we said, we will update you on a regular basis journey in terms of the strategy, maybe you might take the outcome.
Great. And a final question for me, if I may. In esports, is there anything that you would like to invest further in that you have not been able to? I mean, will this strategic review, depending on the outcome, change anything in that regard?
We have a list of opportunities, of course, which we are exploring, and that is something we will continue to look for, things which can help us accelerate the export path. That could be capabilities, that could be geographies and so forth. So that is a range of opportunities that we have in which we will explore and continue to explore.
So Oskar, we've been quite generous. So do you have any follow-up question there?
No. Thank you. That's it for me for now. Thank you.
Thank you, Oscar. Very good. Operator, we can have the next question, please.
Thank you. Our next question comes from the line of Rasmus Engberg.
Let's see what we have. Yes, if we talk about the savings program, what functions are you scaling down in this program? And secondly, as I understand it, as you say, this is independent on whatever you decide to do strategically with new business. So there might be.
Sorry, Rasmus, you're breaking up there. Your second question, please.
Sorry. Do you hear me better now? I'll try again. Yes. So what functions are you targeting in the savings of, I guess, €80,000,000 or so?
And secondly, is it correct that if something happens strategically with gaming, there will be further changes to the group competition?
Thanks, Russel. I'm just going to repeat. So savings program, if we're targeting any specific parts of the organization. And as we mentioned in our release, this is independent of the strategic view, would there be additional efficiency programs the review would come through. I would hand that over to Maria to answer.
Thank you. On the streaming front, I think that we said the ambition is a run rate savings of CHF 50,000,000 starting then in 2020 and forward slash in 2021. And what we're looking at is across the whole organization. So it's not a specific department, but it's across the whole organization. And I don't want to go into further details because that is discussion that we will have now.
If you then look at the 2nd phase, probably in the gaming review, I think this is premature to say if that's an additional savings or not. So, what we're doing right now is to make sure that based on where we are right now, how do we ensure that we get the right size of inflation in place and that we are doing it. So we do it properly and we do it once ideally.
Okay. And second question, where do you see the DC fund in the future of NTG?
That is also a little bit premature. That depends again on the outcome. As such, I think we have big VC fund investments into East Road also through VITA. And we have made a range of VC investments into gains. So clearly, depending on the outcome, of course, you could argue that getting PC front will fit well into a strategic partnership eventually.
Again, it's premature. I suppose that's something that we need to understand how we should
And then final question. When do you anticipate that this review will be finished?
It is a review which will take us long time as we wanted to take, meaning we want to make sure that we have analyzed the different opportunities. And as we also said, we will conduct on a regular basis to inform you on the progress of this strategic review at potential
ARCA. Our next question comes from the line of Tom Syngelhurst.
Tom here from Citi in London. A few different questions, if it's okay. Firstly, on the strategic review, I just wanted to double check of all the different options, committing more capital is off the table. So this is definitely going to be a sort of either you injecting the assets into a sort of 3rd party JV or partially monetizing the asset. That's the first question.
2nd question, I suppose, sort of linked in a funny way is any update on progress on the sort of due diligence process
in terms
of HUYA ESL transaction? And then one operational question to finish up on, which is ESS or Esports Services. I mean, obviously, an area that I suppose thematically, you sort of want to deemphasize in favor of the owned and operated shows, but both in the quarter and in terms of outlook, it looks like an area that's been doing really well. I suppose the question is, can you give us an update on sort of profitability profile of the SS? You've moved into a phase now where that will be consistently profitable revenue growth?
Yes. Thanks, Tom. Just repeating them. On the strategic review then. So if we would commit additional capital, if that's off the table or still on the table when it comes to MTG investing more into GMV, if I get you right, Thomas.
Update on the due diligence process in Hoya, if there's anything we can share there? And the last one is on ESS and how that specific part of the export gaming vertical is looking like. I guess the first two questions is for Jurgen. I have
one for you, Marietta. Yes. So the strategic review is exactly what it is, is a review, meaning we want to understand what opportunities we have out there and be open to the solutions out there. So we will not put ourselves in a specific solution mode right now. We want to explore the different opportunities we would be having in the region.
So that is what and again, as I said, we'll come back on a regular basis. Contingent on Hoei, yes, we have the continuous process ongoing. And I think what we have communicated and we expect by Q4, late Q4 that we expect the transaction to TLI. So that was the 2 questions for BIA, I think, Maria, on the ESS part. Yes.
So on BIA, you're right. We saw very nice growth in our Esports business. I'm back on the ESS as well in the quarter, which we're very happy about. And I think what we always thought is a strategic publishing partnership that we have within ESF. We want to continue to drive a nurse and develop.
And that's what we've seen the results of in Q3. We have moved away from non core services within the ESS market. That is not to be defined as a publishing partnership that we're having. So we have some new developments. And also, of course, that is a fixed margin business that also nicely contributes to the bottom line.
And it should be said,
I mean, sorry, you go.
Listen, I'd like to hear the extra bit. I was going to have one final question in a slightly different area. So
if you
Well, the thing is yes, just a clarification on ESS.
I mean, as you know, we have enough strategy focused more on strategic partnership within EFS, which has been helpful when it comes to the profitability of that
part of the Eastwood Watch Company.
Very clear. And the final follow-up. You've sort of given a rough indication of cost savings, and I know there's still consultations and things to happen, which is obviously very important. Just the rough cost of achieving savings, should we just think about it being a one for 1 cost of saving ratio?
Yes. I think it's a little bit premature to give you an exact number, but you should expect to have within the year ish on the cost program.
Okay. Thank you very much.
Our next question comes from the line of Erik Lindholm.
So a couple of questions from me. First off, you mentioned that most KPIs for imports are up double or triple versus last year. Can you give a few examples of these
UK guys?
Yes. When it comes to the East 4th, as we said as well, we have seen 17% growth in the own coverage. We have seen 42% growth when it comes to the sponsorship. If you look at the figures as well, which we showed on the slide when it comes to reviewing as well on the event, very strong viewing. And you can also see that our U.
S. Event is maybe 3 times bigger than the Overwatch vinyl. And that is, of course, an important comparison, though, that not only we are strong in this universe of Esports, but also obviously, we are going outside Esports universe to connect conversion partnership. So that is also important as well. You see the young audiences, if you see it in the second slide, that we can deliver in the target groups of 16 to 44, we have 88% of that audience is that age group, which, of course, is extremely attractive conversion age group.
So that's a range of interesting KPIs costs, which we are happy around, of course. But the industry is growing faster. And so is our ambition in esports as well.
Okay.
And on the ESL Pro Tour, you signed a deal in Denmark with TDQ. Have you received any other feedback from the U. S. On the U.
S. Platform
so far?
Yes. We have actually, and we are negotiations. So if I can answer your question two ways. So first of all, giluzutanol was a fairly easy sell In that respect, here we have the TV media panel, like you know, in normal media, which has stipulated the quality of the audience that TV 2 had on the events that they had with us. So there you get the rating figures, you get the target room.
So obviously, when they benchmark with other sports that they are having and what they deliver and what they pay for that, then we came out very strong. So there, of course, we are best with a measurement system, which is the PV panel. So it's very easy to assess the valuation or the value of the products. Then we just depended hotel, which is a big sports fair with all kind of global media
companies participating.
And we have also been on a tour now of presenting the ESL Pro Tour to a range of media products as well globally. So there's a lot of things going on right now in order to introduce this new ESL brochure. It's a different animal for the media partners now because obviously, they have a set schedule now. That also means that it is easier for them to onboard it and also to begin to work with the product as such and also to start market the product and so forth. It's a commercially stronger product.
So that is the feedback we are getting from the media partners. But negotiations are still ongoing with a range of potential partners.
Okay. Thank you. Very helpful. And do you expect to sign a deal of together with a broadcasting company such as Twitch or Mixer as well or are you primarily focusing on traditional TV of
sorts? We have partnership already, as you know, Twitch. And we have also partnerships with other OTT platforms around the world. So what we are looking at is, of course, how we can put together the best and most attractive media packages globally, and that is what we are assessing based on the conversation that we're having with media partners right now.
Okay. Thank you.
That was all from me.
Thank you, Erik. And operator, do we have the next question, please?
Thank you. Our next question comes from the line of Rasmus Enkberg. Your line is open. You can now ask your question.
Just on nitty gritty stuff. Just coming back to the central costs, is the 1,000,000,000 euros 150,000,000 I thought it was 170,000,000 €180,000,000 Can
18,000,000. Can you clarify that? Yes. I think that you're right. We said at the Capital Markets Day, a run rate of 100 and 80,000,000.
I think that based on what we've seen, it come down to around SEK 160,000,000. And what we're seeing with this new savings program going forward in 2021, when we see the full impact of it, we should expect a run rate of approximately SEK 100,000,000.
Okay. Thanks. And then on the figures you announced yesterday, this disposal of Zumieh, did you get all the pay for that? And secondly, this accounting loss, is that also going to be reported and discontinued, I guess?
Yes. So on the deal we announced yesterday, I mean, we had the final one off, we took SEK 80,000,000 and we think we paid for divesting the assets here. It was a small
And it would be reported in
It would be the full statement of the business will be reported discontinue operations starting Q4.
Q4. So operator, do we have any more questions?
Yes. We have another question, our last question actually, from the line of Mr. Oskar Erikssingen. You can ask your question now, sir. Your line is open.
Thank you. I was going to ask about central cost clarification as well. And one more question on the gaming segment actually. We've seen a few mobile gaming peers supporting higher used acquisition costs and thus lower marketing efficiency. Are you worried about the lower organic growth for Innogames this year even if including a strong Q4, which you are guiding for?
Yes. You are right. Of course, on the market design, it's very competitive. I think what we are seeing in our 2 companies is we have an extremely strong user acquisition team and marketing team. So we are quite happy with the sales we are seeing there.
And I think where we have ramped up marketing, we have seen positive investments in the quarter and also where we see that games are not performing the way we want to do, there are underlying metrics, we are then scaling back marketing. So, I mean, we have a very sort of well developed KPI team and intelligence system that makes sure that we are very active when we see the performance of our marketing campaign. So that is something that the teams are working very strongly on.
Great. And a follow-up there. You have previously spoken about a potential new game release for indie games at the end of this year or possibly early next year. Is this something that still might happen?
Yes. So I mean, we have 3 games currently in development, and we expect that there will 1 or 2 of those will gradually come out in the soft launch and then almost in Austria in 2020.
Great. Thanks very much. Thanks, Oscar. Operator,
do we have any more questions?
Yes, sir. We have one more from Paul Schimpf. I'm sorry if I mispronounced your name. Your line is open. You can now ask.
Hello. This is Paul Schimpf from AOC. AOC. Can I just ask one question regarding the overall direction of the strategic review where you consider putting parts of gaming and focusing on esports? And why end up considering a transformation the other way around a disposing ease of focusing more on gaming?
The reason why I'm asking is why gaming is obviously tremendously interesting. We've lost many for a few years. And while gaming, on
the other hand, is a
more mature market and has maybe
a more financial profile, so might be a more suited for the companies.
Could you thought about it the other way around?
Yes. I think what we have announced now is the incoming calls that we have had and the discussion that we have had with different parties. We are constantly evaluating how to make our verticals more competitive, how to drive more value. I think the partnership that we are expecting to close with Golar is one way of creating a new way of partnership. So we will continue to examine and to evaluate what is the best way of this path forward of any pricing for our 2 gaming verticals.
And that can also be partnership in Eastbourne. So but right now, it is a strategic review of the gaming vertical, which we have announced and which we are
We don't have any further questions at this time, sir. You can proceed.
Okay. Thank you. That concludes the question and answer session. I will now hand the call back
to Julian for his concluding remarks. Yes. I would also like to thank you for holding in today. We look forward to stay in touch until we release the next quarter report. We have 6th Q4, 2019, which is presented the 6th February.
So have a great day, and see you soon.
Thank you. That concludes our conference for today. Thank you all for participating. You may all disconnect.