Good morning, ladies and gentlemen, and thank you for holding. Welcome to the MTG's second quarter earnings call. At this time, all participants are in a listen-only mode. After the presentation, participants will have the opportunity to ask questions, at which time instructions for the question and answer session will be given. If any participant has difficulties hearing the presentation, please press star followed by zero for operator assistance. Presentation slides to accompany the call are available via the link on the homepage of mtg.com. I will now hand the call over to your host, President and CEO, Mr. Jørgen Madsen Lindemann, who is joined on today's call by CFO Maria Redin.
Thank you, operator, and good morning, everyone. Just before we get into the numbers, let's take the usual step back and look at the MTG strategy. Please click through to slide number two. As you can see, we are transforming MTG from a traditional national broadcaster into a global digital entertainer while aiming to deliver long-term sales and profit growth and return cash to shareholders at the same time. If I can ask you to turn to slide number three, you can see that the strong momentum we have seen for some time now continued into Q2. Sales were up 5% on an organic basis with growth in all four of our business segments.
The rolling 12 months organic growth rate has now accelerated to 8%. I'm particularly pleased that the momentum is so broad-based and driven by the strategic investments that we have been making in both our Nordic and global businesses. Profits were up 9% at the same time as we have continued to invest in esport, original drama content, and additional sports rights. Our markets are amongst the fastest-moving in the industry, and our products are better positioned than ever to shape the future of entertainment and benefit from the ongoing changes in consumer behavior. We have now secured virtually all of the major football rights for the years to come, including the Champions League and the English FA Cup. We have also won back a shared deal in Sweden for the Ice Hockey World Championship and locked in the Finnish rights for the National Team football qualifiers.
We are also creating our own IP with a pipeline of up to 50 original drama productions and have now launched the World Boxing Super Series. We are a founding shareholder in this first-of-its-kind knockout boxing tournament. We have 16 fighters, two weight classes, and we can present nine undefeated fighters, seven belts, five world champions, and three former champions, all competing for the Muhammad Ali trophy. I hope you also saw this morning that Viasat and Viaplay will be showing the most-talked-about fight in years, taking place next month as boxing meets MMA in the form of the showdown between the world champions Floyd Mayweather and Conor McGregor in Las Vegas. We have also continued to realign our portfolio. We have completed the sales of our Czech operations, stepped up our investment in InnoGames, and announced the acquisition of online games publisher and developer Kongregate.
The announced sale of the Baltic and Tanzanian operation is just pending regulatory approval. Moving to slide four, you can see that the group reported sales were up 14%, with higher sales in all segments and the contribution from the consolidation of InnoGames from the beginning of May. Our increased profitability was again driven by the performance of the Nordic entertainment business, with healthy sales growth and positive effects from our cost transformation program. The transactional impact from the US dollar has continued to reduce and amounted to approximately SEK 15 million in the quarter, most of which impacted the Nordic entertainment. If you go to slide number five on our Nordic entertainment sales, you can see that it was up 8% on an organic basis.
This was the fourth consecutive quarter of robust organic growth for our Nordic operations, and the rolling 12 months organic growth rate has now accelerated to 10%. Our free TV and radio operations again grew in all three countries in Q2. Linear viewing continues to fall in all markets, but this is more than offset by higher advertising prices, increased carriage fees, growing sales for Viaplay, and the benefit of extended agreements with the likes of Fox. We have talked about this many times now, but TV continues to offer superior reach and return on investment, and this creates the high demand levels that continue to push up prices. We also continue to invest in Viaplay and are entering more sales and content partnerships agreement with the likes of Discovery and Viacom and Fox.
The Nordic pay TV sales were again up double-digit percentage points, and Viaplay continued to be the key driver of this growth, which is a function of both volume and value growth. We have continued to see subscriber erosion in our traditional platforms, but the revenue effect was offset by the distribution agreements for our new premium sports channels in Sweden and the price increases put through last year. Viaplay's customer satisfaction remains a prime driver of our growth, and we have implemented many technical and product improvements and premiered new Viaplay originals such as "Veni Vidi Vici" and "Baby Blake," which together resulted in a new all-time low churn rate for our TV and movie package in Q2. The organic growth flowed through to the bottom line and combined with cost transformation savings to give a 15% higher profit for the segment.
If you turn to slide number six, we can see that sales for the continued international entertainment business were up 5% and driven by another quarter of very healthy growth for our Bulgarian business. However, this was offset to some extent by trade performance, which was impacted by a termination of some distribution and event agreements. Profits for the segment were down 7%, which reflected the double-digit percentage point profit growth in Bulgaria being more than offset by the increased investment and bad debts write-off at Trace. The investment include the launch of Trace Play, which is a new global subscription-based video and radio streaming service that we are gradually rolling out and is dedicated to urban entertainment.
Moving to slide seven, MTG Studios sales were up 1% on an organic basis. The demand for scripted drama and brand entertainment continues to be high, but it's been offset by lower demand for non-scripted productions. Our storytelling remains very strong. The upcoming premieres of high-end drama series like "Hassel" and the cinema release of the Superswede about Formula One driver Ronnie Peterson's life are both creating huge interest. On our Q1 call, we announced that our drama series, "Midnight Sun" and "Nobel" had been both nominated to the Golden Nymph Award. "Nobel" actually won this prestigious award, which is a great contributor to the quality and relevance of the content experience that we are creating. Last year's profitability was exceptionally strong on the back of previously announced license sale of several scripted formats.
This year's EBIT was therefore down, but still significantly higher than in Q2 2015. The underlying performance is still heading in the right direction. Turning to slide eight and looking at the MTG sales, which was up 70%. This primarily reflected the consolidation of InnoGames sales from May 1, when we increased our shareholding to 51%. InnoGames' total sales for Q2 were up 32% compared to 30% in Q1 and 25% last year. EBIT increases almost 50% to EUR 9 million, with a margin of 23%. E3 is a seasonally very strong period with a lot of promotion activities as gaming activity increases during holidays. As a result, roughly half of InnoGames' Q2 EBIT came in April, meaning that we only partly benefited from the strong Q2 performance as we started to consolidate the company from May.
Also remember that our consolidated EBIT for InnoGames is impacted by MTG amortization charges of EUR 1.3 million following our purchase price allocation. We are now looking forward to a very strong second half when it comes to our esports business with organic revenue growth of at least 40%. That is due to more events taking place now in Q3 and Q4 than we had last year. MTG's organic growth in Q2 reflected the different event calendar this year. As you can see from the event schedule in the presentation on slide nine and 10, some major events which took place in Q2 2016 have now moved to Q3.
This combined with the new deals signed with Intel and Facebook and Twitter and Twitch and YouTube, and yesterday's announcement of the partnership between ESL and Disney on two original series in a new daily summer programming block dedicated to the world of gaming on Disney XD, will ensure that our second half growth is much higher and more than 40% on an organic basis. This compares with 60% growth in the first half of the year. The Intel deal in particular has been extended to not just cover the Extreme Masters, but also a global technology partnership, the branding of our studios in Europe and U.S., and the creation of the new Intel Grand Slam with a $1 million prize for the winner. As in Q1, we no longer include prize money for third-party events in our reported figures.
Q2 2016 sales and costs would've been SEK 25 million lower if presented on this basis. Our combined organic MPN sales were up slightly following a combination of very healthy growth at Play, but lower sales in Zoomin.TV due to the lower online advertising prices and industry-wide impact of advertising focus on brand safety. We do expect the Zoomin.TV performance to gradually improve in second half as the market comes back and we focus more and more on branded entertainment sales. We reported a total operating loss for MTGx of SEK 53 million in Q2, up from SEK 48 million a year ago, but down from the SEK 88 million in Q1. This result includes a SEK 36 million positive contribution from InnoGames as an associate in April and then fully consolidated in May and June, as well as the SEK 10 million of M&A costs mainly related to the Kongregate acquisition.
The consolidation of InnoGames, together with a more positive sales development in the second half for esports in particular, as well as the measures that we are taking to optimize Turtle, make us confident that we will deliver significant lower losses in the second half and a profit for the whole of MTGx already in Q4. Just to be clear, there's no change to our overall outlook. We do expect that the full-year losses for MTGx will be lower than last year when excluding InnoGames and Kongregate. This, of course, implies a significant improvement in the second half and year-on-year. We expect to close the acquisition of Kongregate soon, which we expect will generate at least SEK 50 million of revenue and around 10% EBITDA margin for the full year 2017.
Kongregate is a strategic fit for us because it brings multi-platform publishing business and an emerging games developer, all based in the U.S. to complement InnoGames' Europe-based business. This therefore gives us the ability to screen other investment opportunities in a very efficient way and to build up further value through the acquisition of smaller games developers and their studio IP. That concludes my comments. I will now hand the call over to you, Maria, for your comments.
Thank you, Jørgen, and good morning, everyone. If you please turn to slide 11. Reported sales were up 14%. This included 5% organic growth and a positive 3% currency impact driven by the appreciation of the euro, the Norwegian and Danish kroner. The impact from acquisitions and divestments amounted to 6% and was primarily driven by the consolidation of InnoGames. Operating income was up 9% compared to last year. Nordic Entertainment and InnoGames were the key profit drivers, which only partly was offset by the weaker performance in Trace, MTG Studios, and our esports businesses. The transactional headwind from the US dollar amounted to $50 million in the quarter, which was offset by translation gains. We continue to expect a negative transactional impact of approximately $75 million from the US dollar for 2017, which means that the second half impact will be slightly lower than the first impact in 2017.
Items affecting comparability amounted to SEK 23 million, and it comprised of a non-cash charge mainly relating to the accounting for previously capitalized transaction costs when InnoGames became fully consolidated. Turn to slide 12. Our cost transformation is on track, and we generated incremental savings of SEK 30 million in the second quarter, taking the run rate to SEK 555 million. We continue to expect annualized savings of approximately SEK 600 million for the program. The cash flow impact from restructuring was approximately SEK 10 million in the quarter, taking the total so far to SEK 480 million. Looking forward, there is around SEK 40 million of cash to be paid out, which would take the total cash cost to approximately SEK 520 million. That is slightly lower than our initial forecast of SEK 550 million. Turn to slide 13. Cash flow from operations was up in the quarter.
As normal in Q2, net cash flow was positively impacted by working capital development. However, the net positive effect was impacted by an inventory buildup, which primarily reflects our content investments. Cash flow from investing activities included the step-up investments in InnoGames and the disposal of our Czech operations. The Baltic and Tanzania disposals are still awaiting approval, and we have now also announced the acquisition of Kongregate for an enterprise value of SEK 55 million. Our short-term borrowings increased by nearly SEK 1.5 billion in Q2, and we ended the quarter with a higher-than-normal cash balance of SEK 2.2 billion, which will be used to fund the content payments due in July, as well as the expected payments for the Kongregate acquisition.
We paid out the highest-ever cash dividend of SEK 800 million in Q2, and we ended the quarter with a net debt of SEK 2.2 billion, equivalent to 1.7 times trailing 12-month EBITDA before items affecting comparability. That is it for my comments, and back to you, Jørgen.
Thank you, Maria Redin. Now please go to slide 13. In summary, we have again delivered a quarter with healthy organic growth, which clearly demonstrates that we have more relevant and popular products than ever. Profits were up 9% despite content and digital investments, and the Nordic business in particular has performed very well. InnoGames has added sales and profit, and we now expect MTGx to report its first quarterly profit already in Q4 of this year. We have continued our portfolio realignment through the closing of the divestment of our Czech operation, the step-up investment in InnoGames, and the announcement of the acquisition of Kongregate, while at the same time paying out our highest-ever cash dividend. That concludes our comments on the results. Over to you now then, operator, to start the Q&A session, please.
Thank you, sir. Ladies and gentlemen, we are now ready to register questions. If you would like to ask a question, please press star 1 on your telephone keypad, and you will enter the queue. Should you wish to cancel, please press star 2. The first question comes from Adrien de Saint Hilaire from Morgan Stanley. Please go ahead. Your line is now open.
Good morning, everyone. Thanks for taking the questions, and I've got 3 of them, please, if that's okay. First of all, we've heard comments from Com Hem saying they're looking to reduce the number of linear TV channels that they carry. Can you talk a bit about the outlook for your own carriage fees and distribution revenues, and also touch on the upcoming schedule for renewal for your channels in the Nordics? That's the first question. Second question, sticking to Com Hem. Kinnevik, of course, took a stake in the quarter. Just curious about what you think it means for MTG. Lastly, Jørgen, perhaps can you give us an update on the 2018 target for MTGx, which was, I think, for the business to be breakeven ex InnoGames and Kongregate.
I don't know if you want to touch on this guidance or give us an updated guidance inclusive of InnoGames and Kongregate. Thank you very much.
Yeah. When it comes to the linear channels and our linear channels, I think it is obvious that what we have done, of course, is that we have invested in the products, and we have got more content on board, and that hopefully should make our products very relevant to the consumers. Obviously, if we have got more content on board, some other companies might have lost content. I don't know. That might be the companies that he's referring to. We are very happy with the partnership that we have with Com Hem and the other distributors. We have long-lasting distribution deals with basically everybody right now until 2018, 2019, 2020, and so forth.
I think it's quite important that if you are relevant storyteller, you have relevant products, which the consumers, that they are dying to get, obviously, then you have a relevance in Com Hem network as well. That's of course, what we are aiming to continue to have. When it comes to Kinnevik and Com Hem, I am probably for sure the wrong person to ask since I don't own any of them, you need probably to ask Kinnevik or Com Hem what the idea is, I cannot help you there. 2018 for MTGx, yeah, we said that MTGx would be breakeven in 2018, we said it would be that without InnoGames that's still the case, of course. That is still the ambition. Obviously now with InnoGames performance, it should look fairly strong as well in 2018 for X.
Okay. Thank you very much.
Thank you. Now we'll take our next question from Lisa Yang from Goldman Sachs. Please go ahead. Your line is now open.
Good morning. I have a couple of questions, please. Firstly, in the pay-TV segment, in light of Netflix results, which reported very strong beat internationally. I'm just wondering if that has affected Viaplay in particular. If you can comment on your market share there, that'd be really helpful. Related to that, I noticed you lost about 14,000 customers for your third-party network. Just wondering what has driven that. Secondly, it's related to MTGx. You're guiding for the first time to over 40% growth in esports for the second half. Is it possible to have any expectations for the overall MTGx growth in the second half? Finally, could you also maybe clarify what your intentions are regarding the international assets Trace and Bulgaria? Thanks.
Yeah. When it comes to Viaplay, as I said as well in my comments, we have seen a very strong quarter again for Viaplay, and we have seen more customers coming in, and we have seen a lower churn. That is, of course, good news, and that is always on the back of the investments that we have made particularly also in the original programming. The development of Viaplay, we are happy. I think none of the Nordic OTT players are releasing their figures, so we don't know the performance of Netflix and HBO and others in the Nordics. We know that we are very happy. With Viaplay, as you can see as well that despite the 14,000 third-party network you are talking about, we still managed to grow the business 11% in the quarter, the pay TV business.
It was a very strong quarter. Some of the losses that we had in third-party networks, again, it is minor, 14,000, but that of course could probably be something that we have a low sports season coming out as well, and those might come back later. That could be one of the reasons. I don't know specifically why we have lost the 14,000. Last year, we lost 24, and this year combined, this year we lost 24, that is the same pattern actually. When we talk about MTG growth, the second half, yeah. What we have said is particularly around the esports business, that we have teed it up now to be very strong. The segment, we see strong growth in InnoGames as well. We are not giving any outlook when it comes to the percentage growth of the whole business.
What we have said is that we do see now, we have the ambition now to make it profitable in Q4. I think that was your question.
Okay. Can I also follow up on esports? What do you think of the growth trajectory in 2018 beyond, especially on the back of, I think you have publishers like Activision, Riot Games recently, all setting up esports leagues. Just curious about your outlook beyond 2018.
No, the outlook is very positive. That goes without saying, since we have the brands and products that we are having, and that is what you see as well in all the deals that we are announcing. I think yesterday, we recently also announced a deal now with Disney, where we will deliver original programming to the Disney XD channel. It is very strong brands, obviously, the area is very interesting. You will see more companies coming in, and you will see new esports products coming in as well. Hopefully, we will also be able to present a range of new products going forward.
We think that is a very interesting area to be in, and obviously, we see that the consumption of esports continue to increase, came from Katowice and also now the last event we had in Cologne, which was not even one month ago, and we still had very strong traction. You see the partner deals that we have lined up, the global partner deals as well. That is, as we see it, a very prosperous future for esports, and the further we get down the path with esports, the better we are able to articulate as well a sponsorship proposition and advertising proposition.
You saw also the bigger deal that we now made with Intel, which is not just a regular sponsorship deal, but is actually much more than that because the advertisers, they also now to see proof of the pudding that the segments in esports are very interesting. The agencies will start to reallocate money, hopefully from other places and then into esports. We do see a very prosperous future for our esports assets.
Thank you.
Thank you. Now we'll take our next question from Rasmus Engberg from Handelsbanken. Please go ahead. Your line is now open.
Yes. Hi. I was wondering, since you don't state anything about the third quarter in MTGx, that will still be a loss, I suppose. Is that correct?
Yeah. You could assume that, yes.
Yeah. If I take the profit that you see in Q4 relative to the loss in Q3, does that mean that the second half overall is profitable, i.e., it's a significant profit in Q4? Is that how we should read it?
Yes. It is also fair to assume that it will be profitable in the second half, yes.
Okay, thank you. The U.S. dollar has come off quite a bit now. What is the timing effect of that? When would you see a benefit from that with your current hedging?
Given that we hedge on a rolling 16 months trajectory, it will be during 2018. If you look at now, as I said, you have $75 million this year, with the current rates, you should see rather zero impact next year, and it will continue to sort of go down, then you start seeing a probably small positive effect in the second half of 2018.
Okay, thank you.
Thank you. Now we take our next question from Martin Arnell from DNB Markets. Please go ahead. Your line is now open.
Good morning. My first question is on these new agreements in esports. Could you just elaborate a little bit on those agreements and how it works from sort of an incremental cost perspective? How much does it take on the cost side when you enter these agreements?
Yes, I can. Obviously, it is very much depending on what agreement it is, that is not to give you a political answer, but obviously if it is content we are selling, which we already have produced and we are selling that globally. That could be a tournament, that could be news clips or whatever. Obviously there's a scale effect here as well, the more countries we sell to, the more money we'll make on the content. That is, of course, one thing. The sponsorship is also depending on what kind of sponsorship is it. With Telefónica in Spain, we are also doing leagues. We are doing tournaments, we are doing studios. There you have a different component to it. I think the secret is, of course, or the idea is, of course, that you have a margin independent of what product it is.
Then obviously, which we have done and you have seen, you are in the beginning investing a lot, which we have done in order to document, in order to prove that the product that we have here, the storytelling in esports, is very relevant for many consumers. That is what we see right now, that is the investment we have made. I think the fact that we have managed to do all these deals and now lately with Disney or lately with as well with the OTT platform in Canada, we have now as well the content in Emirates flights and wherever is all over, of course shows that the relevance is there. Therefore we, going forward of course, will see movements where we can capitalize better on the content and you will see advertisers coming in.
It is very difficult to give you a general answer on the question on the cost associated with the revenue streams. Advertisement is a different ballgame. Concentration is of course a different ballgame and also our horizon for payback for that content, if it's specific for market, if it is a global product and so forth. I don't know if that helps you, but I think that is as close as I can get.
No, that's good, thanks. This sort of organic growth that you're talking about, more than 40% in the second half, sort of what you see now, do you think that that could continue into the first half of next year?
I think what we are anticipating, of course, is that we will continue to produce and do very strong and relevant shows. We will do more shows. That is what we are believing. Also in the first half of second year, we should also see hopefully more content sold. We should see more advertisers coming in and so forth, we have not guided for 2018 at all. I think what we are doing now is that we can see the strong momentum that we have in the media deals that we have done, the advertising, the sponsorship, and we have more events coming up now in the second half. I think that is as far as we can give you ideas on the performance right now.
Obviously, as I said, all trends in terms of consumer behavior point, of course, in a direction that this product continues to be very relevant. We are not seeing the opposite.
Okay, thanks. When it comes to your international entertainment business, it seems Bulgaria continues to do well. Do you expect a margin expansion in Bulgaria going forward? What about the timing for a turnaround in this Trace business?
We are happy with the performance of Bulgaria, and they are doing very well. We have not talked about margin for the Bulgarian business, but obviously it is a strong performing company right now and also digitally very strong area. We are not guiding on margin for the Bulgarian business, but we are very happy with the performance. When it comes to Trace is a unique story. It is a unique story about urban entertainment. It is a unique story which can travel globally. That is what we're investing in right now when it comes to the play products that we have launched globally, soft launch. We understand and we can see the traction and where to invest more and what content to invest in as well. Trace is a very interesting opportunity for us, obviously.
Bulgaria right now is, of course, a driver in the international setup.
Okay. Just finally on the pay TV in the Nordics, do you still see a potential to grow third-party subs this and next year for the full year? Would you expect satellite ARPU growth to continue quarter-over-quarter in the second half?
It goes without saying, I think if you ask all our sales people, the ambition is, of course, to grow also a third-party network. That is what we're investing in, that we become more relevant there as well. That is an ambition, difficult to give you a forecast on that. The ARPU growth, yes, we do believe that we can continue to grow ARPU. We have a very strong customer base. We are around 10,000 only, as you can see in the second quarter, but we are up quite a lot when it comes to the Viaplay product. It is a very strong combination that we're having right now.
Just to help you a bit more on your question, sorry, on esports. I think if you want some industrial figures on how the markets they see the growth going forward, you have Newzoo figures for 2018, which implies a growth of 35%. They have set the growth in 2019 to be 26% and the growth in 2020 to be 25%. That is the Newzoo figures, where they're making a stand on the growth in esport. Hopefully, we at least will follow that model.
Okay, thanks.
Thank you. Now we'll take our next question from Mikael Nissen from Carnegie. Please go ahead. Your line is now open.
Thanks. I have a question regarding InnoGames, if you can talk about the growth drivers for this quarter, and hopefully also a little bit about the outlook. I'm thinking about games and monthly active users, unique payers, acquisition cost, and the pipeline that you have.
I think what we're seeing, of course, is that the InnoGames' transformation from a browser-based, browser-focused company to a mobile gaming company is helping a lot in all fairness. Also the pipeline of products that they're having right now, some of them being soft launched, looks very interesting as well. I think that is what we can say, and that is what we have given. The 32% growth in Q2 is very strong, and it is above the growth that we saw in Q1 and also the 25% that we saw for the full year last year. They are 50% up on profit Q2 versus last year. It is a very strong performance, we have not given any specific information, and we will not give any specific information when it comes to customer acquisition cost and so forth.
The traction that the company sees right now and the soft launches that they have with some of the games are looking very interesting. It is a high-margin business as well for us. They have a strong pipeline. We are very excited about the future for that company.
Okay, sounds good. You're not thinking about using part of the strong results momentum to boost acquisition costs further? Hold back margins a bit, invest in the future growth?
Yeah, I think what we're looking at right now is, of course, to make sure that we do it in the way that the company, the very disciplined way the company has always done it. They are still, when it comes to marketing and understanding as well the returns on the marketing investment and when to beef up and not, as we also said in the results around Easter and so forth, around the special holidays and so forth, we do see strong performance, and they have full control and know better than anybody else where to put more marketing effort in, when to launch new stories and so forth. It is very industrialized in a very good way, I must say. They are driving the company in a very responsible and professional way, the aim is, of course, to grow the company.
It is not to milk, not to take more money out of the company. It is to grow in relevance and to make sure that we launch many new successful IP formats.
Yeah. My final question is about the overall game strategy that you have after the acquisition of Kongregate. It would be interesting to hear thoughts about what you're targeting, where you want to be combining Kongregate-
Yeah, no-
InnoGames and further acquisitions.
Yeah, no, I think it serves different purposes. The InnoGames, they have already now established IPs and very strong performance already, as you know, they're big in U.S., they are looking at where else they should be big, these guys. I think as well, when it comes to InnoGames going forward and the financial performance, you should look at a 20% EBITDA margin as what that company should deliver independent more or less on the investment. That is what we're looking at right now. Kongregate is a complete different animal, where you have historically published a lot of games, of course you get so many games you vet every day, so you also understand the trends and you understand what games you want to invest more in.
That is, of course, an opportunity for us now to go in and acquire IPs at a very early stage as well, which is a new model as well for Kongregate. That is another strategy. Of course, you look at the different genres of gaming, where you have casual gaming and you have the strategy games and so forth, we want to broaden the genres as well, not only focus on one genre. We are looking at a range of new companies, of course, which can help us get a very complementary and a very full-based genre portfolio as well. We see a lot of opportunities. Luckily, as you know as well, 30% of the time spent on mobile today is related to mobile gaming every day. It is a super relevant storytelling power.
We are very excited, that is why we are investing in this area since it is a very strong entertainment area.
Thanks.
Thank you. Now we'll take our next question from Viktor Höglund from SEB. Please go ahead, your line is now open.
Yes. Thank you. Viktor Höglund, SEB. Most questions have been taken here, the event schedule looks very promising for the second half. Could you maybe just elaborate here if you see that you have lost any larger events or gained any larger events apart from the quantity in number of events? If you could elaborate a bit on the significance of the events, if you see that going up or down for you. Secondly, just to follow up on the previous question on FX for next year, could you just say what you've said, what is the change now compared to what you said before? Maria Redin, you see your name there about zero impact next year in the middle of the year. What was the previous comments on that? I think I'll stop there. Thank you.
When it comes to the esports events, as I also said in my comments, as one example, we are launching a new event with Intel, a Grand Slam event where you have the $1 million prize money. What we are doing as well with DreamHack, as you also can see the history of DreamHack, is, of course, to launch many more events with DreamHack in many more cities with DreamHack as well. The same, of course, goes with ESL, which have launched in, as you know, Manila last year as well. We had the event we had in Oakland and so forth. The ambition is, of course, to launch more mega events, to launch for DreamHack more festivals, and then, of course, to create more local leagues as well.
That is why we are entering into partnership in a range of countries with the local communities in order to be able to launch more local leagues as well. Then, of course, you will see as well that many more companies will come into the esports area, I think. Many more products, not necessarily the traditional ones that we know already will start to go into esports. That is, of course, what we're looking at as well. You should expect more events and more investment in events as well going forward.
Yeah. To take your currency question, it is a moving target. I believe when we had the Q1 results that the dollar was around 9 SEK, which meant I think that the outlook for 2017 is unchanged, SEK 75 million, but I think at that point in time we had roughly incremental SEK 75 also in 2018, which based on the current FX rate and the hedges we have done, it is currently no incremental cost expected for 2018 versus 2017.
Okay, great. Jørgen, back to your answer there. Do you see that the events you have now as a whole, are they better or less good or about the same, or how should we see that?
What we do now-
On a like for like basis, I would say.
Yeah, I think what we do now as well when you talk about the quality of the event is, of course, that you measure as well the NPS score of the events. There you have seen a massive increase in the quality. What we do every time is, of course, that you ask the audiences how they feel about the events and different criteria, the ones who buy a day pass, the ones who buy the weekend, and so forth. There you have seen a steep increase in the NPS score. The quality of the event will increase, of course, because the events are very relevant and the right teams will play our events. That, of course, gives us comfort that we can do more events.
I think I'm very excited about the DreamHack development as well, where we are investing a lot because they used to be in Jönköping or whatever. Now I think in 2016, they were in Leipzig, they were in Austin, they were in Valencia, they were in Montreal, Bucharest. Now what you see as well is they go to Denver in Q4 2017. That is a new event for them, as an example. The quality of the event should be there. We would, of course, like more events to be handled by us or it is our tournaments and our shows. That is, of course, a focus area we have as well, that we are together with the different partners we are the publisher of the events as well. The quality should increase, and we see that as well looking at the ESL brand.
It is super strong compared with Nike, compared with whatever. I think it came above Formula One in terms of sport brands last year when you made the research. That, of course, gives us the comfort to invest more into these shows and to make sure that they stay relevant. That is what we have discussed all the time, that we need to continue to have these relevant tournaments. We do believe in increased quality, more participants, and of course, more partners for our events.
Okay, great. If I may just add one more question on the share of commercial viewing. In that number and other things you do to increase your inventory and so on? Is this number just based on your own channels, let's say?
Yeah. No, I think there are two things. First of all, the figures you read in the report is only our channels. Obviously what we are doing, as you know, is that the ambition is to create a very big reach product. That is why we have teamed up with Fox and Viacom and others to make sure that we have much more to sell, much more inventory to sell, and that we can reach more people faster. That is, of course, the ambition.
Basically, what you can sell is better really than the trend in, for example, Sweden?
Yes. No, that goes that the more we can add in terms of partnerships, again, as Fox or Viacom, whatever, the more we can sell. That goes without saying.
Perfect. Thank you very much.
Thank you. Now we will take a follow-up question from Rasmus Engberg from Handelsbanken. Please go ahead. Your line is now open.
Yes, hi. Just wanted to ask you about InnoGames, given that it's a new creature for us. What is the seasonality there? Is the second half equal to the first half? If so, how tilted is it to the fourth quarter?
I would say that in respect to seasonality, you have the Q4 quarter, which is by far the most strong quarter. Then the rest quarter, you always have peak when you are marketing events, then you see peak. Otherwise, for the full year, Q4 is the strongest quarter.
Is it Q1, Q2, Q3? Are they kind of the same, more or less?
Yeah. I would say so. Q3 is probably the weakest of the three, but Q4 is a stand out.
All right. Thank you.
Thank you. We'll take another follow-up question from Adrien de Saint Hilaire from Morgan Stanley. Please go ahead, your line is now open.
Yes, thank you very much. Very quickly. You indicated higher sales and profits for Nordic in Q1 '17. Just wondering if you could tell us what it should look like for the second half of 2017.
If you look at the second half for the Nordic, of course, sales is going to be much tougher comp. You should not expect the same high sales growth. In Q3, of course, last year, you had the Olympics. The costing is also different in the comps. For the full year, that's what we're focused on. The aim is to drive profitable growth.
Okay. Sorry. Very sorry, Maria, just to confirm, you said the same level of high sales growth in the second half and in the first half?
No, you should not expect that because you have much tougher comps last year. Sorry for not being clear.
Okay. Thanks, Maria.
Thank you. That concludes the question and answer session. I will now hand the call back to Jørgen Madsen for his concluding remarks.
Thank you all for your time today. We will announce our Q3 results on October the 21st and hope to see as many of you as possible before then. Thank you for your time today and your interest in our story. We look forward to keeping you up to date with our further progress. Goodbye for now, have a great summer.
Thank you. Ladies and gentlemen, that concludes today's MTG's second quarter earnings call. Thank you for your participation. You may now disconnect.