Good morning, ladies and gentlemen, and thank you for holding. Welcome to MTG's Q1 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 this 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 that 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 to this call by CFO Maria Redin. Please go ahead.
Thank you, operator. Good morning, everyone. Before we get into the numbers, let's take a 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 broadcaster into a global digital entertainer while growing sales and profits and returning cash to shareholders at the same time. If I can ask you to turn to slide number three, you can see we're delivering 8% organic sales growth in Q1. The rolling 12 months organic growth rate has accelerated to 7%, which clearly demonstrates the momentum generated by the investments that we have made in our streaming services, our content portfolio, and our MTGx business. Profits were up 15% at the same time as we have continued to invest in MTGx and accelerated our investments into original content.
The organic sales growth and cost transformation savings have enabled us to reinvest into our products and expanding into new areas. This is the foundation for our future growth and profitability. We have also continued to realign our portfolio and have now announced the sale of the Czech Republic and Baltic operations. The proceeds will be used to increase our stake in online games developer InnoGames from 21% to 51% in the coming weeks. We are also stepping up our investments into original TV drama series. Moving to slide four, you can see the group reported sales were up 11% with higher sales in all segments except MTG Studios. Our increased profitability was again driven by the performance of the Nordic and International entertainment businesses, with healthy sales growth and positive effects from our cost transformation program.
The transactional headwind from the US dollar in the quarter amounted to 30 million SEK, most of which impacted the Nordic entertainment segment. If we move on to slide five, our Nordic entertainment sales were up 11% on an organic basis. This was the third consecutive quarter with robust organic growth for our Nordic operation. The rolling 12-month organic growth rate has now accelerated to 8%. I think it's safe to say that this is a second-to-none performance in the European broadcasting industry and that has been achieved despite falling linear viewing and subscription levels on all traditional pay TV platforms. Our free TV and radio operations grew in all three countries in Q1. Linear viewing levels have continued to decline in all three markets, but this was more than offset by high advertising prices, increased carriage fees, and the development of Viafree.
The high demand that drives the pricing reflects the fact that TV continues to offer superior reach and return on investment when compared to other media, and our MTGx sales packages offers an integrated on- and offline, tailored and programmatic solution that includes our own and third-party content. Nordic pay TV sales were up double-digit percentage points at constant exchange rates following another record quarter for Viaplay, with further subscriber and ARPU growth. Traditional distribution platforms continue to see subscriber erosion, but Viasat benefited from the distribution agreements for our new premium sports channels in Sweden and the price increases put through last year. Viaplay is the primary growth driver in the Nordics. Viaplay had its second highest ever quarterly net intake of movie and TV series subscribers with record low churn levels. The gross intake is supported by the Viaplay original series.
Nordic entertainment profits were up 22% on the back of this organic growth and cost transformation. Turning to slide six, you can see that sales for our international entertainment business were up 4% on an organic basis, and operating profits were up 82%. International free TV and radio sales were up 7% on an organic basis with double-digit sales growth in Bulgaria. International pay TV sales were lower at constant exchange rates following a weaker performance by Trace due to the termination of some events and carriage agreements. Trace has, however, recently soft-launched Trace Play, which is a global subscription-based video and radio streaming service dedicated to global urban entertainment. Turning to slide seven, you can see that MTG Studios sales were down 5% on an organic basis.
The demand for scripted drama and planned entertainment continues to be high but was offset by timing differences in production schedules and the lower demand for non-scripted productions. Q1 is a seasonally weak sales quarter and therefore typical loss-making, which was the case again this year, and the operating loss did slightly increase compared to last year. Last week we announced that for the first time ever, we have created a show, produced it, aired it, sold the format, and now secured a U.S. network deal. This illustrates the potential of creating our own IP, and Swedish Dicks will now be broadcasted on U.S. cable network Pop TV, which reaches over 80 million households. This deal includes both the first and the upcoming second season, which will be filmed in L.A. in the summer 2017.
MTG Studios storytelling continues to be best in class, and our "Midnight Sun" and "Nobel" series have both been nominated for the Golden Nymph Award in June in Monte Carlo for the best drama TV series. We also launched AtriumTV, which is a commissioning club for streaming platforms around the world. Focus will be on big-budget drama productions that each player will have exclusive access to for their territories, including Viaplay for the Nordics. Turning to slide number eight, you can see that MTG sales were up 24% on an organic basis. The reported growth was impacted by our decision to change the way we present ESL figures and no longer include prize money in ESL sales, where ESL acts as subcontractor for esports events. So Q1 2016 and full year 2016 sales would have been SEK 36 million and SEK 82 million lower if presented on this basis.
This change has no impact on operating income or cash flow. Turtle revenues were up 37% on a like-to-like basis. The key event of the quarter was the Intel Extreme Masters in Katowice, which this year attracted 173,000 visitors, making it the world's largest esports event. The event also attracted over 46 million unique online viewers. It was up 35% compared to last year. This was also the most broadcasted event in Turtle's history, with 70 TV and online partners who produced and distributed the event in 19 languages. Q1 is a small quarter for DreamHack. The high growth rate continued in Q1 with the DreamHack Masters taking place in Las Vegas and becoming the most viewed DreamHack Masters event ever. Splay continues to perform well, driven by strong demand for influencer marketing campaigns.
Zoomin.TV sales continue to be impacted by the lower AdSense advertising prices and is refocusing on lower volume but higher value branded entertainment sales. As you know, we currently own 21% of InnoGames. We increased our ownership to 51% in the coming weeks and then fully consolidate this fast-growing and profitable business. InnoGames' revenue grew by 30% in Q1, which makes an acceleration from the 25% in 2016. InnoGames' EBITDA also increased significantly compared to last year. The end result of EUR 3.5 million was impacted by a EUR 5 million charge related to capitalized development cost for one of its games, which is yet to deliver on its projected sales. This is not unusual situation in the games industry as not every game succeeds. This is a larger than usual charge.
Our 21% share of InnoGames net income therefore amounted to SEK 3 million in Q1. MTGx reported a total operating loss of SEK 88 million in Q1. This reflects the significant stepping up our strategic investment in the esports area during the second half of 2016. This, of course, affects the costs for the first half of this year, too. Q2 losses this year will be higher than the SEK 48 million of Q2 losses last year. There's no change to our overall outlook though. We expect full-year losses to be lower 2017 than in 2016, and quarterly losses will gradually decline quarter on quarter this year. The investment that we have made will enable ESL to continue to grow at a high rate moving forward. We will also soon benefit from the consolidation of InnoGames, which is performing well above expectations.
That concludes my comments. I will now hand the call over to Maria for her comments.
Thank you, Jørgen, and good morning, everyone. If you please turn to slide nine. Reported sales were up 11%. This included 8% organic growth and a positive 2% driven from FX. This is due to the appreciation of the EUR and the Norwegian and Danish kroner. The impact from acquisitions and divestment in the quarter was negligible. Operating income was up 15% compared to last year. This is a function of the combined impact of organic growth and cost transformation. The transactional headwind from the US dollars amounted to SEK 30 million in the quarter, which was largely offset by the translation of gains. We continue to expect a negative transaction impact of approximately SEK 75 million from the US dollars in 2017. We are anticipated to move up to 51% ownership in InnoGames from the beginning of May, at which point we will start to fully consolidate the company.
InnoGames generated sales of EUR 130 million in 2016 with an EBITDA margin of approximately 20% and an EBIT margin of approximately 16%. The company is performing above expectations. Bear in mind that we will have an annual amortization charge of approximately EUR 8 million per year relating to this acquisition, which will impact the MTGx segment. We have now also announced the sale of our Czech and Baltic operations. These two businesses will be reported as discontinued operations in MTG's Q2 results. If you then turn to slide 10, our cost transformation is on track. We generated incremental savings of SEK 25 million in Q1, taking the run rate to SEK 525 million. We continue to expect annual savings of approximately SEK 600 million from the program. The cash flow impact from the restructuring was approximately SEK 20 million in the quarter, taking the total so far to SEK 470 million.
Looking forward, there is around SEK 50 million cash still to be paid out, which would take the total cash cost to approximately SEK 520 million. That is slightly lower than our original forecast of SEK 550 million. If you then turn to slide 11, net cash flow from operations was up in the quarter, reflecting higher profits and lower payments relating to the restructuring program and some timing differences on key rights payments. We ended the quarter with a net debt of SEK 2.4 billion, equivalent to 1.5 times trailing 12-month EBITDA before items affecting comparability. That is it for my comments. Back to you now, Jørgen.
Thank you, Maria. If I can ask you to turn to slide 13. In summary, we have again grown our sales to record new levels, which clearly demonstrates that we have more relevant and more available products than ever before. Profits were up 15% despite content and digital investments and is again driven by a combination of volume and value growth, as well as the benefits of the cost transformation program. As a result, we can continue to reinvest into our products as well as expanding into new areas, while at the same time returning money to shareholders. That concludes our commentary on the results. Over to you now 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 one, followed on your telephone keypad, and you will enter a queue. Should you wish to cancel, please press star two. We will now assemble the queue. Our first questions comes from the line of Adrien de Saint Hilaire from Morgan Stanley. Your line is open. Please go ahead.
Yes, good morning, everyone. Thanks for the presentation and taking those questions. Firstly, I know you're not big fans of divisional guidance, I'm just curious whether the margin improvements in the Nordics, given all the investments you've made in esports, et cetera, yet you've seen margin improvements. Does that give you confidence that margin in the Nordic business should grow in 2017? That would be the first question. Second question, Jørgen, can you give us a bit of an idea on what you expect around the Champions League auction in Scandinavia? Maybe any sense of timing and the expected inflation. Lastly, you repeated the outlook for lower losses at MTGx. Sorry, can you be a bit more specific of the magnitude of that improvement in the losses? Thank you.
On the first question, when it comes to, as you said yourself, guidance, we don't give guidance. I think what we have talked about is the profitable growth in the Nordics, which we do expect to continue to have for the full year. Of course, we are very happy with the results that we have seen now in Q1. When it comes to the Champions League auction is taking place and bids are due the 8th of May. We have had the Champions League for I think 25 years now, and we have invested a lot into the product, and we have a lot of customers, of course, who are very happy about the product as well. We do hope that we will be able to continue to show Champions League when this auction is over.
As always, what we do in these cases is that we understand and we analyze what we believe that the product is worth for us, that is, of course, what we are looking at when we go into these auctions. On the last question, when it comes to MTGx, we are saying that we are expecting lower losses for the full year in MTGx. Also, we expect higher revenue to come in. We do expect to continue to see the very strong growth, of course, that we're having in particularly in esports. As you can see now, we have signed up a range of new interesting deals, which we have invested in so far, that is the deal with Facebook, that is the deal with Twitter now, that is the deal with YouTube, that is the deal with Sony.
Of course, the investment right now is, of course, to create the product, then we are out selling to global partners. I think the interest from Katowice with 70 international partners in 19 languages shows the interest. I think if you're a bit harsh, you can compare that with one of the Champions League matches that have taken place. I don't think there were 70 international broadcasters present at the Champions League matches, despite they were very good.
Jørgen, if I may just follow up on this, thank you for your answers. Given the fact that H1 losses will be bigger than last year, is it fair to assume that the improvement shouldn't be so meaningful?
If I understood your question correctly, yes, H2 losses will be lower then.
Sure.
Yeah.
Thanks, Jørgen.
Our next question comes from the line of Mikael Laséen from Carnegie. Your line is open. Please go ahead.
Yes. Good morning. Thank you. Can you comment and say something about the number and size of the large events that you are planning for 2017 for MTGx or on the esports side compared with 2016, and how you are monetizing them and the difference between this year and last year, if you can talk about how you work there?
Yeah. I think when you talk about the events, there's a range of events taking place. Of course, the big events that we are having, we have a global schedule now, and they will take place around the globe. What you see with these events is, of course, that we have more data. If you are increasing the spectator by 50%, which we did in Katowice, of course, it's a documentation for future sponsorship sale that we have many more people there, many more eyeballs, and therefore you should be able to capitalize better on these people coming into the event. When it comes to all the tournaments and the partners as well, as I said, we have 70 participating in the Katowice event. That, of course, means that we have more content showed, we have more partnerships where we make money on advertisement and so forth.
The more data, the more we can continue to demonstrate that we see more millennials going to these esports events or participating in our tournaments, of course, we will be able to document stronger products and therefore should be able to document stronger revenue. That is what you have seen as well with the big guys like Twitter and Facebook and YouTube and so forth entering this space as well, global distribution of our products, which, of course, should result in even more participants in our tournaments and, of course, therefore should render more revenue. That is the way we see that. The revenue streams, we are very familiar with. It is advertisement, as I said, it is sponsorship, it is event marketing, it is content production or creation, which we are then afterwards selling then to global partners.
It is something that we have done for many years, and I think it is very safe to say that with the data and KPIs that we see right now around these events, of course, you should be able to get even stronger traction from advertisers and partners. That is what we see right now.
Okay. Thank you. These new recent agreements that you mentioned, will they change the growth rate or is that sort of needed to continue to grow by 35%?
Yeah. We expect this right now, of course, to grow at least in line with the market. That is what we see, of course. The more successful that Twitter or whatever will be with those products, of course, the better it is for us.
Okay, thanks. Can you also comment on Zoomin and performance in the quarter and results for that part of the MTGx segment? Thanks.
Yeah. I think what we're seeing, of course, or witnessing is that the big discussion there is around YouTube advertising right now. Of course, as we said earlier, that has an impact on Zoomin since it has historically or is an enormous big global MCN platform. It is impacting Zoomin. We are changing the strategy for Zoomin and growing towards a more branded content, professional content model. We have 4,000 video journalists who every day create more than 400 new stories. That's, of course, something we want to invest more into to make sure that global media around the world can document their written stories with video stories as well. There are multiple revenue streams going into Zoomin, which of course, is great that it is not just dependent on YouTube advertisement. These are the revenue streams we are investing in now.
Branded content, you will see more of, and you will see more of these video network, of course, which we will capitalize on. It goes without saying that we, like everybody else, is hurt by the falling YouTube ads and prices, of course. That goes without saying.
Okay. Do you think it will be stable in the coming quarters? Just generally.
Again, we are probably not deviating from giving any guidance this matter either. Of course, what you see right now is that it is going down. I think you will see April as well will be lower when it comes to the YouTube money, and that is something that they are probably very much aware of as well, the YouTube guys.
Okay. Just a quick question on studio. How much is more scripted versus scripted productions?
Yeah, we haven't split that up, but it is more scripted. That is what we see. That is also, we see the demand for global OTT players, it is much more scripted than it is non-scripted, as I said in the call as well. We are having a very strong traction on scripted. We see the same effect in all fans from Viaplay, as I said. The scripted series that we have on Viaplay, we see up to two, three times the traction for our Viaplay originals than we see from American acquired content. Of course, that is a trend that probably other OTT players globally see as well. That's why we will see more scripteds going forward.
Thank you.
We'll take our question from Lisa Yang from Goldman Sachs. Your line is open. Please go ahead.
Good morning. A few questions, please. On MTGx, can I confirm that when you say 2017 losses will be lower than 2016, does that include the consolidation in part of InnoGames at all, or does that exclude that? If you exclude InnoGames as well, do you still expect breakeven for MTGx in 2018? The second question is on esports. What proportion of your business is basically a white label business where you basically act as a subcontractor, just to understand potential risks associated with increasing prize money in the other parts of your business? The last one is on your performance in Nordic Entertainment. Just wondering why audience share was down quite significantly in Sweden, Norway in Q1. Is there any risk on your advertising share or need for reinvestment in the future? Thank you.
Yeah. Let me try to take them from the top. When you talk about the losses for full year MTGx is going to be lower and that is excluding InnoGames. We can confirm that as well, the ambition is for 2018 to have the segment break even. We have not split when it comes to the Esports, when it comes to white label and the revenue streams that we are having. Of course, what we're looking at right now is to ensure that we also direct the business very much into our own produced shows and our own IPs, of course. That is something we are looking at right now.
When you look at the share of viewing in Sweden and Norway, I think last year we had some shows like handball and other stuff which we didn't have this year, of course. On the other hand, it is also a fact that we are not happy with all the products that we have aired. I think Denmark is increasing, that's, of course, very good news. In all fairness, that happens now and then that you have a quarter where you're not that happy. Obviously it is also an effect that we had strong products last year which we didn't have this year.
Can I ask another question on the Esports business as well? In general, what trends are you seeing in terms of publishers doing their own events? What kind of growth are you seeing in the number of events being produced in general by you and in the market by you and competitors? How much can actually the market really absorb in terms of number of events?
Yeah, we have increased the amount of tournaments that we are doing and doing together with the publishers and their products, and this is, of course, broadening the product range as well, so into different new games as well, which we will try as well in Esports and not the traditional ones only. We are getting more partnerships on board, and that is, of course, what you will see going forward. What was your last question? Sorry, what was that? You had another.
I was just wondering to know how many events can the market really absorb, because it just looks like there's a big increase.
Yeah. I think it's like everything else, it's about relevance in all fairness. We have the big events, as you can see from Katowice and the one we did in Rio and New York and so forth. That is what we, of course, are experiencing a lot of people who would like to enter this very interesting space, and that is fully we understand, and I think we have our eyes very focused on making sure that we can continue to create the right events with the right teams. That is the focus that we are having. We will produce the biggest tournaments. As long as you can do that, then of course there is a space for us, and we can continue to grow.
We recently, again, with Katowice, set quite a new record and we saw more people and more broadcasts and OTT and online players attending our events. It is about relevance, you will see that more people will try to enter the space, which is actually good news for us because it then also increases the interest for Esports as such, and increases the interest also from the advertisers. That's, of course, something we can then benefit on since we are one of the big.
Great, thank you.
Ladies and gentlemen, once again, if you would like to ask a question, please press star one on your telephone keypad at this time. If you find your question has been answered, please press star two to remove yourself from the queue. We'll take our next question from Viktor Höpner from SEB. Your line is open. Please go ahead.
Yes, good morning. My line broke up a bit. Can you just say again when you expect the Champions League to be announced or renegotiated? Also could you repeat the numbers you said for InnoGames in 2016 and the extra amortization that we should take into account? Then maybe, you answered this a lot already now, but on MTGx, putting InnoGames aside and also the YouTube related assets that is strictly looking then at ESL and PRIMA instead. Why did you say that the losses should come up in Q2 and why should we expect you to reach breakeven in 2018? Just the larger building blocks here if you can point them out.
In 2018, is it by a quarterly basis you expect to reach breakeven on those businesses or is it on the full year 2018 number excluding InnoGames and mainly excluding InnoGames. If I may, just two more questions. You mentioned in the report that you plan to invest more in your own production and just the reasoning around that then the levels and if that's more cash flow things or P&L things we should take into account. Great Viaplay here. Could you say anything if that's Norway or Denmark or broadly speaking and the IPTV subscription base is coming down, whereas it was up in Q3 and Q4. Is that some kind of new trend maybe or is it seasonal effects or how should we look on it? Sorry for the many questions. Thank you.
I will try to take some of them. The Champions League auction is due, and I think the first bid goes in the 8th of May. That is the first round of offers coming in. I think that was on the Champions League. When it comes to Viaplay and more local productions, I think what we're looking at right now is, of course, to understand how to allocate our content budgets and to understand where we see the biggest value for the customers. We do see that these Viaplay originals, which we have produced, meaning "The Black Widows," "The Swedish Dicks," and also then recently, "Veni Vidi Vici," and we have a range of new coming up. We see very strong traction from the customers.
Obviously, that has an impact on the net intake of customers, and that also has an impact, of course, on the churn levels, which were record low now in this quarter as well from TV movie package on Viaplay, and thus, second best also net intake quarter for that product. It is now with all the data we have, and we understand that the impact of these Viaplay originals might be two to three times better than you have impact and the satisfaction from the customers on acquired content. Viaplay gained customers around Nordic. It was not any country specific, which was the outstanding, I think, the product that we're having are traveling very well around the Nordics. When it comes to the IPTV decline or our DTH decline, I think that we have seen the DTH decline over some time now.
It was lower amount of decline DTH subs by, I think, some couple of thousand than in Q1 2016. The IPTV is, of course, an effect on marketing campaigns with partners and so forth, which are probably not as aggressive in Q1 as it has been last year. I think that is how we see it. We see great opportunities in IPTV going forward and, of course, with fiber rollouts and other things and our own IP-only rollout as well. We see fiber rollout with IP-only. We see great opportunities there as well.
On your question on InnoGames, we had last year, EUR 130 million of sales, 20% EBITDA margin, and 16% EBIT margin. What we said now is we are looking at approximately EUR 8 million of annual amortization charges as a consequence of the acquisition. That would then start as we consolidate.
Okay, great. Thank you very much. It's EUR 8 million.
We'll take our next question from the line of Martin Arnell from DNB Markets. Your line is open. Please go ahead.
Hi, good morning. My first question is on e-sports. What do you see and what are your ambitions when it comes to partners in the U.S. and China?
Yeah, we have nothing new to say there. I think what we're looking at is, of course, how to accelerate esports even faster, and that you can do yourself or you can do with partners. That's why we are constantly hunting, of course, companies in the market that we are in who can help us get this sport out even faster. Also, therefore, the deals with the big international companies like Facebook and Twitter and YouTube and so forth. We have nothing new when it comes to partnership. We will let you know once we have decided who we would see as an appropriate partner. We would like to find strategic partners in the markets that we're in as a general rule.
Okay, thanks. Given that you're seeing such a strong growth in this area and in MTGx, could you consider a spin-off of this business in the upcoming future?
I think right now we are very excited about the development of the business as such. I think that is the focus that we're having right now. Whatever we do in terms of structure with the companies, I think it is probably not for this quarter.
Okay, thanks. Second question is on the sports rights negotiations. It's not only Champions League, there will be more upcoming, and we don't know really what the price is going to be on that. What initiatives could you take in order to secure superior content portfolio also in the future here?
We have taken.
Could you repeat the program you did in 2015? How flexible are you?
I think, first of all, the assumption is that we have products which our customers like, and that has made us We have gotten more customers on board. That, of course, helps when you are going out and you want to acquire these rights. I think it is fair to assume that these very important stories, like sport or like the drama series, whatever, or the best movies, will always increase in cost. I think that is just a fact. The idea is, of course, to make sure that you have multiple revenue streams so you can capitalize on these different stories, on this different content. That is what we have developed over the years now. We have a strong SVOD platform, we have strong AVOD platforms, we have strong pay TV platforms, we have strong free TV platforms.
You can see that the Nordic is doing very well. We have a strong satellite platform as well. We have multiple revenue streams to the content that we would like to acquire going forward. There's a range of opportunities. It might be so you want to change some content in portfolio in order to finance something else. It does not need to be incremental, everything we do. This is the flexibility, of course, that we are having and something we're constantly looking at through research and other measures, what do we believe that the customers in the Nordic would treasure the most, and how could we secure these rights, these movies, these drama series. There's no magic bullet. You need to create a position where you can continue to be able to tell the best story to your customers.
That is what I believe we at least are trying to position ourselves to do.
Okay, great. Thanks for that. Finally on MTGx, I remember at the Capital Markets Day, you mentioned you had the ambition to be profitable in MTGx in 2018, excluding InnoGames. Do you still have that ambition?
Yeah. That is still an ambition that we're having. Yes.
Thank you.
Our next question comes from the line of Rasmus Engberg from Handelsbanken. Your line is open. Please go ahead.
Yes, hi. Thank you. I wanted to ask you about the deal with your production being sold in the U.S. for two seasons. Is that a significant deal for MTG Studios that sort of means that the relatively soft Q1 can be disregarded, or how does the monetization work on that contract, really? Can you explain that to us?
I would say strategically, it's a very important deal for us. It's the first time we air our own produced show in the U.S. Financially, I would say short term, you will see very little impact of it because it is a joint investment made by Viaplay and MTG Studios. Basically what we're doing is monetizing it on our own platform, the Viaplay subscribers, and then we're getting the forefront production cost from the U.S. network then.
It's already been produced for Viaplay. If you do sell it now, wouldn't that mean that you sort of sold it twice? How should I think about that?
The first season has been produced. The second season is currently being produced. We're starting production this summer. What we do is, we balance it on a balance sheet item on Viaplay, the part that Viaplay takes. That's why you saw some partially working capital increase last year on the original Sweden. You would see a recoupment of that balance sheet item, so it's not going to be financial revenue right now.
All right. Okay, great. Thank you for that. The second thing, I was just wondering, in the esports industry during last year, I think the number of events decreased around 25%, but the prize money continued to grow at least 50%. Are you seeing people sort of pull out during last year and say, "This is too big for us," or how does that work? I don't really understand why that happened, because it's been historically going hand in hand, the number of tournaments and so on. Last year was a rather big decrease. Would you agree with that picture at all?
Yeah, I think we have, at least from our side, Rasmus, we have launched more own tournaments. It might be so that the big events, again, I don't know, it's not related to us, but again, it's about relevance. It is also about that these big events which we are producing, we see strong traction from people there, even in Las Vegas now with DreamHack, where they suddenly popped up with a fantastic event, one of the best ever. We continue to produce events which we believe is relevant and in areas we believe are relevant. We will continue to do many more tournaments now also in the countries and on many new products as well.
It may be so that some events, I've not seen that, but maybe shown that some other events from some other competitors, that they have scaled down because it was not that good teams or whatever. I don't know.
Right. Then the second question, just given that we have missed MTGx development so many times now, compared to Q1, do you think that the losses will decrease in Q2 in MTGx?
Yes, it will.
All right. Thank you.
Ladies and gentlemen, once again, if you would like to ask a question, please press star one on your telephone keypad at this time. We will take a follow-up question from Viktor Höpner from SEB. Your line is open. Please go ahead.
Yes, hello again. Sorry, could you just confirm on Rasmus's question again that you said losses should come down in MTGx in Q2? Given the current USD rate, what would the theoretic effect look like in 2018? Thank you.
Yeah, we can confirm that as it looks right now, the MTGx losses will be lower in Q2 than they were in Q1. For 2018 currencies, I think that's a bit premature. We can talk about 2017 right now, that we know. 2018, I don't know, Maria, if you have anything.
All we can say is, right now for 2017, we have guidance of SEK 75 million. The majority is hedged, so that is locked in. For 2018, of course, that is a moving target, but based on the current spot rate, you should anticipate that you will have additional charges in 2018. They should not exceed to what we're seeing in 2017, I don't think. It's quite premature, as Jørgen is saying. There's a lot of movements still to be made.
Great. Thank you very much.
That concludes the question and answer session. I will now hand the call back to Jørgen Madsen for his concluding remarks. Please go ahead, sir.
Thank you all for your time today. We will announce our Q2 results on July the 18th and hope to see many of you at our AGM on May the 9th. 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.
That concludes today's conference call. Thank you.