Q4 2019 Earnings Call
Ladies and gentlemen, todays conference scheduled to begin shortly.
Until that time, that's again be pretty cool. Thank you for patients.
[music].
Good afternoon, everyone and thank you for participating in todays conference call to discuss Super League gaming financial results for the fourth quarter and full year ended December 31 2019.
Joining us today are super leaks precedent didn't see Oh, and hence SCS Oh. Please continue.
Following their remarks, well open the call for your question before we go Frittered. Please take note that's companies Safe Harbor statement, we didn't mean other private Securities Litigation Reform Act of 1995.
The statement provides important cautions regarding forward looking statements. The company's remarks. During today's conference call will conclude include forward looking statements. These statements along with order information presented does not reflect historical facts are subject to a number or risk a bunch.
Good.
Actual results may differ materially from dose implied by these forward looking statements. Please refer to the company three cents earnings release, it's the company's reports filed.
With the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ.
I would like to remind everyone that gift card will be available for replay through March 19, Twentytwenty perking up eight PM Eastern time Tonight.
A webcast replay will also be available by the link provided in todays press release I smell I said, the company's website at Www <unk> Dot com.
Now I would like to trying to go over to President and CEO of Super League gaming and head.
Good.
Good afternoon, and thank you for joining US today. This afternoon I will review our accomplishments in the fourth quarter and for the full year 2019, Lialda strategic roadmap for 2020, and then handed over to Clayton to review our financial.
Overall headline for 2019, it'll be significantly outperformed the K T. I called me laid out in January 20, Nike setting ourselves up for a strong 2020 focused on accelerated revenue growth.
We are ahead of our plan and ready to share more data said keep you more informed about how this will play out.
2019, with a transformational year for Super League in so many ways and not just because we went public in February it was transformational because we put into place the building blocks for our two primary revenue sources direct to consumer revenues or game or monetization and sponsorship and advertising revenue the monetization of our car.
Uh huh.
Before I go into that I'd like to make a comment about the Super League business model and how it plays into the recent world climate.
Gaming is now the largest category of entertainment, it's bigger than television. It's about three times the size of the global film box office, and almost seven times larger than digital music.
And gaining has proven itself to be fairly recession perch in times of belt tightening it is a smaller affordable luxury that indoor.
We have all seen the impact on travel and large events over the last few weeks.
Super League, you don't need to get on a plane or gather and she was a big stadium.
We're all about bridging local gamers and gameplay staying close to home and with people you know to that and we have seen various engagement metrics increase over the last few weeks, including a 25% increase in the activity on our online gaming portal mine.
Obviously, everyone is impacted or we take comfort that the nature of our business and business model has a build to national resistance.
So after 2019 and what was truly great performance against our K T eyes that exceeded all of our expectation.
First we went from a few game titles at the end of 2018 to running leagues across dozens of titles in 2019.
And our digital content network, which features user generated content from any gamer anywhere has a limitless library of featured titles.
The diversity of our portfolio differentiates us as a truly game agnostic platform speaking to the widest set of players.
As well, we set a target should grow our retail partner footprint from 34 venues at the end of 2018 to 200 venues by yearend and by October we were already in over 500 locations and most importantly globally.
Let's put us squarely as the leader and aggregating local E sports fields for everyday competitive gamers.
In addition, we wanted to double our register player base to 600000 by year end and ended up tripling to nearly 1 million users.
More gamers from whom we can gather content and up sell into paid offers.
Also we went from virtually no digital audience to over 120 million views by year end or target was a mere 2 million.
Not only does this mean exponential growth in our Monetizable AD inventory, but also on the backs about others, 75% of these views were driven up user generated content meeting we didn't have to invest in high production costs.
And lastly, we facilitated over 15 million hours of game play through our platform up from less than 1 million to your prior.
We are just beginning to explore the ways. We can repackaging just distribute the significant derivative content library for further monetization.
And there are other strategic highlights that amplified our reach frozen capability on venue, we forged a national partnership with chalk all a global partnership with GE circuit to leverage their 700, plus gaming Center fleet and we continue to work with a wide range of high quality retailers from Dave and Busters to our recently announced partnership.
With Wanda theaters and their dominant China footprint.
And with then you grow Theres also player gross customer acquisition of existing captive audience is a core part of our strategy.
And our digital audience has been has grown through the organic growth.
Hi, Jerry content channels like mine Hot and Super League TB, along with the acquisition of frame rate or social channel network for everyday game or share their highlight reel.
We continue to expand our game publisher and brand partnerships as a key source of revenue from the companies like Tencent, one plus in large attack for which we've had long relationships that.
And we run tournaments across a wide genre gains from traditional sports titles like Madden through to Battle Royale titles like fortnight.
We released the Alpha version of Super League Prime in December our first consumer subscription offering and leading up to that launched deliberate something substantial technology functionality, including a player reward system and dynamic like leaderboard, along with a full integration to Gigi circuits operating system for gaming centers establish.
I've seen a true b to B to C solution for greater retail application.
And we also built our capability and 2019 Samir on that joined as our CTO mid year after running consumer technology for I.M.D. be an Amazon company, we recruit a deeply experienced sales team and late for Q to monetize our ever growing advertising inventory.
And John Boy, who recently joined to serve as the general manager of our consumer subscription offers John has worked across several consumer brands and market spaces to drive customer digital experience and monetization from Pandora to proactive.
So aside from the metric ton mile stones, what are some of the headlines you should extract from 29 cheap.
Well, we further de risked the business, we have title fluidity and venue diversity and stronger more scalable technology.
We established a premium advertising model, we can now monetize with the team in place to deliver.
We launched our first effort at meaningful customer monetization with our prime subscription lunch.
We went from being a U.S. company to one that is truly global global both digitally and physically we offer a variety of ways gamers can engage digitally across our Super League content networks, and our network of hometown venue, serving as the playing field for recreational use sports.
And even today, you might've seen or announcement that we are expanding our city based gaming clubs system from 16 to 24 cities across North America, including Canada and Mexico.
Rapid expansion beyond North America is around the corner just like traditional sports League when the field of the teams expand the league becomes more vibrant and more valuable.
So there's a template here lock in the top titles done lock in a distributed network of venues locally done rollout or technology or tournament programming and our gaming clubs.
Underway.
Now combine that with the power of Super League consumer brand and our critical mass of players and viewers and we're really on our roads monetization.
So before we jump into 2020, a refresher on our business model the fundamental drivers of our monetization for creating deep community engagement through our highly contextualize local experiences that when coupled with the critical mass of our large digital audiences provides the depth and volumes for premium content and offer minded.
Nation differentiated from more traditional commoditized advertising model.
The powerful combination of our physical than Youve network, and digital programming channel, which Super League platform at the hub creates the opportunity for not just the share of the players wallet, but also the advertisers wallet.
We do this by offering brand sponsors in the advertisers a premium marketing channel to reach elusive generation Z and millennial gamers and offering players ways to access exclusive tournaments rewards in programming through our Super League consumer offers.
So on the 2020 and what you can expect the headline it's about topline revenue and continuing the March we started in 2019 of accelerated organic and inorganic growth.
Additionally, we will continue to track and report on a few T.I.s that we see as the health indicators of our financial goals.
Or just a moment, let's try to wrap our heads around the potential here.
We know that almost 50% of the 2.6 billion gamers on the planet identifies competitive.
And the gamers earn <unk> games themselves are now being designed for each sports with more competitive feature set.
So the interest in adoption beyond the professional level for E sports is inevitable.
If we conservatively assume that only 10% of those 2.6 billion gamers when a recreational E sports experience experience that they want to some way or another join the team or league and are willing to pay just $5 a month to support that interest we're already talking about a new market category amateur EA sports that it's worth.
$15 billion. This is what our opportunities.
So now into 2020 revenue, we will continue to prove out our main revenue source today, which is monetizing our audience to our sponsorship an AD inventory, which has experienced exponential upside over the last six months as we mentioned earlier. This is not a programmatic commoditize advertising model with us.
Sub one dollar CTM, we have a premium high quality model that allows game publishers and brand to reach a very targeted attractive gaining demographic.
If we sold out all of our projected inventory at $15 a CPM it would be valued around 45 million in revenue, but there are few variables you want to think about here one our inventory continues to grow to you don't want to sell all your inventory at any price you want to sell the maximum them out at the optimal.
And three the $15 CPM rate I site is on the lower end of our average.
This will be a big driver of their 2020 revenue.
And then we turned to consumer monetization and that starts with our current pilot build around a monthly consumer subscription offer Super League Brian.
We launched in December and have nearly 500 pilot users my intention we focused on a small captive audience PC gamers or power users that already visit one of our North American gaming centers. So serviceable market in the range of 50 to 70000 gamers currently priced at $5 a month players get.
To access to accelerate rewards and benefits specific to their game play we will refine and expand the offer this year to speak to a wider birth of gamers across more game titles Guinea platform and Guinea location, including and at home off are greatly expanding our surgical market.
And that is just one form of consumer monetization.
We are exploring additional digital offers that could become components of prime or stand on their own its unique ways to monetize our audience in players.
And while we continue to see our game titles and global retail then you substantially grow there are three Kate <unk> that are the biggest inputs to support revenue growth.
First further audience development and amplification, because that translates into monetizable advertising inventory or impression.
It can extract premium rate so impression is Kate I number one.
Next because our other revenue stream is consumer monetization continued player base growth so be can bring more and more potential customers into our funnel for conversion and retention. So registered users is Katie I number two.
And lastly, how do we get more of a share of gamers wallet well first we need to get a greater share of their time, so hours of engagement through Super League digital and physical networks that can be online or life game play sharing your best highlight reel checking out your place on the leaderboard challenging other players to battle or just chatting and one.
Our social four hours engagement is Casey I number three.
Let's put some numbers to that.
As we said earlier, we generate generate 120 million impressions last year. So we are targeting 360 million for 2020 through February we are at 42 million and we'd like the trajectory. We see here again that the three X grows and Monetizable ad inventory.
For our player base, we have reached 1.1 million registered players through February and believe we are well underway to reaching another material threshold of 2 million users by yearend.
And for hours of engagement, we generated 15 million hours of game or chime in 2019, and believe we will come close to doubling that performance to 30 million hours for 2020 through February we have booked over 4 million hours of engagement.
So this leads us to our 2020 gross strategy and we have six bold moves.
Number one pushing our technology to the center of an operating system that powers E sports below the professionals the software and media backbone.
Number two.
Dividing the bridge between at home and local gaining including the introduction of a mobile app for deeper player engagement beyond gameplay.
Number three competing for a 10 birdied, even larger brand advertising programs through our digital physical and now global reach.
Number four.
Stabling, our power user consumer subscription offerings and expanding into new segments of gamers.
Number five leveraging our digital and physical connections with gamers and hometown venues to take our proprietary city base gaining clubs to a new level of amateur E Sports League.
And six continuing to explore accretive on strategy acquisitions to scale in growth.
And to close an exciting recent development I talked about are abundant content library, and the monetization opportunity of our own AD inventory through our proprietary channels.
But our content is of interest to other people for their own channel. We've had several discussions with various streaming platforms and social networks and have our first tangible proof point.
On the opportunity for third party content licensing and other new sources of advertising revenue. We just got word. This week that snapshot has ordered up a full 15 episodes season of our user generated content series called taking shape.
Through the first four episodes released so far we have added 124000 subscribers to the channel and have generated 9.5 million monetizable impression.
These impressions are on top of the 42 million that we self generated ourselves through February that I cited earlier.
Too early to estimate the value of the advertising revenue share we will receive some snapshot on this but is a great proof of concept for us to take to other third party content partners.
At this point I'll turn the call over to our CFO Clayton Haynes, who will provide an overview of fourth quarter financial result, after which I will come back on with some closing remarks, then take question.
So over to Clayton.
Thank you and.
Good afternoon, everyone and thank you for joining us today [laughter].
Overall from a financial statements standpoint.
Well 2019 saw a modest increase in revenues year over year.
A decrease in constant I'm cost of revenues for our digital and physical experiences and the continued emphasis on operational control that excluding the impact of the cost would be in a public company allowed us to maintain and operational cost structure relatively in line with our pre IPO structure.
Along these lines in 2020, we anticipate reallocating a higher percentage of our opex to our sales and marketing function.
Focused on monetization as we ramp revenue in future periods, while maintaining overall opex levels relatively consistent with 20 my team up.
Taking a look then add our fourth quarter and you're in 29 Chief financial results.
I've summarized in our earnings release filed earlier today, we're quarter, what do you like GE revenues were 262000 compared to 470000 for the fourth quarter of 20 cheap.
The decrease was primarily driven by fluctuations in the timing of brand partner activation and the recognition of related revenue from quarter to quarter.
For the full year 20, Nike revenue increased approximately 4% to 1.1 billion up from 1 billion for the full year 2018.
Content related revenues, which includes brand sponsorships of our owned and operated properties and more customized brand partner programs.
Traditional advertising and third party content licensing.
Price approximately 97% of revenues for fiscal year, two what do you like GE as compared to 87% in fiscal year, 2018, and increased 16% year over year.
Direct to consumer revenues comprised of our legacy model of charging ticketing fees for our digital and physical experiences decreased 76% year over year due to a strategic decision to hold the higher number of free to play events during fiscal year 2019.
And with our strategic focus on increasing the volume of new gamers spectators introduced into our customer funnel to increase the number of registered users on our platform.
Consumer conversion and increase the overall awareness of the Super League brand and technology platform offerings.
Going forward, we intend to continue to offer a combination of paid in free to play experiences with the focus on ramping up overall monetization.
Fourth quarter 29 seen cost of revenue decreased by over 50% to 134000 compared to 285000 in the comparable prior year quarter.
Due to a combination of the decrease in related revenues quarter to quarter as well as operational efficiencies, resulting in lower direct cost for Super League physical and digital experiences held during the period.
For the full year 2019 cost of revenues was down approximately 25% from 684002 513000, despite the modest increase in revenues, reflecting overall operational efficiencies, resulting in lower direct costs for simply physical and digital experiences during 2019.
Fourth quarter 219, operating expenses were 4.8 million compared to 5 million in the comparable prior year quarter.
The decrease was primarily due to lower noncash stock compensation expenses, which was down approximately 500000 in the quarter related to the best thing in certain employee performance based warrants in the fourth quarter of Twentyg.
The decrease was partially offset by an increase in technology platform infrastructure costs and insurance and other corporate public company expenses.
Noncash stock compensation charges for the fourth quarter of 29 gene decrease.
951000, as compared to 1.5 million in 2018.
For the full year 29 key total operating expenses were 21 point threemillion as compared to 16.5 million for the full year 20, a key.
Fluctuation was primarily due to an increase in equity and other performance based compensation in connection with the achievement of certain performance based milestones during fiscal year 2019.
In approximately in approximately 10% net increase in engineering sales and other personnel expenses in connection with the acceleration of our growth initiatives during 2019.
And increasing technology platform infrastructure cost and an increase in public company related insurance and other corporate expenses.
Non cash compensation charges for the full year 2019, and 2018 totaled 6.2 million and 3.9 million respectively.
On a GAAP basis, which includes the impact of noncash charges.
Net loss in the fourth quarter of 29 team was 4.7 million or 55 cents per share compared to a net loss of 7.5 million or $1.62 cents per share in the comparable prior year quarter.
In addition to the non cash compensation charges described earlier.
Net loss for the fourth quarter of 2018 included non cash interest expense related to convertible debt outstanding.
Number 31, 2018 totaling 2.6 million.
Oh principal and interest related to the company's convertible notes was automatically converted to equity upon the close at the IPO in the first quarter up 29 cheap.
On a GAAP basis net loss for the full year 2019 was 30.7 million for $3.89 per share as compared to 20.6 million or $4.48 per share for the full year 28.
In addition to the non cash compensation charges net loss for the full year 2019 included non cash interest expense related to convertible debt totaling 9.9 million as compared to 4.5 million in 2018.
So those are our GAAP numbers for the fourth quarter in fiscal 2019, which includes significant non cash charges.
Now, let's look at our net results on a pro forma basis, which excludes the impact is non cash charges.
Provide supplemental information about the results of our operation on him on more of a cash basis.
For the fourth quarter of 29 T pro forma net loss, excluding non cash compensation charges totaling 961000 was 3.7 million compared to 3.2 billion in the comparable prior year quarter.
For the full year 20, like GE pro forma net loss, excluding non cash stock and debt related interest charges totaling 16.2 billion was 14.5 million compared to 11.5 million for the full year 2018.
The fluctuations in gap and pro forma net loss for the 2019 and 2018 periods were primarily due to the same operational and other expense fluctuation factors cited earlier.
As described in our earnings release, an 8-K filed with the FTC today pro forma net income or loss is a non-GAAP measure that we believe investors can you compare and evaluate our financial results along with other applicable case yards and metrics you and metrics discussed by an earlier.
Please note that our earnings release contains the more detailed description of our calculation of pro forma net loss as well as a reconciliation of pro forma net loss with the most directly comparable financial measures prepared in accordance with gas.
Looking at the balance sheet. We ended 2019 with 8.4 million in cash no debt in total shareholders' equity of 13.4 million.
Our current monthly net cash burn rate continues to be in the 1.2 million to 1.3 million range, which excluding the impact of certain public company costs is relatively in line with our pre IPO scan breed.
From a financial position and liquidity standpoint management and the board of directors continued to be focused on our cash in the capital required to execute and accelerate our monetization and growth initiatives.
Management and the board continue to explore a number of alternatives for bringing in additional capital to the company, including opportunities to work with strategic partners, who are aligned with our vision and he could bring to bear complementary assets in strategic capabilities.
In addition to growth capital.
No definitive determination to have been made by our board at this time. However, the board is focused on our alternatives for bringing in capital in a manner that addresses our growth capital requirements on a non diluted basis of possible and if in and in any event in a shareholder friendly manner as possible.
With that I will turn the call back over to and for some additional remarks.
Yeah.
Thanks Clay.
[noise], it's been just over one year and Super leagues IPO, yet our progress has exceeded our expectations.
As I stated before I truly believe the transparency and positive sense of urgency that comes from being a public company created an added layer focus and the results are evident in our rapidly growing audience player base. Global then you network footprint and game title portfolio and now it's time to prove the revenue opportunity. This found.
Nation provide.
Our focus is clear.
Platform Pemex, the deeply engaged passionate audience of local competitive game or to each other and to their hometown venue and not just compete but share their content around the loves the game.
Establishes Super League as a software immediate backbone for bringing amateur local E sports to scale. Our point of differentiation has always been well that gamers are the gains or digital our players are human.
And with that Clayton and I will take any questions you have operator.
Ladies and gentlemen, if you have any question at this time. Please press Star then to number one key on your Touchtone telephone. If your question that's been answered arguably sure move yourself from the Q press the pound key well pause for just a moment.
Your first question comes from the line of Mike Latimore from Northland kept Thermosets. Your line is now open.
Yeah.
Okay, that's going on for Mike Latimore I have two questions.
First one is a wonderful platform as a foundries.
And done sponsorship contribution to fourth quarter revenue.
Be contribution.
Many grab that for you when second here. If you can ask the second question I'll get that number.
Yeah. The second one is like what are the key features you want to add to your technology platform. This year.
So first just a little context, it's like pulling up the specific numbers first of all I'm platform as a service.
As long as a service is one way that game publishers and brands engage with us and its where they actually asking to decide to design something very unique for them. So right now you'll see us running a logic taxi ESCO leak that was something where larger tech picks the game titles and we were able to give them some flexibility.
So it works in addition to our standard set of programming. So just for everyone's kind of contact that's what we are we're talking about its still gameplay and it's still players that come into the Super League system. They register with US they push all their game play concept through but it is a game league.
It has been but hopefully designed for sponsors neat.
And then I'll answer your technology question, but first Clayton do you want to.
Yes, so for the fourth quarter of EUR 2019, 97000 over 262000 was related to a lot from answers.
Oh Im sorry for core that's what do you actually yeah.
No. Thank you.
As far as the new technology advancements for the year I alluded a little bit to you know we.
I started with is very specific smaller subset of PC gamers and these are great North American venues that are powered by GE circuit or software partner and these are you know PC gamers are are much more competitive gamers. They are spending a lot of.
Together and or the first most obvious group of people, who really wants to participate and competitive leaks and structures and so we buy intention started the launch of prime focus on that audience.
Ah Theres really a couple of ways that we continue to grow one is is that we grow across other types of gaming platform. So having offers it speaks to the console game or or to the game or we'd like to competitively game using their mobile phone. So that's expanding into more platform.
The second way is that in some ways. We've already done that's with our digital channels is going be on gameplay. You know when you look at our digital channels right now frame rate is where players celebrating the afterglow. After the game has ended their offloading their highlight reels and they're getting attention for they're great place.
No different than you go on the locker room after and kind of celebrate kind of the great places again I'm equally we started to think about whether the other component that happened before game play after gameplay what are the ways that we can help our gamers continue to engage with each other even when they're not in the game itself.
Whether they're at one of their hometown venues or they're at home. So when I talk about the introduction this year of a mobile app, it's really speaking to away that we could start to be more central and to be competitive players like around all things around the game play and that means were connected to them everywhere. They are wherever there.
I wanted right there with them.
Got it thank you.
Your next question, it's from Mark Argento from Lake Street Capital. Please go ahead.
It does.
Any thoughts on.
Correct.
You know positive.
<unk>.
Yeah, Mark I think you were having a little trouble getting loved it earlier and I did kind of address it right up front.
No.
One of the things that we've often heard.
And and seen evidence of historically is the way that Beijing is.
Somewhat resilient to economic downturn.
And you know when it in a way as I alluded to in my earlier words, it because it's kind of one of the smaller affordable luxury right when you're not able to take big trips and and do those more expensive kinds of waste entertain yourself and given the gaming is now bigger than TV and much bigger than the film box office.
This is the primary form of entertainment.
That's highly accessible and we think will continue to thrive.
When you know we're being faced with so much other kind of health and economic challenge, we've seen on our digital portals and increase of activity in the last three weeks, which I think really speaks to that so very specifically as I mentioned earlier, our mine had gaming portal, which is a 24 seven gaming portal, but it also the social kind of Facebook couponing.
Good.
We've seen a 25% increase on average across all dayparts.
So that's.
Pretty healthy were also reaching a over the weekend. We reached 6550 concurrent so that means 6550 players simultaneously playing together and we just had another record I was told as I was leaving the office yesterday. So we expect over the weekend working that can.
Can you to set new records there.
So for.
Uh huh.
[noise] venture Chinese venture with wand I believe any.
And your report there in terms of furthering that relationship.
Any kind of more.
Yeah.
Got it made and.
Sure.
[music].
Josh.
In the summer there.
<unk>.
Yeah, I know, it's a great question you know when we announced that operating agreement. It's it's it's a real agreement right and it's a real commitment to bring dedicated eastport faces across their Wanda theater footprint, which is about 700 plus theaters.
However, we always expected that we would then the first half of this year do lead product market fit testing.
You know that we would talk about what is the right game title to launch you know the biggest mobile game. There is a game owned by 10 cents called on Hurricane.
So you know that could be about starting point and because of that we knew that there would be a period of time were working with the game publishers with Wanda and all the expertise we have from running thousands of experiences that we would craft what is the right rollout strategy for China. What did you give them look like.
What game titles are we going to focus on and because of all of that in baking that into our planning we have no intention of formally launching in China until the second half of the year. So we are actually we haven't at this point had any delay.
And our current plan for roll out because we had that buffer time build and to do what we thought was right and really build the right go to market strategy with them.
Great and then last one for me I'm on the capital side.
Kinda Plumeri thoughts I know you had mentioned.
So you want.
<unk> capital what Jeff.
<unk> financial.
And any kind of any plans any conversations or from a strategic perspective.
Or what are your thoughts on kind of when you need to go to market.
Yeah.
Yeah, I, just kind of highlighted in our in our prepared remarks, yeah. When we certainly the board is looking at a number of opportunities.
A strategic strategically would be something Oh, some opportunities there that we're taking a look at currently at this point in time, there's nothing definitive and sobered were not kind of able to speak to anything definitive at this time, but we're looking at a number of alternatives before to updating.
You all once we have something definitive to watch before.
As weve proven historically weve been able to engage with.
Commercial partners and converted them into a strategic they've seen the benefit of our business.
And so you know just like the fact that we're very fortunate to have investors like large attack in front of Mark theaters, we really that's our top priority is to continue to look for.
Ways to bring more capital into the company that also accelerate our commercial strategy.
Thank you.
Your next question is from Allen Klee from National Security.
Please go ahead.
Oh, Hi, you laid out kind of work what the size of the advertising revenues could potentially be the question I have is how do you. How do you think about how long it could take until you will be at the point, where you think you ramped up and.
To be selling to the amount of advertising that that you'll be at the maximum amount you hope to reach.
Yeah, I mean, that's the real kind of important thing.
A few activities we did in late Fourq you, we brought in an expert a woman who used to run.
Sales and IDN and the West coast sales team for Twitch to independently help us evaluate the size of our AD inventory plus identify additional opportunities for AD inventory. We then also went through an independent exercise of repricing that although you know it validated that we do have a very premium kind.
Of CPM as we've talked about.
And then we also have used her helped to recruit art. Our sales team. We now have an exceptional director of sales Albert Brig, who literally starting January one I started pulling together the sales narrative and going out to a whole different host of media buyers.
With his you know 15 years plus experience to start to sell against that inventory. So we have some exciting things in the pipeline that hopefully we'll be able to announce soon and I think what you'll see it if the trend I see in the pipeline looks right is that the deal sizes are increasing too and I think that really goes back.
To see breadth and depth of reach we now have between the global then you network since the greater critical mass, we haven't digital viewers and physical players.
Maybe just following up there can you think that by the end of 2020, you would be at a point, where you would be selling 'em the amount of advertising the you hope to Rouge.
I believe.
20 that we'll see a large improvement and the revenue generated from advertising.
Great and then one the.
On the subscription side.
You mentioned you have five 500 customers.
The question I haven't or are they all related to juju circuits and.
Do you consider in 2020 potentially expanding.
Subscription business model outside of the juju circuits related people.
Yeah, I'd say I'm kinda she thinks that it was absolutely by attention that we want it first to target the PC gamers and those gaming centers and those are we access those players through our integration with Gigi circuit. So they are the b to b software that offer.
Great the system inside those gaining centers and we are now the b to C front end to that so when those players come in we have an opportunity to get them to registered Super League. Once they register they start to understand their place on leaderboards and start accruing some reward points and then we have the opportunity to convert them into.
Paid players we did that because we believed in we're told by good subscription advisers that we need to start with a very specific segment first but I alluded to it a bit I just absolutely our intention to have subscription offers that speak to mobile game or that have.
Aspects or features that are of interest to gamers engaged with us even when they're at home and that's the beauty of the work we've done with BG Circuit is you really need to.
I think way beyond the gaming centers. This integration really starts to me that we can have application to kind of gamers anywhere. They are there's a lot more benefit.
For us going beyond those getting centers weren't today.
Okay, and then Hum this is gonna be hard to answer, but how much of the activity that you generate revenue from you think will be coming from physical events versus digital and to the extent. It is physical are you hearing anything that that's some of those.
Places might be shutting down temporarily due to the corona fires.
Well, it's a good question I mean, right now a lot of <unk>.
Generated off of our digital.
And you know Clayton tells you that over 90% of our revenues last year came from brand in advertising sponsorship and most of those are for our digital reach its getting behind our Vili channel, it's getting behind our online late.
We're really just starting as we did historically when we charge tournament fees for physical events, you know prime right now had some real sticky units to the physical then you. So it has a greater dependency or focus on the physical games played versus the digital but of course, we're going to continue to expand that so right now most of our revenue.
As our apart from the digital side of the house and that's also where we have the greatest breath.
That said, we did get some interesting data couple of days ago. Its preliminary but we did get some about how the North America gaming centers, where do eat as far as just their own customer participation and deeply showing that actually the numbers are up.
And February and then that the March trend line I think that while of course people are going to be I'm very focused on not spending as much time in large social situation. You know these local gaming centers are people, who already have friends, there and there either.
Going to hang out at home together or they're going to go to the cooler venue that has access to greet equipment, a little bit more of a social experience. So I believe we might be the type of retail venue that endures because it's small it's sentiment is close to home. It with people you know it's your substitute frankly for all the.
Other types of social experiences you'll be sacrificing over the next two weeks.
Okay. Thank you very much.
Your next question from Jeff call him from Stephens, Inc. Please go ahead.
Hi, guys. Thanks for the question most of mine have taken so I'll go to the broader one no doesn't pointed out a number of different rep.
Today Hum advertising.
Subscription I'm than even the third party content licensing snapshot could you maybe stock right those for and talk about.
Sector, we should expect to succeed ramp first in 2020.
Thanks, Yeah, absolutely so.
No. We it's a good point, but there are different forms that sponsorship an AD revenue and different forms of consumer monetization, but it all comes back to those two buckets either we the player pays us.
For a brand sponsor advertiser pays us and the majority of our revenues have been from brand and brand sponsor and advertising, that's certainly where we have a deep robust pipeline of a different deals and negotiations going on and really just in December with the launch of Prime was really the.
First meaningful step we've made in trying to get the player to pass.
And so for that reason, you'll continue to see this year that the dominance will be on the sponsorship AD revenue side, but we've always you know again it was a strategic choice. We made in the early days, which was to first just get as many players into our funnel is we could for free that's also really fall.
Close the classic gaming mall. These days a freemium you know you can download port night for free and then they get you on the micro transactions inside the game and so certainly for US that was the bulk of our consumer models that monetization strategy last year. So again, the simplest way to think about two buckets brand sponsorship in average.
Typing for which snap snapshot is just a subset of that it's just a different type of source of bad revenue and then this new step into consumer monetization with crime and that's the simplest way for you the bucket.
Got it thanks.
Your next question is from Ken Kingston Linger, you're from Alliance Global parts. Your line is open.
Hi, This is Jay gone for Brian I'm. Most of my questions were also already taken I was wondering if you could talk a little bit about the ramp of a Super League Prime.
Yeah, I mean, it's a tough one 'cause it's early days right I mean.
When I talked about our AD inventory last year and said, it's ramping it's ramping and you know it's early days will now we've got the team in place and so we're actually now getting into that business actually delivering that AD revenue crime and consumer monetization is really eight weeks old and we just brought in a big leader to.
To.
To be the G.M. of it four weeks ago I.
I think that we.
Our learning a lot about the ways the type of reward system and gameplay programming that these PC gamers are excited about I think they probably the more important exciting path is the.
Product road map that takes it way beyond just traditional game play in the center. So you know it's hard to its hard to say you know again, we've got that samples that I talked about of users right now and then we're mining a lot of data to see how we segment them further to get in.
Sites I'm right now the current pricing system is $5 a month.
And for those $5, a month youre getting accelerated points and rewards access to a global volatile pricing.
Enhance surprising for tournaments by being a member as well as access to exclusive programming special tournaments, and so we're still kinda tweaking those things to make sure that we really find the silver bullet and hoping in those players for the longest kinda lifetime value.
Okay, great. Thanks, and just one more and he touched them a virus that but do you expect to see more uploads and on frame rate and some of your other gaming channels and then more gameplay hours and in mind hut due to children being at home because of the virus.
Yeah, absolutely so when I talked about the fact that mine has seen a 25% a pre increase over the last three weeks and that we're hitting our peak concurrent we think you know first of all mine had is just a diamond in the right. It is really exploding. It's got a very active engaged user base because it has that social components.
Well, we average over nine minutes session views just in the chat Forum. So kids are hanging out with chat form almost as long as they're playing the game itself and we expect to see that continued increase and it's interesting you mentioned frame rate because that I just heard somebody say it today as I was walking out of the office to this call.
You know, it's gonna be fun to watch the frame rate numbers to because again. This is going to just be these other kind of fun ways for gamers to take their preferred form of entertainment and spend more time, socializing, then and having been around that when maybe they've had to.
You know give up going to class.
Great. Thank you.
Hopefully we won't be responsible for declining the grade point average [laughter].
The globe.
[laughter]. Thank you again.
Now the nice thing to about that is just remember my.
Frame rate there beautifully global.
No frame rate it can be any game title anywhere so a player who's sitting at home in South Korea, and like the title that maybe I've never even heard us can still have an epic fail or an epic play that can be highly entertaining on those channels. So the beauty of that is that it really cant.
The or any game or anywhere.
We have a follow up question from Allen Klee from National Securities.
Sir Please go ahead.
Yes, Hi, I mean, I didn't know if you had this information at this point, but you do you have the breakout of your revenues by Grand in media sponsorship.
Platform as a service and direct to consumer and advertising.
Sure sure and we will also laid this out.
Same thing, which we intend to file.
In the short term a book for the fourth quarter branded media partnership revenues were about 41% photo.
But from a disservice were about 37% or the total.
Third party content about 18% and direct to consumer about 3%.
Those first three lines Alan.
We are you can simplify and bucket as a part of the umbrella called sponsorships and advertising.
It's really only the fourth line direct to consumer which is the beginnings of prime.
And then from a year, okay cleanly. He I'm sorry from year to date. When you know teams standpoint, a 42% branded media, 49% platform as a service a 6% third party content opened up 3% for subscription.
Thank you.
At this time. This concludes our question and answer session I would now like turn the call back over to Mr., Ken for any closing remarks.
Thank you very much look Oh I'll be brief we'd like to thank everybody for listening to todays call. We look forward to speaking to again soon I'm really appreciate your support we're confident that we're going to deliver a big shareholder return here in the future and so all we are right now is that everybody.
Ah stay safe and we will stay focused on the mission at hand.
And on our March to prove that we have scalable revenue. So thank you.
Ladies and gentlemen, this concludes todays teleconference. You may now disconnect.
Thank you for participation.
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