Follow-up: MTGx Investor Presentation

I’ve finally had a chance to properly look at MTGx‘s investor presentation that Rikard Steiber posted on Twitter a few minutes before my last post went live. I apologise for the delay but my master thesis had to take priority 😉

I will not discuss everything presented in the slides, but on the parts that specifically interest me.

[Edit: Embedded the slides, had forgotten you could do that with Slideshare]

xVentures: MTGx incubator/investor arm. xVentures is very interesting as they can actually offer  startups a lot than traditional incubators and investors lack: advertising and sales infrastructure. Both of of these are usually a problem for startups and one thing is for sure, MTG knows their advertising.  From the slides (The Pitch):

60 channels in 35 markets
TV operator, Radio, Digital
Media cross promotion
Content cross creation
Local sales force to sell
Local editorial to curate

Ability to advertise in 60 channels across 35 markets? That is an amazing opportunity for most companies and startups in particular. Let’s not forget that MTG(x) are used to selling B2B. I am quite positive they can assist startups with marketing (Sorry, most people (including myself) are just not as good at marketing as we think) and pricing.

Viagame: I could not really understand why MTGx would spend the time and money on Viagame, it is, as I said in my previous post, a deviously hard market to make a decent buck in and they basically had nothing that differentiated them from the competitors. I was wrong. They do have one thing, which is mentioned in the slides: Leverage unsold TV inventory to drive online traffic and sales.

Leveraging the unsold inventory, where they were unable to sell advertisement, to generate (some) revenue. It is quite brilliant. The margins on each sold game are probably around 15-30% (I believe Steam takes ~30% from game sales), which is a healthy margin for relatively small investment on MTG’s part (Shelf-ware distribution tool, basic adverts for Viagame etc). The unsold inventory would otherwise be ‘wasted’, now a profit can be made, albeit smaller than if the inventory had been sold but it helps smoothing out the revenue streams – no/smaller dips in revenue if inventory goes unsold.

xCreations: ‘Youtube style’ production/content (my own interpretation). Rikard Steiber correctly identifies that ‘old media’ have not been very good at embracing Youtube and they, in my opinion, have often failed to create the type of content that the Youtube viewers expect, thus it makes sense to create a small and innovative team to embrace the Youtube-styled content. Perhaps on their own platform, perhaps not.

I would love to see production companies embracing gaming content (my personal favourite among the Youtube content). eSports on Youtube, game play commentaries and Let’s Play are quite big business these days and they could be so much more with proper production companies behind them. Companies like Yogscast have come a long way with their production, they got a really good crew going right now, and they are still growing, but many others are still 1-3 man operations and could use a good production crew. Yes, I know they get support from Maker studios/The Game Station etc. but it just doesn’t have the same finesse as traditional production for the most part.)

The slides make me even more excited to see what MTGx has in store for us. Will the be successful?  I don’t know. I hope so, it would mean more jobs in Stockholm, which is never a bad thing – except if you want to buy an apartment. MTGx still have a long way before they can revolutionize digital media but god knows it is sorely needed. ‘Old Media’ seems to have trouble to adopting to Youtube-style content. More innovation is never bad in my opinion. I will continue to keep an eye on MTGx and other potentially innovative companies in Sweden.

P.S. I should say, if you found these things interesting, you probably should apply at MTGxJobs.com, they seem like nice people and currently got 25 jobs up for grabs. (And no, I have no relation to MTG(x))

Now back to writing my thesis. Perspectives on ES/ERP implementation success (in the onward and upward phase). Interesting stuff if you like large scale implementations of IT systems and the factors that leads to successful implementations.

-P

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MTGx – Internal Digital ‘Startup’ at MTG

Modern Times Group (MTG) announced their new digital venture today, called MTGx. The idea behind it seems to be to consolidate their digital offerings into a new ‘startup’ in order to quickly adapt, pivot and innovate without being limited and restricted by MTG’s internal workings and the inherent rigidity of a large company.

To me it sounds like a well-funded ‘startup’ within the media conglomerate that already starts out with some pre-existing assets. MTG has also managed to hire people with impressive resumes to head up the project. Earlier in the year they poached Rikard Steiber from Google and made him Chief Digital Officer(CDO – Collateralized Debt Obligations?) at MTG and head of MTGx.

MTGx’s tagline is:

For decades MTG has been in the forefront of entertainment broadcasting. Now we want to revolutionize the digital entertainment industry too. With MTGx we’re combining the power of a global media group with the energy of a startup, to turn the grey corners of Internet into amusement parks. And if you’re the top talent in your field, we’d love to have you on board. We can assure you, it’ll be fun.

To me it seems like MTGx is a great way enable quick adopting, prototyping and pivoting (Lean style) while still having the financial clout of  MTG. I am actually rather interested to see what they will do in the future, their current products are quite diverse and I suspect they need a rather large team to keep them all going, not that I should complain about a company having to hire a lot of people. Anything that helps Swedish GDP along makes me happy.

MTGx splits their products into four different categories: xPlay (Core Services), xVentures (New Services), xCreations (Digital Production) and xLabs (Development Shop)

xPlay includes Viaplay, TV Play and Sports
xVentures includes Music, Games and Like.TV
xCreations includes Mobisodes, Webisodes and TV Extensions
xLabs includes Web / Apps, Social and Sign on

The xPlay area mainly circulates around Viaplay as far as I can tell and it is pretty much a Netflix competitor in Sweden. Priced at 79SEK/m for movies and tv series. This area has massive potential but they need to be able to offer a better service with larger offering than Netflix et al.

xVentures is the most interesting part in my opinion, this area will focus on the actual new services and a lot of good things that could come out of this. I am especially interested in the collaborations with startups, that they claim will be part of xVentures:.

As part of this effort xVentures will establish presence in start-up communities in several countries, with an initial focus on Sweden, the UK, and the US, to find partnership and investment opportunities.

Both partnerships and investments could be very beneficial to start-ups in these areas. MTG has huge reach with their media offerings and they sure know how to handle themselves on traditional media so I would trust them to run promotions. More investment money is always a good thing (as long as it is sensibly spent of course) and there is a lack of VC money in EU compared to the US so I am quite delighted about MTGx’s xVentures.

However, on the subject of xVentures, I am a bit worried about their current products, primarily Viagame and Like.tv.

Viagame is in a hard, competitive business. Selling PC games online is NOT easy in this day in age. Steam has a near monopoly on the main stream (and to an extent indie) scene. EA (Origin) and Ubisoft (UPlay) are trying to get in on the action and GOG has the niche market of older games (without DRM) in their pocket. What does Viagame have? A website, with a ‘shelf-ware’ distribution system and TV advertisement. TV ads are worth a lot and I did hear about the company via their Swedish ads but it is not an easy market. Just look at Gamersgate, the quite established Swedish digital distributor – in 2011 (most recent figures available) they only had 35m SEK in revenue, and a minor loss. It is not an easy business and I think Viagame needs to do more than they currently do to become a contender in the space. Don’t get me wrong, more competition is great and I would love for them to succeed but to do so, they need to have an edge.

The traditional ways to generate value in the IT economy is:1) Lock-in 2) Novelty 3) Efficiency 4) Complementaries. Viagame currently has none of these, though I could see both complementaries and Efficiency playing a part in the not too distant future. Complementaries as MTGx other products might be very good compliments to selling games (producing a video game review show or such perhaps). Efficiency as I assume it was not very expensive to set up the service and once it is up the fixed costs stay the same and the margins go way up – though I still suspect they won’t have an easy time generating enough revenue.

Like.tv is a second screen service, I never understood them and I am not sure how they will generate any money but I can see the use for live statistics, polls and betting. Other than that I fail to see the point. However, it is wonderful compliment to MTG’s current offerings, which mainly revolves around TV. It is actually brilliant but I am not sure if it will  actually make any money, mobile (incl tablet) is hard to monetize – the ad revenue isn’t exactly stellar for these devices.

I have been a bit negative toward the end of this post but I do hope this venture will be a success for MTG and those involved, innovation is damn important and will in the end benefit the consumer. On a related note, the stock markets appear to be quite neutral to the initiate, MTG closed 0.37% up.

In this stage they seem to be mostly recruiting new talent – over 25 positions within the ‘startup’. A quick glance suggest that they are building a solid backend team (Venture mangers, financial mangers, etc) but also investing heavily in new technical employees. Last I heard lots/most of the technical graduates in Sweden got swallowed up by Spotify and Skype but MTGx may be able to compete for these graduates in the future as they do have solid financial backing and are offering a startup environment – or claim to at least.

Or they can just hire me (hint hint nudge nudge) as I am soon done with my master. The results from my last exams are just out and I am officially done with all courses and only got my thesis to go. I shall soon return to Stockholm! In all seriousness though, I am (causally) looking for work so any hints would be greatly appreciated. See About for more info.

P.S., in case someone at MTG(x) reads this; the email at the bottom of your page says jobs[at]mtgx.com but as far as I can tell you don’t actually own that domain,  nor is the mail server run by you? I assume the correct email is either @mtgxjobs.com or @mtgx.se : ).

Edit 00:38 14/06: Just a few minutes before this post went live Rikard Steiber posted a 40 slide long presentation about MTGx on Twitter, sadly I did not see it before finishing the post. I will write an additional post with thoughts on it tomorrow. It is late and I want to be awake when I go through the presentation properly. You can check out the presentation on Slideshare.

-P

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Employer Branding: Swedish Graduates Rejecting The Large Companies

The engineering students in Sweden are fleeing the large companies read the headline in on web version of SvD. Who is surprised? I’m not. Swedish conglomerates need to work on their employer branding.

Employer Branding

Employer Branding

There are, apparently, more civil engineering students than never but they do not want to work for the large engineering organizations in Sweden. One in three students want to be entrepreneurs or work in nontraditional engineering organizations according to employer branding company Universum. One in ten wants to be entrepreneurs. This leads to a shortage for the companies and government organizations that rely on engineers.

Why is this? Well in part it is due to the fact that today’s engineers are a bit picky and want do to things they perceive as fun or more rewarding, and who blames them?

But a large part of problem is due to the laziness of government organizations and the large Swedish conglomerates. They have not been taking care of their image with the students, nor do they properly market their organizations to get students interested in working there. There are many government organizations that rely on engineers that have amazing and interesting tasks but if they don’t tell the students about the interesting work they have to offer, then they are not going to be able to get any of the students, but rather see them lost to McKinsey, Skype and Spotify. The management consultants have done very well in their own marketing, the perception is that you get very interesting and varied tasks throughout the world. Whether or not this is the truth is irrelevant, today’s prospective employees think that it is and do not work for the old and dusty companies and government organizations.

Another aspect is the fact that these organizations are lagging behind in wages. Many of these companies pay way to low wages for the work that the engineers do. Government organizations are as always guilty of this but even big companies like Ericsson have been underpaying it’s workers as well as not providing a lot of job security. Low job security may be okay if you earn a lot of money but if you make peanuts compared to a McKinsey consultant, then you might reconsider how attractive employment these old giants are.

For example, a friend is working at an industry leader within its manufacturing field, and he has worked there for the past three summers. He makes something like 108 SEK ($16.3) before taxes. Now you may say “But Patrik, that is excellent pay in my country!” Sure but this is Sweden, my girlfriend makes 129 SEK ($19.3) per hour working retail, with an 100% increase on weekends. The classic Swedish manufacturing giants have become complacent in their attitude towards prospective employees.

The classic employers need to increase their visibility, Sweden has changed and employees are more critical than ever, they shop around and aren’t afraid to move out of the country to get jobs they want. Just look at how many move to Norway and earn an absolute fortune in comparison to Sweden, not to mention that it is easier to get a job in Norway than Sweden.

If companies aren’t clear about the benefits of working at their company they cannot compete for the ‘best’ graduates. The highly educated graduates with attractive degrees, especially IT engineers, have a buyers market, they are able to pick and choose between many employers. Just being a large, stable company isn’t enough anymore. Today’s graduates wants interesting and challenging jobs.

-P

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