Modern Times Group (MTG) has reached a significant milestone in its strategic shift toward independent payment ecosystems, reporting that direct-to-consumer (D2C) sales now account for 42% of its total revenue. The Stockholm-based gaming powerhouse revealed the figure in its third-quarter financial results, marking a substantial increase from the 26% recorded in the same period last year. However, this growth in independent billing arrives alongside a cautionary note regarding the shifting regulatory and fee-based landscape imposed by major mobile platform holders, specifically Google.
The company’s Q3 performance highlights a pivot toward higher-margin revenue streams as it seeks to bypass the traditional 30% commission fees charged by the Apple App Store and Google Play Store. While the growth in D2C revenue suggests a successful diversification of its monetization strategy, MTG management warned that recent policy changes by Google concerning external payment links will likely mitigate some of the anticipated cost savings. Despite these headwinds, the group remains committed to its long-term financial targets, supported by a robust portfolio of midcore and casual gaming titles.
The Strategic Shift to Direct-to-Consumer Channels
MTG’s aggressive push into D2C channels is part of a broader industry trend where mobile game publishers encourage players to make purchases through proprietary web shops rather than in-app storefronts. For MTG, this strategy has yielded rapid results. The 42% D2C revenue share in Q3 represents a steady climb from 38% in the second quarter of 2024. The acceleration is even more pronounced within the group’s midcore division, recently rebranded as Playamp. At Playamp, D2C sales accounted for 55% of revenue in the third quarter, a massive leap from the 33% reported in the third quarter of 2023.
By directing players to external websites to purchase "hard currency" or battle passes, publishers like MTG can theoretically retain a much larger portion of each transaction. Traditionally, platform holders have restricted the ability of developers to communicate these external options to users. However, recent legal and regulatory pressures, including the Digital Markets Act (DMA) in Europe and various antitrust lawsuits in the United States, have forced Apple and Google to allow alternative billing methods and external linking.
The "Google Tax" and the Erosion of D2C Advantages
The financial benefits of bypassing app stores are being increasingly challenged by new fee structures. MTG highlighted that Google’s updated rules on alternative billing, which took effect for Android players in the United States on October 1, have already begun to impact the group’s margins. Under these new rules, Google continues to charge a platform fee on transactions that occur via external links, effectively capturing a percentage of the revenue even when its own payment processor is not used.
MTG noted that these new fees reduce the "cost advantages" previously associated with the D2C model. While the company did not disclose the exact percentage of the new Google fee, similar industry-standard "link-out" fees typically hover around 26%—only a 4% discount from the standard 30% take. MTG confirmed that its full-year margin outlook already incorporates the expected financial impact of these regulatory adjustments, signaling that while D2C remains a priority, it is no longer the "fee-free" haven many in the industry had hoped for.
Financial Performance and Net Sales Breakdown
In the three months ending September 30, MTG reported net sales of SEK 2.99 billion (approximately $308 million). This figure was flat on a year-on-year basis and represented a 2% decline when measured in constant currencies. The stagnation in top-line growth reflects a maturing mobile gaming market and the specific life cycles of MTG’s core titles.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose by 3% to SEK 693 million ($71 million). This resulted in an adjusted EBITDA margin of 23%. The company explained that the savings generated from lower platform fees—thanks to the D2C push—were largely offset by an increase in user acquisition (UA) spending. MTG allocated SEK 1.18 billion ($122 million) to UA during the quarter, a 6% increase year-on-year. This spending represented 39% of the group’s total revenue, underscoring the high cost of maintaining and growing player bases in a highly competitive digital advertising environment.
Portfolio Analysis: Playamp and Playsimple
The performance across MTG’s internal studios was mixed, illustrating the volatility of the midcore and casual segments.
Playamp (Midcore Division)
The midcore division, which includes the renowned studio Plarium, saw its revenue fall by 6% on a pro forma basis. The group’s flagship title, Raid: Shadow Legends, continues to show resilience, posting a 1% growth in revenue. However, this was not enough to offset declines in other key titles. Forge of Empires saw a 13% drop in revenue, while Warhammer 40,000: Tacticus declined by 10%. MTG management contextualized the Tacticus decline by noting that the game had an exceptionally strong performance in the third quarter of the previous year, creating a difficult year-on-year comparison.
Playsimple (Casual Division)
In contrast, the casual gaming division, Playsimple, reported an 11% growth in revenue. Based in India, Playsimple specializes in word games and has become a vital growth engine for MTG. Despite its strong performance, MTG announced that it has postponed the planned Initial Public Offering (IPO) for Playsimple. The company cited current volatility and unfavorable conditions in the Indian capital markets as the primary reason for the delay. MTG now plans to revisit the timing of the IPO in 2027, opting to keep the studio fully integrated within the group for the foreseeable future.
Acquisitions and Rebranding: A Timeline of Expansion
The third quarter was a period of active organizational and portfolio management for MTG. The company officially unveiled the "Playamp" brand to unify its midcore gaming operations, a move designed to streamline marketing efforts and cross-promotion between titles like Raid: Shadow Legends and Warhammer 40,000: Tacticus.
In addition to rebranding, MTG continued its M&A (mergers and acquisitions) strategy:
- July 2024: MTG took full ownership of Snowprint Studios, the developer behind Warhammer 40,000: Tacticus. Previously, MTG held a majority stake, but the full acquisition allows for deeper integration of Snowprint’s live-ops expertise.
- August 2024: The group acquired WARP36, the developer of the upcoming Star Trek: Warp. This acquisition strengthens MTG’s presence in the licensed IP space, adding a globally recognized franchise to its roster.
Pipeline and Future Growth Drivers
Looking ahead, MTG is banking on a series of new releases to drive growth in 2025 and beyond. Two major titles are currently in the spotlight: Bloons Blitz from the Ninja Kiwi team and Star Trek: Warp. Both games are either currently in or entering their soft launch phases. Soft launches are critical in the mobile industry for testing monetization loops and retention metrics before a global rollout.
Furthermore, MTG teased a "major project" currently under development at Plarium, the creators of Raid: Shadow Legends. While details remain scarce, the company expects to officially announce and potentially launch this project in early 2027. This long-term pipeline suggests that MTG is focusing on high-quality, high-production-value titles that can sustain long-term player engagement, rather than rapid-fire releases.
Market Analysis and Industry Implications
MTG’s current trajectory offers a case study in the "new normal" of mobile gaming. The reliance on D2C channels is no longer a niche strategy but a core pillar of financial sustainability. However, the reaction from platform holders like Google indicates that the "30% tax" is evolving rather than disappearing. As Google and Apple implement "service fees" for transactions that occur outside their billing systems, the net benefit to developers may stabilize at a lower level than initially anticipated.
The high UA spending reported by MTG (39% of revenue) also highlights the ongoing challenges posed by privacy changes, such as Apple’s App Tracking Transparency (ATT). With less granular data available for targeting, publishers are forced to spend more to acquire the same volume of high-value players. MTG’s ability to maintain a 23% EBITDA margin despite these costs suggests a high level of operational efficiency and the benefit of owning long-lived, "evergreen" franchises.
Full-Year Guidance and Outlook
MTG remains optimistic about its year-end performance, maintaining its previous guidance while narrowing the expected ranges. The company expects pro forma revenue growth for the full year to fall between 5% and 8%. Current trends suggest the final figure will land toward the lower end of that range.
Regarding profitability, the group expects an adjusted EBITDA margin of 22% to 24%. Management indicated that they are currently tracking toward the upper end of this margin range, bolstered by the shift toward D2C revenue and disciplined cost management, even as they navigate the new fee structures introduced by Google.
As the mobile gaming industry continues to consolidate and mature, MTG’s strategy of balancing aggressive user acquisition with a diversified payment infrastructure will be closely watched by competitors and investors alike. The success of its upcoming titles and the resolution of platform fee disputes will ultimately determine if the group can break out of its currently flat revenue growth and return to the double-digit expansion seen in previous years.
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