Good afternoon, everyone, and thank you for participating in today’s conference call to discuss Super League Gaming’s Financial Results for the Fourth Quarter and Full Year Ended December 31, 2019. Joining us today are Super League’s President and CEO, Ann Hand; and CFO, Clayton Haynes. Following their remarks, we’ll open the call for your questions.

Before we go further, please take note of the company’s Safe Harbor statement within the meaning of the 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 include forward-looking statements.

These statements, along with other information presented does not reflect historical fact, are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements.

Please refer to the company’s recent earnings release and to the company’s reports filed within the Securities and Exchange Commission for more information about the risk and uncertainties that could cause actual results to differ.

I would like to remind everyone that this call will be available for replay through March 19, 2020, starting at 8:00 p.m. Eastern Time tonight. A webcast replay will also be available via the link provided in today’s press release as well as on the company’s website at www.superleague.com.

Now, I would like to turn the call over to the President and CEO of Super League Gaming, Ann Hand.

Ann?.

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, layout a strategic roadmap for 2020 and then handed over to Clayton to review our financials.

The overall headline for 2019 is that we significantly outperformed the KPI goals we laid out in January, 2019. Setting ourselves up for a strong 2020 focused on accelerated revenue growth. We are ahead of our plan and ready to share more data to keep you more informed about how this will play out.

2019 was a transformational year for Super League in so many ways, and not just because we went public in February. It was transformational, because we’ve put into place the building blocks for our two primary revenue sources; direct to consumer revenues or gamer monetization and sponsorship in advertising revenue, the monetization of our content.

But 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 gaming has proven itself to be fairly recession-proof, in times of belt tightening, it is the smaller affordable luxuries that endure. We have all seen the impact on travel and large of them over the last few weeks, but with Super League you don’t need to get on a plane or gather into a big stadium.

We are all about bridging local gamers and gameplay, staying close to home and with people you know. To that end, we have seen various engagement metrics increase over the last few weeks, including a 25% increase in the activity on our online gaming portal Minehut.

Obviously everyone is impacted, but we take comfort that the nature of our business and business model has a built-in natural resistance. So back to 2019 and what was truly great performance against our KPIs that exceeded all of our expectations.

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 beak into the widest set of players. As well, we set a target to grow our retail partner footprint from 34 venues at the end of 2018 to 200 venues by year end, and by October, we were already in over 500 locations and most importantly globally.

This put us squarely as the leader in aggregating local esports fields for everyday competitive gamers. In addition, we wanted to double our registered player base to 600,000 by year end, and ended up tripling to nearly one million users. More gamers from whom we can gather content and upsell into paid offers.

Also we went from virtually no digital audience to over 120 million views by year end. Our target was a mere two million. Not only does this mean exponential growth and our monetizable ad inventory, but also on the backs of others. 75% of these views were driven off user generated content maybe we didn’t have to invest in high production costs.

And lastly, we facilitated over 15 million hours of gameplay to our platform, up from less than one million the year prior. We are just beginning to explore the ways we can repackage and distribute this significant derivative content library for further monetization.

And there are other strategic highlights that amplified our reach, growth and capability.

On venues, we forged a national partnership with Topgolf, a global partnership with ggCircuit to leverage their 700 plus gaming center fleet and we continue to work with a wide range of high quality retailers from Dave & Buster’s to our recently announced partnership with Wanda theaters and their dominant China footprint.

And with venue growth, there’s also player growth. Customer acquisition of existing captive audiences is a core part of our strategy.

And our digital audience has been – has grown through the organic growth of proprietary content channels like Minehut and Super League TV along with the acquisition of Framerate, our social channel network where everyday gamer 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, OnePlus and Logitech for which we’ve had long relationships with. And we run tournaments across a wide zoner of games from traditional sports titles like Madden through to Battle Royale titles like Fortnite.

We released the alpha version of Super League Prime in December, our first consumer subscription offering, and leading up to that launch delivered some substantial technology functionality including a player reward system and dynamic live leaderboards along with a full integration to ggCircuit’s operating system for gaming centers, establishing a true B2B2C solution for greater retail applications.

And we also build our capability in 2019, Samir Ahmed joined as our CTO mid-year after running consumer technology for IMDb, an Amazon company. We recruited a deeply experienced sales team in late 4Q to monetize our ever-growing advertising inventory. And John Boyden 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 Proactiv. So aside from the metrics and milestones, what are some of the headlines you should extract from 2019? Well, we further de-risk the business.

We have titled fluidity and venue diversity, and stronger, more scalable technology. We established a premium advertising model. We can now monetize with a team in place to deliver. We launched our first effort at meaningful customer monetization with our Prime subscription launch. We went from being a U.S.

company to one that is truly global, both digitally and physically. We offer a variety of ways gamers can engage digitally across our Super League content network and our network of hometown venues serving as the playing fields for recreational esports.

And even today you might have seen our 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 leagues, 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 title, done; lock in a distributed network of venues globally, done; roll out our technology, our tournament programming and our gaming clubs underway.

Now combine that with the power of Super League’s consumer brand, and our critical math of players and viewers and we’re really on our road to monetization. So, before we jump into 2020, I will refresh on our business models.

The fundamental drivers of our monetization are creating deep community engagement through our highly contextualized local experiences that when coupled with the critical math of our large digital audiences provides the depth and volume for premium content and offer monetization differentiated from the more traditional commoditized advertising model.

The powerful combination of our physical venue network and digital programming channels with Super League platform as the hub creates the opportunity for not just the share of the player’s wallet, but also the advertisers’ wallet.

We do this by offering brand sponsors and advertisers at premium marketing channel to reach elusive Generation Z and Millennial gamers, and offering players ways to access exclusive tournaments, rewards and programming through our Super League consumer offers. So on to 2020 and what you can expect.

The headline, it’s about top-line revenues 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 KPIs that we see as the health indicators of our financial goals. For 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 identify as competitive. And the gamers are – games themselves are now being designed for esports with more competitive feature sets. So the interest and adoption beyond the professional level for esports is inevitable.

If we conservatively assume that only 10% of those 2.6 billion gamers want a recreational esports experience that they want to some way or another joint a 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 esports that is worth $15 billion.

This is what our opportunity is. So now on to 2020, for revenue, we will continue to prove out our main revenue source today, which is monetizing our audience through our sponsorship and ad inventory, which has experienced exponential upside over the last six months.

As we mentioned earlier, this is not a programmatic commoditized advertising model with a sub $1 CPM. We have a premium high quality model that allows game publishers and brands 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 $4 million to $5 million in revenue, but there are a few variables you want to think about here. One, our inventory continues to grow; two, you don’t want to sell all your inventory at any price.

You want to sell the maximum amount at the optimal price; and three, the $15 CPM rate eyesight is on the lower end of our average. This will be a big driver of our 2020 revenue. And then we turn to consumer monetization and that starts with our current pilot build around a monthly consumer subscription offer Super League Prime.

We launched in December and have nearly 500 pilot users, by intention we focused on a small captive audience, PC gamers or power users that already visit one of our North America gaming centers. So it servable market in the range of 50,000 to 70,000 gamers.

Currently priced at $5 a month, players get access to accelerated rewards and benefits specific to their gameplay. We will refine and expand the offer this year to speak to a wider berth of gamers across more game titles, gaming platforms and gaming locations including and at home offer greatly expanding our servable 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 as unique ways to monetize our audience and players.

And while we continue to see our game titles and global retail venues substantially grow, there are three KPIs that are the biggest inputs to support revenue growth. First, further audience development and amplification because that translates into monetizable advertising inventory or impression that can extract premium rates.

So impressions is KPI number one. Next, because our other revenue stream is consumer monetization continued player base growth. So, we can bring more and more potential customers into our funnel for conversion and retention. So registered users is KPI 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 network that can be online or live gameplay, sharing your best highlight reel, checking out your place on the leaderboard, challenging other players to battle or just chatting in one of our social forums. Hours engagement is KPI number three. So, let’s put some numbers to this.

As we stated earlier, we generate 120 million impressions last year. So we are targeting 360 million for 2020. Through February, we are at 42 million and we like the trajectory we see here. Again, that’s a 3X growth and monetizable ad inventory.

For our player base, we have reached 1.1 million registered players through February and believe we are well on our way to reaching another material threshold of two million users by year end.

And for hours of engagement, we generated 15 million hours of gamer time in 2019 and believe we will come close to doubling that performance to 30 million hours for 2020. Through February, we have booked over four million hours of engagement. So this leads us to our 2020 growth strategy and we have six bold moves.

Number one, pushing our technology to the center of an operating system that powers esports below the professionals, the software and media backbone. Number two, providing a bridge between at home and local gaming, including the introduction of a mobile app for deeper player engagement beyond gameplay.

Number three, competing for and converting even larger brand advertising programs through our digital, physical and now global reach. Number four, establishing our power user consumer subscription offering 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-based gaming clubs to a new level of amateur esports league. And six, continuing to explore accretive on strategy acquisitions to scale and grow.

And to close an exciting recent development, I have talked about our 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 channels.

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 covered this week that Snapchat has ordered up a full 15 episode season of our user-generated content series called Taking Shape. Through the first four episodes released so far, we have added 124,000 subscribers to the channel and have generated 9.5 million monetizable impressions.

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 from Snapchat on this, but it 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 results after, which I will come back on with some closing remarks and then take questions. So over to Clayton..

Thank you, Ann. Good afternoon everyone and thank you for joining us today.

Overall from a financial statement standpoint, fiscal 2019 saw a modest increase in revenues year-over-year, a decrease in cost of revenues for our digital and physical experiences and the continued emphasis on operational control that excluding the impact of the cost of being a public company allowed us to maintain an 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 to focus on monetization as we ramp revenues in future periods while maintaining overall OpEx levels relatively consistent with 2019 levels.

Taking a look then at our fourth quarter and year-end 2019 financial results, as summarized in our earnings release filed earlier today, fourth quarter 2019 revenues were $262,000 compared to $407,000 for the fourth quarter of 2018.

The decrease was primarily driven by fluctuations in the timing of brand partner activations and the recognition of related revenue from quarter-to-quarter. For the full year 2019, revenues increased approximately 4% to $1.1 million, up from $1 million 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 comprised approximately 97% of revenues for fiscal year 2019 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 a higher number of free to play events during fiscal year 2019, consistent with our strategic focus on increasing the volume of new gamers and spectators introduced into our customer funnel, to increase the number of registered users on our platform, drive 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 and free to play experiences with a focus on ramping up overall monetization. Fourth quarter 2019 cost of revenue decreased by over 50% to $134,000 compared to $285,000 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 costs for Super League physical and digital experiences held during the period.

For the full year 2019, cost of revenues was down approximately 25% from $684,000 to $513,000, despite the modest increase in revenues reflecting overall operational efficiencies resulting in lower direct costs for Super League physical and digital experiences during 2019.

Fourth quarter 2019 operating expenses were $4.8 million compared to $5 million in a comparable prior year quarter. The decrease was primarily due to lower noncash stock compensation expenses, which was down approximately $500,000 in the quarter related to the vesting of certain employee performance-based warrants in the fourth quarter of 2018.

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 2019 decreased to $951,000 as compared to $1.5 million in 2018.

For the full year 2019, total operating expenses were $21.3 million as compared to $16.5 million for the full year 2018.

The 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, and approximately 10% net increase in engineering, sales and other personnel expenses in connection with the acceleration of our growth initiatives during 2019, an increase in technology platform infrastructure costs and an increase in public company related insurance and other corporate expenses.

Noncash compensation charges for the full year of 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 2019 was $4.7 million or $0.55 per share compared to a net loss of $7.5 million or $1.62 per share in the comparable prior year quarter.

In addition to the noncash compensation charges described earlier, net loss for the fourth quarter of 2018 included noncash interest expense related to convertible debt outstanding at December 31, 2018 totaling $2.6 million.

All principal and interest related to the company’s convertible notes was automatically converted to equity upon the close of the IPO in the first quarter of 2019. On a GAAP basis, net loss for the full-year 2019 was $30.7 million or $3.89 per share as compared to $20.6 million or $4.48 per share for the full-year 2018.

In addition to the noncash compensation charges, net loss for the full-year 2019 included noncash 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 and fiscal 2019, which includes significant noncash charges.

Now let’s look at our net results on a pro forma basis, which excludes the impact of noncash charges and provide supplemental information about the results of our operations on more of a cash basis.

For the fourth quarter of 2019, pro forma net loss, excluding noncash compensation charges, totaling $951,000 was $3.7 million compared to $3.2 million in the comparable prior year quarter.

For the full year 2019, pro forma net loss excluding noncash stock and debt related interest charges totaling $16.2 million was $14.5 million compared to a $11.5 million for the full year 2018.

The fluctuations in GAAP 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 and 8-K filed with the SEC today, pro forma net income or loss is a non-GAAP measure that we believe investors can use to compare and evaluate our financial results, along with other applicable KPIs and metrics discussed by Ann earlier.

Please note that our earnings release contains a 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 GAAP.

Looking at the balance sheet, we ended 2019 with $8.4 million in cash, no debt and 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 spend rate.

From a financial position and liquidity standpoint, management and the Board of Directors continue to be focused on our cash and the capital required to execute and accelerate our monetization and growth initiative.

Management and the Board continued 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 who could bring to bear complimentary assets and strategic capability in addition to growth capital.

No definitive determinations 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 if possible and if – and in any event in as shareholder a friendly manner as possible.

With that, I will turn the call back over to Ann for some additional remarks.

Ann?.

Thanks, Clayton. It’s been just over one year since Super League’s IPO, yet our progress has exceeded our expectations.

As I’ve stated before, I truly believe the transparency and positive sense of urgency that comes from being a public company create an added layer of focus and the results are evident and our rapidly growing audience, player base, global venue network footprint and game title portfolio.

And now it’s time to prove the revenue opportunity this foundation provides. Our focus is clear. Our platform connects the deeply engaged, passionate audience of local competitive gamers to each other and to their hometown venues cannot just compete but share their content around the love of the game.

This establishes Super League as a software and media backbone for bringing amateur local esports to scale. Our point of differentiation has always been while gamers or the games are digital, our players are humans. And with that, Clayton and I will take any questions you have.

Operator?.

[Operator Instructions] Your first question comes from the line of Mike Latimore from Northland Capital Markets. Your line is now open..

This is Pavan on for Mike Latimore. I have two questions.

The first one is what was the platform-as-a-service and a brand sponsorship contribution to fourth quarter revenue?.

The contribution – I’m going to grab that for you, one second here. If you can ask your second question, I’ll get that number here in a second..

Yes.

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 is Clayton pulling up the specific numbers. First of all, on platform-as-a-service. Platform-as-a-service is one way that game publishers and brands engage with us. And it’s where they actually ask us to design something very unique for them. So right now, ELC is running a Logitech CS:GO League.

That was something where Logitech 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 context, that’s what we are talking about, it’s still gameplay and it’s still players that come into the Super League system, they register with us, they push all their gameplay content through us. But it is a game league that has been bespokely designed for sponsors needs.

And then I’ll answer your technology question, but first, Clayton, do you want to….

Yes, so for the fourth quarter of 2019, $97,000 of the $262,000 was related to a platform-as-a-service. I am sorry, fourth quarter of 2019..

Yes. Thank you..

As far as the new technology advancements for the year, I alluded a little bit to him. We have started with this very specific smaller subset of PC gamers and these great North America venues that are powered by ggCircuit, our software partner. And these are, PC gamers are much more competitive gamers.

They are spending a lot of time together and are the first most obvious group of people who really want to participate in competitive leagues and structures. And so we by intention started the launch of Prime focused on that audience. There’s really a couple of ways that we continue to grow. One is that we grow across other types of gaming platforms.

So having offers that speak to the console gamer or to the gamer who likes to competitively game using their mobile phones. So that’s expanding into more platforms. The second way is that in some ways we’ve already done this with our digital channels is going beyond gameplay.

When you look at our digital channels right now Framerate is where players celebrate in the afterglow – after the game has ended. They’re uploading their highlight reels and they’re getting attention for their great place. No different than you go in the locker room after and kind of celebrate kind of the great plays of the game.

Equally, we started to think about, well, what are the other components that happened before gameplay, 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 a way that we could start to be more central into the competitive players’ life around all things around the gameplay. And that means we’re connected to them everywhere they are, wherever their phone is, we’re right there with them..

Got it. Thank you..

Your next question is from Mark Argento from Lake Street Capital. Please go ahead..

Hey guys.

I’m just wanted to see if you had any thoughts on the coronavirus and how it might positively or negatively impact your business?.

Yes, Mark, I think you were having a little trouble getting logged in earlier and I did kind of address it right up front. One of the things that we’ve often heard and seen evidence of historically is the way that gaming is somewhat resilient to economic downturns.

And in a way, as I alluded to in my earlier words, it’s because it’s kind of one of the smaller affordable luxuries, right? When you’re not able to take big trips and do those more expensive kinds of ways to 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 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 Minehut gaming portal, which is a 24/7 gaming portal, but it also has a social kind of Facebook component to it. We’ve seen a 25% increase on average across all day parts. So that’s pretty healthy. We’re also reaching, over the weekend, we reached 6,550 concurrence.

So that means 6,550 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 we’re going to continue to set new records there..

That’s helpful.

In terms of your kind of venture, I mean Chinese venture with Wanda, I believe, anything to report there in terms of furthering that relationship in any kind of more plans that have been kind of made and any idea in terms of kind of when you could launch with – into some of their theaters?.

Yes. No. It’s a great question. When we announced that operating agreement, it’s a real agreement, right. And it’s a real commitment to bring dedicated esports spaces across their Wanda theater footprint, which is about 700 plus theaters. However, we always expected that we would spend the first half of this year doing product market fit testing.

That we would talk about, well, what is the right game title to launch? The biggest mobile game there is a game mobile Tencent called Honor of Kings. So, that could be a starting point.

And because of that, we knew that there would be a period of time where 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 do the events look like? What game titles are we going to focus on? And because of all of that and baking that into our planning, we had no intentions 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 rollout because we had that buffer time built in 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. On the capital side, any kind of preliminary thoughts, I know you had mentioned. Obviously, we’ll need some capital look at strategic versus financial and any kind of any plans, any conversations and from a strategic perspective.

And what are your thoughts on kind of when you need to go to market?.

Yeah. As you kind of highlighted in our prepared remarks, yes, we certainly, the Board is looking at a number of opportunities and strategic play would be something, some opportunities there that we’re taking a look at. Currently at this point in time, there’s nothing definitive.

And so we’re not kind of able to speak to anything defensive at this time. But we’re looking at a number of alternatives on the core to updating you all once we have something definitive to before..

As we’ve proven historically, we’ve enabled to engage with commercial partners and converted them into strategic they’ve seen the benefit of our business.

And so, just like the fact that we’re very fortunate to have investors like Logitech and Cinemark Theatres, 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..

Great. Thank you..

Your next question is from Allen Klee from National Securities. Please go ahead..

Hi. You laid out kind of what the size of the advertising revenues could potentially be.

The question I have is, how do you think about how long it could take until you’ll be at the point where you think you’ve ramped up enough to be selling the amount of advertising that you’ll be at the maximum amount you hope to reach?.

Yes, I mean that’s been the real kind of important thing. There were a few activities we did in late 4Q. We brought in an expert woman who is to run sales at IGN 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 it. Although, it validated that we do have a very premium kind of CPM as we’ve talked about. And then we also have used her help to recruit our sales team.

So we now have an exceptional Director of Sales, Albert Briggs, who literally starting January 1, started pulling together the sales narrative and going out to a whole different host of media buyers with his 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 is 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 the breadth and depth of reach we now have between the global venue network, the greater critical mass we have in digital viewers and physical players..

Maybe just following up, do you think that by the end of 2020, you would be at a point where you would be selling the amount of advertising that you hope to reach?.

I believe that in 2020s that we’ll see a large improvement in the revenue generated from advertising in 2020..

Great. And then on the subscription side, you mentioned you have 500 customers.

The question, are they all related to ggCircuit’s and will you consider in 2020 potentially expanding the subscription business model outside of the ggCircuit’s related people?.

Yes, I’d say a kind of two things to that. It was absolutely by intention that we’ve wanted first to target those PC gamers in those gaming centers. And those are we access those players through our integration with ggCircuit. So they are the B2B software that operates the system inside those gaming centers and we are now the B2C front end of 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 and were told by good subscription advisors that we needed 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 gamers that have aspects or features that are of interest to gamers engage with us even when they’re at home. And that’s the beauty of the work we’ve done with ggCircuit is you really need to think way beyond the gaming center.

This integration really starts to mean that we can have application to kind of gamers anywhere they are. There’s a lot more benefits for us going beyond just those gaming centers on today..

Okay.

And then, this is going to 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 is it physical, are you hearing anything that some of those places might be shutting down temporarily due to the coronavirus?.

Well, it’s a good question. I mean, right now a lot of our revenue is generated off of our digital. And Clayton told you that over 90% of our revenues last year came from brand and advertising sponsorships. And most of those are for our digital reach. It’s getting behind our viewing channels. It’s getting behind our online leagues.

We’re really just starting as we did historically when we charged tournament fees for physical events. Prime right now has some real stickiness to the physical venues. So it has a greater dependency or focus on the physical gameplay versus the digital. But of course, we’re going to continue to expand that.

So right now, most of our revenues are from the digital side of the house and that’s also where we have the greatest breadth. That said, we did get some interesting data a couple of days ago. It’s preliminary, but we did get some about how the North America gaming centers were doing as far as just their own customer participation.

And it was showing that actually the numbers are up in February and then the March trend line.

I think that well of course, people are going to be very focused on not spending as much time in large social situations, these local gaming centers or people who already have friends there and they’re either going to hang out at home together or they’re going to go to this cooler venue that has access to great equipment and a little bit more of a social experience.

So hardly, we might be the type of retail venue that endures, because it’s small, it’s intimate, it’s close to home, it’s with people you know, it’s your substitute frankly for all the other types of social experiences you’ll be sacrificing over the next few weeks..

Okay. Thank you very much..

Your next question is from Jeff Cohen from Stephens Inc. Please go ahead..

Hi guys. Thanks for the question. Most of mine have been taken. So, I’ll go with a broader one. You guys have laid out a number of different revenue pieces today from advertising the city leagues subscription and even the third-party content licensing with Snapchat.

Could you may be stack rank those for us and talk about what vector we should expect to start to see ramp first in 2020? Thanks..

Yes, absolutely. So, we – it’s a good point that there are different forms of sponsorship and 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 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 pay us. 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, again, it was a strategic choice we made in the early days, which was to first just get as many players into our funnel as we could for free. That’s also really follows the classic gaming all these days of freemium. You can download Fortnite for free and then they get you on the microtransactions inside the game.

And so certainly for us that was the bulk of our consumer monetization strategy last year. So, again, the simplest way to think about two buckets, brand sponsorship and advertising for which Snapchat is just a subset of that.

It’s just a different type of source of ad revenue and then this new step into consumer monetization with Prime and that’s the simplest way for you to bucket..

Got it. Thanks, Ann..

Your next question is from Kinstlinger from Alliance Global Partners. Your line is now open..

Hi, this is Jake on for Brian. 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..

Yes, I mean, it’s a tough one because it’s early days, right? I mean, when I talked about our ad inventory last year and said it’s ramping, it’s ramping its early days. Well, now we’ve got the team in place. And so we’re actually now getting into the business of actually delivering that ad revenue.

But Prime and consumer monetization is really eight weeks old and we just brought in a big leader to be the GM of it four weeks ago. I think that we are learning a lot about the ways, the type of reward system and gameplay programming that these PC gamers are excited about.

I’d say they probably the more important exciting path is the product roadmap that takes it way beyond just traditional gameplay in the center. So, it’s hard to say. Again, we’ve got that sample set I talked about of users right now. And we’re mining a lot of data to see how we segment them further to get insights.

Right now, the current pricing system is $5 a month. And for those $5 a month, you’re getting accelerated points and rewards access to a global vault of pricing, enhanced pricing for tournaments by being a member as well as access to exclusive programming, special tournaments.

And so we’re still kind of tweaking those things to make sure that we really find a silver bullet and hooking in those players for the longest kind of lifetime value..

Okay, great. Thanks.

And just one more, and you touched on the virus a bit, but do you expect to see more uploads and on Framerate and some of your other gaming channels and then more gameplay hours in Minehut due to children being at home because of the virus?.

Yes, absolutely. So, when I talked about the fact that Minehut have seen a 25% increase over the last three weeks and that we’re hitting our peak concurrence. We think, first of all Minehut is just a diamond in the rough. It is really exploding. It’s got a very active engaged user base because it has that social component as well.

We average over nine-minute session views just in the chat forum. So kids are hanging out in the chat forum almost as long as they’re playing the game itself. And we expect to see that continue to increase. And it’s interesting you mentioned Framerate because that, I just heard somebody say it today as I was walking out of the office to this call.

It’s going to be fun to watch the Framerate numbers too. 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 and having fun around it when maybe they’ve had to give up going to class..

Great. Thank you..

Hopefully, we won’t be responsible for declining the grade point average of the globe..

Thank you again..

Now the nice thing too about that is it’s just remember Minehut, Framerate, they’re beautifully global. Framerate 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 of can still have an epic tail or an epic play that can be highly entertaining on those channels.

So the beauty of that is that it really can be or any gamer anywhere..

We have a follow-up question from Allen Klee from National Securities. Sir, please go ahead..

Yes. Hi.

I didn’t know if you had this information at this point, but do you have the breakout of your revenues by brand and media sponsorship platform-as-a-service and direct to consumer and advertising?.

Sure. Sure. And we will also lay this out in detail in our 10-K, which we intend to file here in the short term. But for the fourth quarter our brand and media partnership revenues were about 41% of the total. Platform-as-a-service, were about 37% of the total. Third party content about 18% and a direct to consumer about 3%..

So those first three lines, Allen, we are – you can simplify and bucket as a part of the umbrella called sponsorship in advertising. It’s really only the fourth line direct to consumer, which is the beginnings of Prime..

And then from a year to-date 2019….

Okay..

I’m sorry. From a year to-date 2019 standpoint, a 42% brand and media, 29% platform-as-a-service, a 6% third-party content, and then a 3% for subscription..

Thank you..

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Ms. Ann for any closing remarks..

Thank you very much. Look, I’ll be brief. We’d like to thank everybody for listening to today’s call. We look forward to speaking to you again soon. 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 ask right now is that everybody stays safe and we will stay focused on the mission at hand and on our march to prove that we have scalable revenues. So thank you..

Ladies and gentlemen, this concludes today’s teleconference. You may now disconnect. Thank you for your participation..