Catena Media has abandoned its blossoming AI project, which was touted as a game changer for the firm less than a year ago.
“We ended the AI content generating platform joint venture and recovered EUR 0.7 million of the initial investment. We continue to see AI as an essential business enabler, such as scaling up content creation and quality,” Catena Media CEO Manuel Stan said during the company’s Q4 results call on Thursday.
Last year’s AI project was touted to be the ‘cornerstone’ of revolution
The response contrasts sharply with what former CEO Michael Daly said about the initiative during the company’s Q4 call the year before.
“The foundation of our transition is a new technology platform that will be available in Q1. When completely implemented in Q2, this will be the first time Catena Media focuses affiliate efforts on a single, cohesive IT infrastructure,” Daly stated last year.
“Creating this new backbone is a step change that will make us technically far more robust across all products and make it easier to deploy new verticals.”
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Catena maintains its downward trend in NA
Needless to say, the product will not be released, and the declining trend for affiliate firms continued in Q4 2024. North American sales fell 28% YoY, from $12.7 million in 2023 to $9.2 million in 2024.
The North American segment generated 87% of the company’s total sales. New depositing clients fell 19% year on year, which Stan attributed in part to the dearth of new state launches.
Sports betting revenue declines accounted for the majority of the losses, although Stan observed that the casino section did not rise either.
“Sports remains problematic, with sustained underperformance in Q4 reducing our quarterly margin. North American casino revenue fell 12% year over year. However, we maintained a strong margin in this market.
Catena’s Google ranking is lower than ever
A regular stream of Google algorithm adjustments did not help Catena Media either.
“Google released surprise back-to-back upgrades in November and December. This resulted in higher-than-normal volatility throughout the quarter. At the conclusion of the month, our average score was 5.35, the highest, or worse, score since we began tracking and publishing the indicator,” Stan stated.
Catena faced more challenges than just a shortage of new states. Operators around the United States have reduced affiliate spending and pushed to renegotiate cost per acquisition (CPA). Stan acknowledged the growing pressure from operators, but stated that the business is attempting to provide value to its partners by offering more than simply first-time depositors.
“What we’re trying to do on our side is to package good deals for operators, so not necessarily just from the traditional way of looking at things but trying to include CRM, trying to include other benefits for the operators, including communication to players, videos and other channels,” he told me. “So overall, I think we’ve managed to secure good long-term deals with some of our key partners.”
Sweeps will pay dividends with online casinos down the line
Sweepstakes casinos helped to arrest the downturn in the casino vertical, but Stan also noted that there is long-term benefit in dealing with sweepstakes sites that will pay rewards whenever more states authorize online casinos in the future.
“Only 16% of the U.S. population lives in states where casino regulation is currently in place, so there is enormous potential for future growth. Sweeps serves as a doorway for us to place ourselves in the best possible position when that happens.”
Meanwhile, Stan understood that the atmosphere in the United States remains challenging, and competitors are battling for the same territory, refining efforts in current states, causing everyone to step up their game.
“Competitors are targeting the same markets as we are. The absence of fresh releases implies less distraction, if you will. So everyone is trying to focus on their current footprint.”
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