Less than a year after trumpeting its burgeoning AI project as something that will turn the company around, Catena Media has abandoned it.
“We have discontinued the AI content generation platform joint venture and recovered EUR 0.7 million of the original investment. We continue to see AI as an important business enhancer, for example, in scaling up content output and quality,” Catena Media CEO Manuel Stan said during the company’s Q4 earnings call on Thursday.
Last year AI project was said to be ‘cornerstone’ of transformation
The comment stands in stark contrast to what former CEO Michael Daly said about the project during the company’s Q4 call the previous year.
“The cornerstone of our transformation is a new technical platform that will launch in Q1. Once fully rolled out in Q2, this will be the first time Catena Media focuses affiliation activities on a single, coherent tech infrastructure,” Daly said 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.”
Downward trend continues in NA for Catena
Needless to say, the product won’t be launching and the downward trends for the affiliate companies continued during Q4 2024. North American revenue dropped 28% YoY, dipping from $12.7 million in 2023 to $9.2 million in 2024. The North American division accounted for 87% of the company’s overall revenue. New depositing customers were down 19% YoY, which Stan contributed in part to the lack of no new states launching.
Sports betting revenue dips accounted for most of the losses, but Stan noted the casino segment did not grow either.
“Sports remains challenging with continued underperformance in Q4 negatively affecting our quarterly margin. North American Casino revenue decreased 12% year-on-year. However, we maintained a healthy margin for this segment.”
Catena’s Google position is worse than ever
A steady stream of updates to the Google algorithm did Catena Media no favors either.
“Google had unexpected back-to-back updates in November and December. This resulted in a higher-than-normal volatility during the quarter. At the end of the period, our average score was 5.35, the highest, meaning the worst, score since we started measuring and reporting the indicator,” Stan explained.
The lack of new states was not the only headwind for Catena. Operators across the U.S. have been cutting down on affiliate spend and pushing to renegotiate cost per acquisition (CPA) rates. Stan noted the increased pressure from operators but that the company is trying to offer more than just first-time depositors to add value to its partners.
“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 said. “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 casino down the road
Sweepstakes casinos helped stem the decline in the casino vertical, but Stan also pointed out there is long-term value in working with sweeps sites that will pay dividends once other states legalize online casinos down the line.
“Only 16% of the U.S. population lives in states where casino regulation is already in place, so there’s a future massive opportunity. Sweeps represents that gateway for us to put ourselves in the best possible position for when that happens.”
In the meantime though, Stan recognized that the climate in the U.S. continues to be tough and competitors are vying for the same turf, refining efforts in existing states, resulting in everyone upping their game.
“Competitors are focusing on the same markets as we are. The lack of new launches means less distraction, if you will. So everybody is trying to focus their existing footprint and trying to focus on that.”
