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Below are three key takeaways from Catena Media’s Q4 2023 results, shedding light on the affiliate’s approach to reversing its fortunes.

Catena Media’s Q4 2023 results were undeniably disappointing, if somewhat expected given the challenges the company has encountered publicly over the past year.

In 2023, the company undertook a comprehensive strategic review, resulting in the divestment of several key assets, including the €45m sale of its flagship AskGamblers brand to affiliate rival GiG.

On the company’s Q4 earnings call today (13 February), CEO Michael Daly acknowledged the “weak” quarterly performance but expressed optimism that the company had reached a turning point.

Rev share transition

Catena has underscored the importance of transitioning operators from cost-per-acquisition (CPA) fees to revenue share models as a crucial step toward achieving sustainable growth.

This strategic shift is not unique to Catena – affiliate rival Better Collective has pursued a similar approach.

In Q3 2023, Better Collective reported that 64% of new depositing customers (NDCs) in the US were referred under rev share agreements.

In the case of Catena Media, rev share accounted for just 16% of NDCs in Q4.

Daly emphasised that the company’s transition to a rev share model is a “multi-quarter, multi-year process”.

He also noted that it is unlikely to reach a point where 100% of the market operates on rev share agreements.

Catena Media wants to pursue a gradual approach, aiming to incrementally increase the percentage of rev share deals over time, in order to avoid affecting near-term revenues.

Negotiations with operators also play a crucial role in this process, as some are more receptive to rev share agreements than others, according to Daly.

Furthermore, the feasibility of rev share agreements is contingent upon regulatory frameworks in various US states.

Daly cited examples such as North Carolina, Massachusetts and New York, where regulations influence the viability of the business model.

B2B AI opportunities

Catena Media has been focused on investing in technology and AI to drive its business forward.

A key milestone in this area is the introduction of a new technical platform slated for launch in Q1, with full implementation expected by Q2.

The group said this platform marks a significant shift as it consolidates its affiliate activities onto a unified tech infrastructure, improving the integration process for new verticals.

In Q4 2023, Catena Media also established a joint venture with a specialist AI partner to develop a generative AI application exclusively dedicated to content production for online betting and casino affiliation.

“This project is progressing at high speed. In less than three months it has delivered a minimum viable product (MVP) that we have already introduced to the business,” Daly said.

During the conference call, he said the joint venture, centred on content and SEO, marks a first for the affiliate industry.

Daly suggested that while competitors may attempt to replicate it, the technical complexity and learning curve associated with AI development may pose significant challenges to emulation.

“We also see it potentially as an opportunity to offer it to partners we work with as a tool because we did not find anything like that in the marketplace,” said Daly.

In November, Better Collective created a new senior role to spearhead AI editorial content.

Growth markets

In line with its strategic review, Catena Media made the decision to focus its efforts on the North American market.

By Q4 2023, North America accounted for 85% of the company’s total revenue, while the Rest of the World segment contributed the remainder.

Catena stressed that it has expanded into new verticals including paid media, which is expected to reduce the group’s dependence on state launches, especially in sports betting.

However, Daly also highlighted the company’s commitment to investing in the Latam region, with a particular focus on Brazil.

Catena Media currently maintains a small team and operates multiple sites in this market.

“We continue to grow at small volumes as we build traffic and authority there,” Daly said.

While Brazil shows promise with its recent approval of sports betting and iGaming, Daly cautioned that the market is still in its infancy, and may take time to reach significant profitability due to its expected low per capita player value.

Meanwhile, Catena said it had “struggled in Japan of late” and in Q4 streamlined the organisation and adapted the business to align with regulatory developments.

“We still see strong underlying player interest in the market and are confident we now have the fundamentals in place to expand the Japanese business from its low post-Covid starting point.”

Daly said the group is now focused on implementing a comprehensive strategy to achieve long-term sustainable growth in Japan.

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