Sam Harrelson

Digital River Shares Slip: Affiliate Future for Games?



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Barron’s is reporting that Digital River, the parent company of affiliate network oneNetworkDirect, is seeing its stock price slide today in light of lower revenue from key client Symantec resulting in a lower valuation:

Zorovic says that he now expects the software-downloading service company’s revenue from key customer Symantec (SYMC) to be down 5% year-over-year in the current quarter, rather than flat as previously expected. “As Symantec continues to focus on its costs in 2008, we anticipate it continues on setting a high performance/price hurdle for Digital River, as it did with subscriptions in 2007,” he writes. Zorovic adds that he expects ongoing investment in R&D and sales and marketing as the company develops its games offerings. He now sees operating margins next year flat versus 2007, rather than the 240 basis point he had been projecting.

I’m eager to see how the gaming offerings mentioned play into oneNetworkDirect. That is a segment of consumer culture that affiliate marketing hasn’t particularly done well (or much) with in the past. Since gaming (both console and online) continue to explode in users and revenues every quarter, it’s time that a network figured out how to leverage the affiliate channel to promote games.



Posted: 12.17.2007

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