Bidstack Group plc (AIM: BIDS), a leading provider of in-game advertising technology for the video games ecosystem, provides a trading update for the year ended 31 December 2019.
Subject to audit, financials for the year ended 31 December 2019 are expected to include revenues in the region of £150,000, arising mainly from programmatic advertising spend, and an expected operating loss of £5.30 million incurred in laying the foundations for the Company’s growth. Net assets are expected to be in the region of £3.57 million including available cash as at 31 December 2019 of £3.14 million.
Bidstack and its partners are trailblazing the creation of in-game advertising as a new advertising category which comes with many technical, regulatory and commercial hurdles. Notwithstanding the Company having failed to meet its revenue targets for 2019, the Board is pleased with Bidstack’s progress towards its goal of becoming the world’s leading advertising network in video games, evidenced most recently by the signing of a major advertising trading agreement announced on 19 December 2019 under which the Company has already commenced engagement with major advertisers with significant budgets.
The Company is also progressing discussions with other global advertising agencies. However, giving the world’s leading advertising agencies the comfort to buy and report on this new inventory takes time and the Board believes further building blocks are still required before those revenues can be fully exploited. While this may be frustrating for investors, the Board and Bidstack’s commercial partners can see evidence of positive benefit ahead for the Company.
The Board believes that the addressable market for video game advertising will go through a period of substantial change over the next three to five years which Bidstack is well placed to take advantage of. The Directors believe that new console launches, the growth of cloud-gaming and e-sports, coupled with legislative restrictions affecting targeting via app and web-based advertising, should all work in Bidstack’s favour.
2020 will see a new generation of hardware launched into the gaming market not least because both Microsoft and Sony have announced plans to launch new consoles this year. The next generation of Xbox, codenamed “Project Scarlett,” is scheduled to arrive this year, as is the Sony PlayStation 5.
The Company continues to work with some of the largest game publishers in the world to make more inventory available to advertisers and some of these games are currently at integration or beta testing phase. However, in order to maximise advertisers’ access to targeted demographics the Company’s focus is on games with higher user statistics rather than on sheer numbers of games. The Board will update the market on significant new games when it is able to do so.
Bidstack is also continuing its work with the Internet Advertising Bureau (“IAB”), the trade group which sets technical standards and best practices for the digital advertising industry, to create a recognised advertising category for native in-game advertising. When this work is completed, programmatic advertisers will be able to use “in-game advertising” on a self-serve basis in the same way they currently access display and video inventory.
With the connections Bidstack has made through its Advisory Committee and Board members, the Directors believe the Company is well positioned strategically to capitalise on the commercial and technical opportunities ahead. Bidstack will continue to add high calibre individuals to the Advisory Committee to assist the Company and the team on its stated goals.
As a result of the experience gained in 2019, the Board believes that Bidstack’s medium and longer term interests require the Company to continue with its strategy of prioritising technical investment over seeking short term revenues in order to take full advantage of the potentially significant shifts in technology and media planning capabilities which are underway.
The Board expects that revenues in H1 2020 will continue to be minor and that material revenues for 2020 will occur only in the second half. Bidstack’s focus remains on securing significant commercial and technological deals that will position the Company well for growth in the medium to long-term.