DVD EXTRA, the technology that should see this company through to profits and a very bright future.
DVD-Extra

During the year the Group accelerated its development of a revolutionary
authoring software for producing interactive DVD-Video discs that will play on
any standard consumer DVD player. We applied for and received a SMART grant
award of 188,000 from the Department of Trade and Industry to assist with the
research and development. DVD-Extra unlocks the hidden interactive capabilities
that exist in every player, and allows developers to produce titles that exhibit
many of the properties of multimedia CD-ROM on a standard, unmodified, DVD
player.

ZOO's principal offering is a product for authoring interactive DVD-Video discs
called DVD-Extra Studio. This tool operates in a similar way to multimedia
authoring products that are designed for creating CD-ROM applications for PC and
Macintosh, but produces DVD-Video disc images as its output. It performs a
similar function to so-called DVD authoring products that are designed
specifically for creating DVD-Video discs, but due to the patent-pending
authoring method it employs, it offers substantial cost savings for companies
that are involved in the production of DVDs and also enables more sophisticated
functionality to be developed.

ZOO will license DVD-Extra Studio to multimedia developers and Compression and
Authoring facilities. Charges will be levied on a pay-per-use basis, such that
customers will pay a fee to ZOO for each project that uses DVD-Extra Studio.

The Group has applied for patents to protect the core DVD-Extra technology and
is continuing to further develop and protect its intellectual property
worldwide.

Outlook

Following the successful fundraising of 1.5m gross through the share placing
which was completed on 2nd June 2003 the Group looks forward to positive
progression. The portfolio of products is expanding, with a focus on the
development of our own intellectual properties. The board believes that the
combination of publishing low risk licensed product and in-house own brands
together with the huge potential of DVD-Extra Studio places the Group in an
excellent position for a move to profitability and significant future growth.

The Group plans to exploit the DVD-Extra technology internationally and has
established an Early Adopter Programme consisting of around twenty companies
including Technicolor, Warner and Comchoice, leading to the first commercial
release of the product within twelve months. We believe that the uniqueness of
DVD-Extra and the filing of international patents will allow ZOO to build and
maintain significant differentiation over other authoring tool providers.

John Barnes, Chairman

Ian Stewart, Chief Executive Officer.G

He's jealous cos tenby deckchair has stolen the limelight.

Just be entered as one of Shares magazines Blue Sky shares for 2003.

Some big buying today.

gf.

Up nearly 40% today and profit takers coming in. No problems though as I have just added yet again. GF

ps, hard look Dil.

Just read the thread, done a bit of other checking - looks worth having a few long term, so coming in today. Interesting!

Yep - bought in - very happy bunny here already! Sitting tight for pre-Xmas game sales now

Another fantastic deal for Zoo and I hear from my city contacts there is more to come.
LONDON (AFX) - Zoo Digital Group PLC said it has signed a second exclusive
European licensing deal with Universal Pictures UK.
The licensing agreement is to create an interactive football DVD game using
Zoo's DVD-Extra authoring system. Under the terms of the deal, Zoo said it will
earn cash advances and "substantial" ongoing royalties.
The seven-year deal with Universal will deliver Interactive Championship
Challenge, an interactive game celebrating decades of international football
that includes four quizzes and a statistics section, Zoo said. It also
incorporates official Premiership footage licensed from TWI and other football
images for which rights have been acquired from Action Images.
Interactive Championship Challenge will be released in the UK in November
2003.
newsdesk@afxnews.com
slm/



GF

I have found another early adopter:

http://www.element-interactive.com

I wrote this email to them:

Dear Sir / Madam,

Hello there. Congratulations on the new website and your incorporation to a Ltd company. My name is xx, I am a significant shareholder of Zoo Digital plc. As you know, Zoo had over 70 Early adopters and only now are they beginning to slowly emerge from the veil of secrecy. I am concerned that no major licensing contracts have been signed (eg: By Disney, Time Warner, BBC World) but it is encouraging to see design consultancy firms adopting DVD-Extra, such as yourselves.

I hope you could spare a few moments to help me gain a better understanding of the potential of DVD-Extra and how it is helping your business. Could you please comment on the following q's?
Thanks in advance.

1.Is your showcase product Ellies World going to be sold through any major distribution channels? What kind of sales are you expecting to see?

2.Did you design Ellies World based on Zowie Intertainments Ellies Enchanted Garden game?

3.What partners are you working with?

4.What are your thoughts on DVD-Extra becoming more widely used in industry? Do you see any of the major plcs partnering with Zoo to promote DVD-Extra?

5.Are all of your design services based on using DVD-Extra?

6.Do you have any further exciting projects planned?

Your views are much appreciated. Keep up the good work and I can't wait to get my hands on a copy of Ellies world for my little niece.

Yours sincerely,

xx



Reply:

Dear xx,

Thanks for your interest in Element Interactive. In answer to your questions:

1. At the moment we have no plans to develop Ellie's World as a
commercial title. Ellie's World was developed as a proof of concept
to demonstrate the potential of DVD Extra to prospective clients. As
a new company using a new technology we felt it was important that we
had a tangible product of our own to use as marketing tool.

2. Until I read your email I was unaware of the "Ellie's Enchanted
Garden" game. Our game is set within a garden, and the character is
named after the company - "Ellie" is a distillation of the Element
Interactive.

3. We are obviously working very closely with ZOOtech. They were very
impressed with Ellie's World which they used as a demonstration piece
at the NAB conference in Las Vegas. We are in the early stages of
development with a number of DVD Extra projects and will announce
details via the website or press as and when appropriate.

4. I am sure that DVD Extra will become a widespread technology. I
understand that there are a number of retail titles planned for
Christmas 2004 which will raise the profile of DVD Extra. Perhaps
more importantly this will help to shift the perception of DVD as a
passive playback medium to that of an interactive entertainment
platform. This will raise the expectation of the DVD platform and
create a demand for DVD Extra authored content.

5. We see interactive DVD as a massive growth market. Our competitive
advantage as Early Adopters of DVD Extra allows us to operate more
freely at a level that would be less accessible if we were simply web
or CD ROM developers. We are happy to provide these other services
for clients if required, but we are concentrating on our expertise in
DVD Extra as a USP to develop new business.

6. Yes.

The "veil of secrecy" is due to the fact that Early Adopters were
required to enter into mutual non-disclosure agreements with ZOO -
obviously to protect the commercial interests of all parties.

ZOO have yet to confirm details of their pricing policy, hence no
major licencing contracts. DVD Extra Studio is still officially in
Beta, although the current version (1.4) is far more polished and
fully featured than the previous version (1.3) which we used to
develop Ellie's World. I do know that ZOO are working very hard on
the supporting material for the final release (plug-in modules etc),
so this is probably their priority at the moment.

I hope this answers your questions. If you like I will include you on
our mailing list for occasional announcements regarding developments
at Element Interactive. I would also be interested to know how you
heard about us?

Regards,

Duncan McMillan
--
Element Interactive Ltd
14a Hull Road Hessle East Yorkshire HU13 0AH UK
t +44 1482 627332 f +44 1482 629757 http://www.element-interactive.com

This email is very important as we have learnt that major contracts are pending on ZooTech confirming a pricing structure, and two, the final release version is being finalized and is far more polished than the beta version.

Quba and Element-Interactive both predict that DVD-Extra will become very widely used and probably become an industry standard. Yes, they are small companies, but it is very encouraging as you must remember, these small specialised design companies are the worker ants for Zootech, they are essentially extensions of Zootech. THEY will be the companies helping larger companies produce interactive DVDs as Zootech only have limited staff. We have only seen two of these unannounced early adopters, remember there are 70 of them! (This is not even taking into account that a lot of Japanese companies are interested in DVD-Extra Japan is a HUGE market and I can think of many many applications they would use it for including anime and porn games!) If design companies see a big future in DVD-extra then I am happy as these are the people whos opinion really counts. For example, Element-Interactive base all their services around DVD-Extra, they would have to have a significant amount of business lined up to even risk their business on one product, so it must be very special.

From all the evidence, the market for DVD-Extra is enormous and DVDs are a BIG and GROWING industry. ZooTech are in with the right product at the right time. There will soon be many more companies revealing themselves as early adopters and once Zootech sort out the pricing, we will see a raft of larger companies licensing DVD-Extra.

Combined with the ambitious publishing arm going from strength to strength, new versions of WWTBAM and Pop Idol coming out for Xmas, I am VERY confident of Zoos future and see this stock as a much safer and solid bet than before.

Zoo is no longer an all or nothing stock. I expect to see strong steady gains from now on.

(Visit my main Zoo thread on ADVFN boards for further discussion)

Just a question of time before we see the massive potential of this stock...the technology developed is truly groundbreaking...watch that share price reach for the sky...

U MUST BE JOKING!!!! ZOO DIGITAL IS ON THE DOWNWARD TREND SINCE OCTOBER, 2003 FROM 17P TO 10P NOW. IT DOESN'T LOOK BRIGHT AT ALL.

hylyeo - You are wrong, Zoo is actually in an uptrend. The spikes to above 17p were caused by hype and not company fundamentals, it therefore should effectively be ignored. SharesMag shares the same opinion that Zoo is in an uptrend.

And just to clarify that matter, like Aerotus said the price of zoo went ballistic after shares magazine recommended it as a play of the week back in Oct 03'. So naturally in any stock when the number of buys exceeds the number of sells the share price will always go up regardless of how well the company is doing.

For those of you who have any doubts about this classic stock should read the shares magazine which was issued just a few weeks ago...

looking at the chart, on a 1 year basis, it looks like a downtrend to me.

Downward trend!!! By how much? Exactly not by much because the price has been hovering around 9.75p to 11p.

I see once breakeven being reached and with the various other projects zoo has been launching in the past few weeks the share price should be skyward!

Sit back and enjoy!

a buy order for 500,000 shares went through at 10.00, I personally think this is the sort of company the market loves. Great innovation and with narrowing losses this is a star of the future.

What is its real potential?
Family of five arrive home. They all sit down to tea/dinner early evening.
After dinner, on goes the television /DVD
Kids want to play their Zoo digital games. Dad wants to watch the news, Mum wants to watch a gardening programne after the news. Kids are told to go upstairs and play with their games on their Games machine. When would the DVD games be played?

Dave,

Good point!



Stu,

You may well be right, but sadly the chart, at the moment anyway, seems to suggest the opposite!

Hypothetical nonsense!

davehmiller,

thats a fair point, but I'd add that most households now have 2 or more televisions and kids will not be interested in interactive dvd versus real games - there is no competition. However, interactive dvds are the future for film (IMO). The games side of things is likely to be aimed at adults as the primary market, so i think there is a real chance ZOO can capture substantial contracts. Time will tell.

skids
Marques-Bros Racing

just been reading this thread today, just a thought along the lines of what you were saying, I am a long term holder of zoo shares, and as the mother of a toddler I can see huge potential for their technology if used for kids stuff. most parents are only too happy to buy something if its going to be educational for the kids and especially if it gives us a bit of peace and quiet.just look at the success of anything t/tubbies or b.the builder. - and in the debate about ps2 versus dvd player, i know alot of families who like us have a ps2 (usually for dad, in a seperate room)and a dvd player in the main sitting room, usually for the kids to use, mainly through the day when the parent can get on with the housework.my little boy can't master the controls of the ps2 yet, but he can use the tv remote with numbers on it. Anyway hope you don't object to my comments, best wishes to all zooers,

regards jules.