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

Nice positive move so far today.

http://www.gamesindustry.biz/press_release.php?aid=7186

Buy Zoo Digital Group at 12p*
Writes Mick Baxter, Video games specialist
As I mentioned with my BIT tip last month, computer videogames is one of the fastest growing and most lucrative sectors in retail. The same can be said for DVD's. In fact the No.1 DVD last year, Shrek 2, far outsold the No. 1 video game, GTA: San Andreas. Hollywood studios count on DVD sales and rental revenues to offset ballooning movie budgets and those sales in 2004 were a record $15 billion. ZOO Digital Group is a play in both sectors.

ZOO recently put out a trading statement which was initially seen as a disappointment by the market. However the in-depth statement gave an insight as to how far ZOO has grown, and is well positioned to continue to grow within the computer videogame and DVD sectors. There are deals already in place that will add significantly to next year's revenue and indications of many others, close to signing, that I believe will totally change investors' perception of the company.

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital although the potential returns are theoretically unlimited. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares.

Knowledgeable investors within the gaming sector have had two main problems with ZOO. One is that it's publishing arm is aimed at lower margin products and the other that interactive DVD games cannot compete with AAA PC and console titles in terms of gaming experience.

As for the first issue, not only has the quality of its catalogue improved, mostly recently shown by Psi-Ops scoring 80% in PC Gamer, but their distribution is expanding across the globe. ZOO Digital Publishing is set to approximately double turnover to 11 million pounds by year end. It is not burdened with development risk as the majority of products are purchased fully complete on a royalty basis from third party developers. With the expected decrease in console prices leading into next generation consoles, ZOO look well positioned to continue their impressive growth.

Secondly, the complaint that interactive DVD games can't compete with PC and console titles is irrelevant. The truth is they can't, but they are not intended to. 'Who Wants To Be A Millionaire?' is in effect a modern parlour game, just like 'Trivial Pursuit' was in its day. Even so, in the lead up to Xmas, an interactive DVD game developed by ZOOtech reached the heady heights of No.23 in the UK 'All Format Game Charts'.

ZOOtech is not just about DVD games, it is a premier provider of tools for the production of interactive DVD-Videos. The tools which are being patented world wide are transforming the use of DVDs the world over. ZOOtech focuses on R&D and licensing of DVD-EXTRA, the Group's highly original development software, capable of creating complex interactive content for standard DVD players. The strategy for ZOOtech is simple: to create the industry standard tool for the production of interactive DVD content and drive revenues through licensing worldwide via a combination of up front fees and royalties.

To get an idea of how its many uses are growing, a read of the recent trading statement is a must, even though I believe it to be deliberately understated. For instance, the statement gave Snap TV this brief mention: "In entertainment we are working closely with several companies on products and roadmaps for iDVD games. These include 'Snap TV' with two major trivia games and the French game company Microids has signed a license agreement to produce a major adventure game, expected to be launched by the end of 2005."

A few days later, ZOOtech in the US issued a press release about the launch across America of these two games. They are an NCAA licensed American Football game and a Basketball Trivia game. This is in fact the same licence that Electronics Arts have on other formats that in the US sell over two million games every year. The comments from Snap TV also endorse the product and give an insight as to why 'DVD Extra' could become the tool of choice: "DVD-EXTRA offered us incredible flexibility. We changed designs on the fly and automatically updated projects to reflect those changes. We can create more products in less time, which allows us to better test and improve our games" and "DVD-EXTRA STUDIO also gives Snap TV the opportunity to create new DVD games with exciting new features that we previously thought were not possible.".

With such a ringing endorsement, it is perhaps no surprise to hear whispers of Disney, Fox and Hasbro filling in the missing names from the trading statement. There is always a risk with such stories, but as major names are signed and titles announced, ZOO's market cap can be expected to grow, potentially to many multiples of its current size.

*I hold shares in Zoo Digital.

Share Price: 11.5 - 12.5p

Stockmarket: AIM

Symbol: ZOO

Mkt Cap: 34 million

Mick Baxter is a private investor, well known for having specialist knowledge in the video games sector. He contributes the occasional tip for UK-Analyst. Mick Baxter is not himself FSA authorised, however this article has been approved for publication by t1ps.com limited.

strong buying going through today

Excellent for that iriedread. You beat me to it.

Gone back in and joined you guys in ZOO this morning. Ive known Mick Baxter the author of the ZOO tip from Analyst.com since around 2000 when we both posted on t1ps.com B/B. Mick in those days wasnt a big fan of ZOO like many other experts in the gaming industry, so to find a message for me on the Mootley Fool board refering he add gone into these a week or so back was a shock to my system.

To see his tip going nation wide yesterday convinced me now is the right time to get back in, and boy does Mick know his stuff in this industry.
Like he says the company have suffered from deferred contracts resulting in a profit warning on the last trading statement, but as he says there is also a lot of big positives in that statement. He seems very enthusiastic for the company, remember its often the case 'its not what you know but who you know that counts'.

cheers GF.

All buys so far shouldnt be long before we get a tick up.

cheers GF

Interesting chart with RSI looking the business.



cheers GF

All buys bar two so far this morning.

cheers GF,

little movement though? i'd have though we'd ticked up by now!?

Same here although they must have known abought the big sell? I think coming in, never mind things are looking positive on high volume.

cheers GF.

Hopefully if the momentum continues we may see 18p by mid April.

skids

Skids just had it confirmed on another board, one of the MMs Winns as now just upped, after it looks like the overhang from that large sell as been cleared.

cheers GF.

Wasn

A poor start to the day but empires arent built overnight.

cheerrs GF.

I suspect some will drop out at 12.65p today.

No action on the price front strange goings on here, thought it would have flew after the tip.

cheers GF.

goldfinger

gossip in another forum
good news in the pipeline in about 3 weeks onwards

A144 go on give me an hint????????

Cheers GF.

also if you read zoos trading statement carefully
from the end of march and onwards,we should be hearing
lots of encourageing news

- 10 Mar'05 -


zoo-tech are also working frantically
on dvd-extra to get whats right for its
customers, some big names in there too
all this is not going to happen over night
but its going to happen