Published: 0:16:19 Wednesday 29 June 2005
Zoo Digital is hoping it will start to see the fruits of its new interactive DVD technology and with 50 licences out there, a number of products should see the light of day this year.
Shares (ZOO) rose 0.125p to 10.5p, valuing the business at 33 million.
As we reported in February, Zoo had some delays closing deals last year, which has made it a little more realistic for this year. The companys main problem is that its revenue model for its new DVD-Extra technology, which enables interactive applications to be written for DVDs, is one of earning royalties on products developed using the technology. However, it has no control over how many products its customers will develop or when they will see the light of day.
Chief executive Ian Stewart told Citywire that the company now has 50 licensees for the technology, and internal forecasts reckon as many as 150 products could be in development at this time.
The agreements range from using DVD-Extra for quiz shows, education and reference products, marketing and corporate products and interactive DVD games to the creation of a variety of content and bonus material for the film industry, including a number of Hollywood studios, which is a key target for Zoo.
The company is very close to signing a deal with one of the major studios, whose delays in signing deals last year were the cause of Zoos February profits warning. However today the company said it has signed documentation and a financial framework agreed that should bring in around $1 million (560,000) of revenues in this financial year.
Stewart said Zoo was just waiting for a signature, but it learned the hard way last year that large companies can be very slow in putting pen to paper.
For the year to December, turnover rose by 149% to 12.7 million. The more established Zoo Digital Publishing, which publishes DVDs, games and mobile content, including its own interactive DVDs such as Who Wants to be a Millionaire, made a maiden profit before interest, tax, depreciation and amortisation of 498,000, although group loss before write-offs were 1.6 million up from 955,000 due to increased investment in the DVD-Extra software.
After the year-end, the company raised 3 million through a placing of 37.2 million shares at 8.5p
The core publishing business still looks pretty interesting, with games such as Millionaire and a new music quiz likely to sell well this Christmas.
More importantly, the technology business should start to show its worth this year. Interactive DVD is a new concept that has only really been around for about a year, and is likely to become ever more popular for many different applications, including entertainment, marketing and education. Zoos patented and patent-applied for technology stands a good chance of becoming the de facto standard for interactive DVD, which should make the next few years very interesting.
We said in February and re-iterate again today, that this is high risk with plenty of unknowns still, but for risk-takers it could still be worth a punt
http://www.citywire.co.uk/