ZOO Digital’s new iTunes toolset adopted by major Hollywood studio

ZOO Digital (LON:ZOO) said it has taken a firm step into the growing Electronic Sell Through (EST) market after its new iTunes production toolset was adopted by a major Hollywood studio.

The movie studio will use Zoo’s new toolkit to publish ‘iTunes Extra’ content for a range of catalogue titles, which can be downloaded and stored permanently on a computer hard drive or portable device.

“Our iTunes production tools provide the only cost effective way of bringing additional features to this exciting sales platform,” Zoo chief executive Stuart Green commented.

"This is an important development for ZOO”, Green said.

“[The deal] takes us firmly into the growing Electronic Sell Through market and provides us with new revenue streams.”  

iTunes is the first EST platform to be supported by ZOO's new suite of authoring tools.

EST refers to the sale of media content over the internet. Essentially, EST purchases allow consumers to download and keep a copy of a video or music purchase permanently on a computer hard drive or portable device.

‘iTunes Extra’ content has additional DVD-like functionality, such as menus and chapter selection as well as special features like deleted scenes, exclusive interviews, and behind-the-scenes footage.

According to Zoo, the costs associated with traditional production methods have proved prohibitive for such sales on iTunes. However its new toolset provides an “innovative way to automate the adaptation of menu systems and bonus features”, which facilitates the production of iTunes Extra titles at significantly lower costs. 

According to Andrew Darley, research director at Finncap, this cost saving function is the product's key feature as far as the studios are concerned.

“The key to the ZOO product set is cost saving for the customer ... ZOO’s cost-saving products improve time and cost to market, which enables a previously uneconomic revenue stream.”

Darley highlighted that the EST production tools represent a "large potential market" for ZOO’s media content products, which have been restricted to DVD and Blu-ray thus far.

“The extension to online content allows further revenue generation from existing content, which studios remain obliged to produce for each content delivery method,” Darley said.

Furthermore, Darley noted that Zoo’s development iTunes Extra content authoring tools is timely, “especially with the imminent marketing and press coverage of next generation Apple TV”.

“Product development beyond the already strong DVD and Blu-ray niche expertise, presents the opportunity for capturing more revenue from existing customers and strengthening the product set for potential customers.”

“Un-modelled upside is considerable”.

In a separate statement, Zoo chairman Roger Jeynes told shareholders at the AGM that the company's “trading in the current year continues to be in line with expectations”. The chairman also added that the company’s strategic relationship with Multi Packaging Solutions (MPS) has highlighted some "exciting opportunities".

Jeynes said that he remains confident that the relationship will enable ZOO to broaden the use of its products to other industries outside of entertainment.

"The last twelve months has proved to be another very successful period for the company,” Jeynes said. “The quality of our products, the strength of our client relationships, the talents of our staff and new initiatives ... continue to provide the board of ZOO with confidence in the future."