Overnight sensations often say it is decades of hard work that has got them there.
ZOO Digital PLC (LON:ZOO) can argue something similar as after years of promise, the subtitling and dubbing specialist has hit the big time.
WATCH: Zoo Digital sees growth from global transition to streaming services
Since June, shares have risen by 1,000% as markets twigged that YouTube, Amazon and other ‘over-the-top’ video streaming offerings need to be subtitled or dubbed into local languages and ZOO does the job very nicely.
Sales jumped 42% to US$16mln in the year to March 2017, though it was the next update, when revenues shot up to US$12mln in the following six months, that really caught investors’ attention.
ZOO confirmed how well trading is going earlier this month as it forecast annual revenues to March would be US$28mln, or 75% higher than a year ago.
Underlying profits, meanwhile, would be at least US$2.3mln compared to US$1.8mln.
Stuart Green, chief executive, told Proactive the turning point was the switch from physical products (such as DVDs and CDs) to subscription digital streaming platforms in 2016.
2016 inflexion
For the ten years previously, ZOO had been battling declining sales of physical media, which still needed to be dubbed or subtitled, but two years ago, the industry switched.
“2016 was the first year that the value of sales flipped from physical to digital streaming platforms.”
Green says ZOO was helped during the transition period by its relationships with major films studios and content makers.
Heavy investment in processes, especially automation where possible, also readied it for the new generation of subscription-based products.
Now it is cashing in as the growth in new media content through OTT suppliers has created a huge demand for language localisation.
Green estimates the market is worth US$2bn annually and growing by 10% a year.
What it does
ZOO receives complete programmes from clients then prepares them so the content can be streamed in any language they want.
Automation plays an increasing part of the process, both to improve efficiency and lower costs.
A sound engineer no longer needs to be ever-present to oversee local translators or actors, for example.
“Firstly, our system proactively manages the progress from step to step ensuring that nothing is missed out.”
“Secondly, wherever it’s viable, we can reduce the human element needed to do certain operations, reducing the opportunities for human errors.
“In addition, we have all sorts of quality control features that are built into our systems, so we are checking things automatically all the way through the process.”
Growth from multiple sources
Going forward, Green foresees growth will come from multiple sources as the OTT/subscription market develops further – increased market share, new clients, and additional territories.
ZOO is already particularly strong in the US, making great strides in Europe, while new partnerships are opening the Middle Eastern and Asian markets too.
“Our investment in tech has enabled us to win market share, add more clients and grow sales to existing clients.”
At 90p, the company is valued at £69mln.