Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

ZOO Digital: An overnight sensation ten years in the making

The turning point was the switch from physical products (such as DVDs and CDs) to subscription digital streaming platforms in 2016
Game of Thrones
or 'Sostų karai' for those watching in Lithuania

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.

View full ZOO profile View Profile

ZOO Digital Timeline

September 30 2014

Related Articles

Top-level domains
In its interims, management undertook a full review of historic legacy agreements that led to a final US$721,000 final restructuring payment made against one agreement and an onerous contract provision on another resulting in a one-time write down for future expected losses of US$7mln with an associated US$4.1mln reduction in intangible assets to US$81.5mln.
Network security
October 02 2018
The company was arguably late to change to a software-as-a-service model, but the change is beginning to take hold
Big data
July 03 2018
The RAPid platform, and its integrated data technologies, empowers business teams to now analyse procurement data on an almost real-time basis

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use