Disney teams up with Zoo to create digital beast

DIGITAL media production specialist Zoo Digital believes it is set to enter the black after winning a 15-year contract with Walt Disney which is expected to generate at least $15m (£7.59m).

The Sheffield-based firm is the market leader for creating interactive DVDs such as 'Who Wants to be a Millionaire' and 'Question of Sport'.

The contract will see Zoo deliver its software automation products to DVD film releases on behalf of Walt Disney Studio Motion Pictures International, which is the international distribution arm of film maker Walt Disney Studios.

Zoo also announced today that Sony Pictures Entertainment has licensed Zoo's Templated Authoring System and will use it in a range of its DVD titles.

Zoo believes the partnership will also increase revenues in this technology stream.

In a trading update today, Zoo said group turnover from continuing operations for the year ended March 31 would be £3.3m, an increase of 119% compared to the previous year.

Losses before interest, tax, depreciation, amortisation and exceptional items were £1.4m, which the company said were in line with expectations.

Zoo believes its acquisition of Los Angeles-based Scope Seven for £1.56m last year had given it greater access to the US market, which has led to an increase in its DVD games in the country, and changed the company's emphasis to digital media technology rather than products.

As well as Scope Seven, Zoo has another subsidiary, ZOOtech.

ZOOtech is a software company that helps video publishers and rights owners maximise revenues and profits by exploiting their content across multiple platforms, languages and territories. The business has an office in LA as well as Sheffield and its software products are used to automate DVD production.

Scope Seven is a media production and design company providing creative and technical services to companies in the entertainment, games and education industries. The company is based in Los Angeles.

Zoo said major US clients including Hasbro and Mattel were providing a number of new projects.

Zoo also said Warner's and Toshiba's decision to stop supporting high definition DVDs had helped it to concentrate on developing technology and services for Blu-ray DVD title production in the next generation home video market.

Blu-ray DVDs offer more than five times the storage capacity of traditional DVDs.

Blu-ray products will be distributed by Scope Seven to provide a further service to present and prospective Hollywood clients.

The group also said that the recent appointment of a liquidator at Zoo Interactive Entertainment, formerly owned by Zoo, would have no “significant implications for our trading in the future”.

Stuart Green, Zoo's chief executive, said the group was confident that it would be cash positive within the current financial year and that revenues will continue to prosper.

Mr Green said: “We have rationalised the cost base with the aim of achieving monthly profitability during the current financial year.

“With the introduction of new major customers and additional revenue streams based on a proven, market-tested product set the board looks forward to a year of significant progress both financially and operationally.”

Zoo's revenue for the six months to September 30 for the continuing business increased by 113% to £1.31m compared to £616,000 in 2006 for the same period. The operating loss reduced significantly to £697,000 from £2.20m.