Maiden profit for Zoo Digital
ZOO Digital, the AIM-listed DVD technology group, reported its first ever profit thanks to high demand for DVDs and Blu-Ray discs from major film studios.
The Sheffield-based group – which makes Who Wants to be a Millionaire video games – said it had seen a significant rise in turnover thanks to an increased volume of new discs produced using Zoo technology.
Announcing its interim results for the six months to September 30, the group announced pre-tax profits of £400,000 compared to a loss of £600,000 in 2007.
Turnover more than doubled to £3.24m – with the recently launched Media Adaptation Tool contributing more than 15% of revenue generated in the period.
The group said like-for-like software licensing revenue, most of which is recurring, grew in the period by 83%.
Chief executive Stuart Green said the move into profit marked a major milestone for the company, and had been achieved as a result of the group’s continued focus on its principal customers – the major film studios – and in broadening products and services.
The group said that it expected to benefit from the challenges facing the home entertainment industry in the current climate.
As a result of the economic downturn studios are exploring ways to reduce costs and increase the speed to market of their products.
Currently most of the studios outsource the production of DVDs and printed items to third parties, however, Zoo’s products can significantly reduce the cost of production by automating the process – removing the need for highly skilled and expensive operators.
Zoo’s technology helps to combat the problem of piracy – which is estimated to have cost the worldwide motion picture industry $18.2bn in recent years.
Mr Green said the studios are committed to reducing that loss and he said he was confident the group will play a key role in helping studios to achieve that goal.
Mr Green said the group had continued to control costs tightly in the period, but that group overheads in the first half of the year were higher than the previous year due to the operating expenses of production and creative services company Scope Seven, which was acquired in August 2007.
Mr Green said “It has been our strategy to focus on the major film studios and home entertainment industry. By working closely with our customers we have been able to develop and refine our offering and as a result we are delighted to be reporting our first ever profit.
“We are finding that our fundamental offering of reducing costs and time to market is proving very attractive in the current economic environment to a wide variety of businesses, both inside and outside the entertainment industry.”
The group said it had benefited from the strength of the Dollar – as the majority of its turnover comes from the USA.
Zoo is continuing to focus on generating revenue through its software – with its newest product – the Media Adaptation Tool (MAT) – demonstrating positive early signs.
MAT lets customers vary print and packaging of DVDs through a fully-automated process and allows them to produce DVD covers in different languages fast and cheaply.
Going forward Mr Green said he was confident the group now had the right platform on which to “continue building during the second half of the year.”
Zoo Digital is the company behind the multi-million selling Premier Manager series and the PAL territories home to Uno52 DS. ZDP publishes titles for the Nintendo DS, Wii, Game Boy Advance, PlayStation 2, PC and Xbox.
