Zoo Digital Share Discussion Threads

[jacobjohn7] 27/11/2006 11:31

growing suite of products at snap in the US. Its easy to focus just on the UK, cos its in our faces...

[diamante] 27/11/2006 10:22

JJ - Not me this time.

Regarding the IP - although there's a cost of applying and registering, there's no on-going cost is there? If someone challenges the patent, or ZOO challenges someone else, then there are potential costs of course. In terms of magnitude, it's not something which concerns me, just the normal running costs of an IP generating company. (Patents can have a very high value of course, so each patent granted increases the value of zoo irrespective of any cash generating abilities).

Regharding Zoo's publishing/dev revenue for this year only and the related disposal of the dev and publishing business - I still can't see the accepted explanation on here making any sense from a business perspective (that is, it doesn't make sense to me that the pub/dev business was sold for a deferred £200k or thereabouts, with all but this years dev/pub income going to the new company). There must be more to it than that - the value was far in excess of £200k. I can only speculate on what MAY have been agreed for that business to be worth only that amount. And I'll SPECULATE that the business was only worth that much is the DES income to Zoo was far higher (in this case) than the 25p bandied about).

It makes sense to me that an ongoing DES licence fee of say £1 per sale (from Zoo interactiev to zoo) would be a fair and reasonable agreement in order that the dev and pub rights of existing games and IP were sold for £200k.

This is pure speculation - but something like that must have been agreed in order that advisors looking after the ineterests of shareholders could state the deal was fair and reasonable.

Unfortunately, Zoo are very unlikely to disclose such information, so all we can do is speculate. At least the screnario I've outlined makes some business sense, whereas simply disposing of an on-going and valuable business for £200k under the terms discussed here doesn't (to me at least).

[mydarlingclementine] 27/11/2006 09:41

Thanks Aphro, I thought that was the case.

Still for holders it will be a bumper stocking filler to carry forward.!

[aphzombie] 27/11/2006 09:36

this is the final year that zoo will get publishing revenues for Zoo Interactive's iDVD products.

ZOOtech (the software business) will continue to get licensing royalties for as long as 3rd party licensees produce idvd products that use dvdextra.

[mydarlingclementine] 27/11/2006 09:28

guys just for clarity.

Is this not the final Xmas zoo will get these royalties for the idvds on sale?

Surely after this year they go to the company recently "sold" to a director?

Lisa

[godfungus] 27/11/2006 09:28

Very interesting discussion here over last few weeks. One thing nobody's mentioned is the (substantial) cost of maintaining all those patents.

[jacobjohn7] 27/11/2006 09:07

that 8k yours dia? Should be on our way upwards pretty soon then.

[jacobjohn7] 27/11/2006 09:04

was in hmv yesterday, and was truly amazed when confronted with the sheer diversity and qty of products in the interactive section, a high % with dvd extra on back, i was even asked if i was OK, spent so much time flicking em round to look at the backs... (interactive anorak.....) hmmm they havent done that yet...! Well youve got your chart area, titled 'interactive' and then another whole face of an isle section devoted to the wide and varied, and on the face of it, very professional polished products... and new products keep emerging/advertised daily. Last one I saw was an interactive dvd of heat mag. out soon. I expect alot more will be released in this next fortnight. Wouldnt leave it much later than that. Positive signs around the isles, just need a one or two more TAS confirmations, and then we can all be very confident of a very bright future at the zoo. The growth of idvds alone worldwide (and zoos monopoly of this market) should be enough to deliver ongoing growing profits.
But personally can see 10 plus companies taking up TAS in the next year. Like ive mentioned before, zoo told us that they could have had 100 plus companies willing to be early adopters for TAS, such is the wider market for this piece of software.

[jacobjohn7] 26/11/2006 21:34

they only have enough staff to cover workloads, after cost cutting/stripping of cash burn. They all have jobs to do, and busy workloads.

[macca28] 26/11/2006 20:06

magnet: i don't wish to interfere, but disney revenue will pay for that,

[magnetincognito] 26/11/2006 19:55

siwel is there enough revenues coming in to pay 50 staff,
and to keep up development to stay ahead of competitors,
not to mention leasing of offices in california paris tokyo,
i will be happy to go along with your say so,

[jacobjohn7] 26/11/2006 19:24

be interesting to see where we go on monday with this one, with the sudden movement on friday, it was as if we'd got a mention in investors chronicle of something like that?... but it had to happen at some stage. And with results due early december then, alongside figures, I anticipate some very interesting and positive words/tie ups included in this. The benefit of having a foresight bod on side is big bonus, as the badly worded affairs of old zoo wont be allowed to happen anymore, and the statements will be optimised for maximum impact in the city.

[jacobjohn7] 26/11/2006 19:18

as explained at the AGM, post production companies will be driven to dvd extra/etc purely because the ones with it, will win every quote due to cost savings/speed of use afforded by the use of the suite of programmes. They wont in effect (in most cases) be able to survive without it.

[siwel100] 26/11/2006 15:20

INDOMIE.....The word "studio" is actually slightly misleading for the Zoo software. In fact Zoo is in no way relevant to film production in any form.
Its sole use is a technical one in the production of DVD's. In some cases this is undertaken solely by a department within the Studio in others it is wholely or partially subcontracted.
The Dept is primarily a technical one with some creative input regarding "extras" although as far as Zoo software is concerned it is used almost solely by technical staff.
The drivers for any technician to change software they are experienced with are twofold, either it is driven down for cost savings or it is driven up by the user for improved ease of use and functionality.
In the case Disney I expect it was driven up with approval to use based upon a cost saving analysis.
The difficulty with any technical department is one of inertia. An individual is always slow to change a productive piece of software unless clear and obvious benefits are available to justify the "pain barrier" of learning the new software package and installing new production processes. An entire team has to make the change not just one individual.
With Disney both renewing and expanding their contract, it is clear that the benefits to Studios is real and tangible. In fact if they had any problems at all they would have dropped immediately. Dont forget that all their technicians will have been trained on Sonic, Zoo is very much the new kid on the block.If they had the slightest problem or non delivery of benefits they would have reverted to the comfort of their old software.
So the issue is at what point other "studios" will change to Zoo. Its an easier question for studio subcontractors as they are smaller, far more production cost focussed and more driven by software change to drive commercial advantage. I would be suprised if a number are not already using Zoo. As far as Studio departments are concerned this is more of an unknown. It is easy to forget that Zoo software has only been in the market for 36 months and that the 2nd element attractive to Studios is still only on pre release.
Personally I wouldnt be suprised if another studio makes the change next year. Zoo is becoming more established. The number of companies using the product is increasing, the iDVD products more common and undoubtedly driving interest in the full range of tools. As far as Zoo is concerned, the Studios will certainly be profit drivers but not essential to the company reaching a stable and profitable position. iDVD products and sales in the UK lead the world, all other major markets are at least 12-18 months behind us. As the rest of the world catches up so the sheer number of iDVD products in the US, Europe and the Far East will drive Zoo.
If Zoo had not renfinanced and streamlined itself to a niche software supplier I would have been the first to question if they had the time to benefit from the growing usuage of their product. But following the refinance which puts ample funds in the Bank and an expectation of a small profit this year which means cashburn is a thing of the past, I am certainly convinced they are reaping the rewards of past investment.
The key positive for me is the volume of both small and large companies coming onboard and using Zoo despite an unconventional pricing plan. OK major Studios may take a bit longer but then again it comes back to Zoo software only having been in the market for 36 months, not exactly ages is it.
The current share price is priced as if the company is about to go bust, which it very obviously isnt. There will be two revaluations, one based on the current real position and the second as the company delivers a growing bottom line.
There are other positives which made me buy but this is enough of my opinions for one Sunday afternoon... :)

[indomie] 26/11/2006 12:56

Diamante

It is very difficult to follow develpoments with this company as the level of communication with investors is appauling! Everyone knows about the 25% dilution that has already taken place but the terms of the loan note conversion are unclear...even the two recent divestments are not exactly clear...which has left so called 'informed' posters to post information which has now been taken as gospel and repeated on these pages....

...the only thing which i have seen from management is that their new business plan is focused on making a small profit this year.....just what sales will do is anyone's guess but judging by last years positive trading update and then a profit warning a few weeks later, it is a big step to say this is on the road to recovery yet (esp when no other studio is using Zoo yet.....do they all think wat they are already using is better?)

[ray164] 25/11/2006 22:09

siwel100. post 1183.

Thanks for the info.

[diamante] 25/11/2006 18:11

Hi Partridge, I owe you an apology - I didn't see JJs posts, so didn't realise he had discussed sales. I suppose he can guess or make his estimate, and you can make yours too - I have no problem with that.

I still can't see what Zoo can do to influence iDVD sales one way or the other this Christmas whatever they do - in fact they can't do a thing. They have done their bit (developing DES) - the rest of the idvd production ploughs on independently of zoo (the dev, the distribution, the retailing and the ultimate sale - none of which require (or would even allow) any input from Zoo.

I would forget everything which has gone on in the past with Zoo - not because I am the forgiving type, but just because there is nothing to be gained by doing so. The only sensible way of assessing Zoos prospects today is to treat it as a newly floated company, imo. The only thing you can say from last years massive loss is that the new zoo inherits £3.5m software which old Zoo paid for and which partly caused the massive loss.

If you don't like new Zoo then fine. I also would like to know (genuine) bear points - a couple have already been pointed out. But what I'll reply to are bear points which no longer apply. Have you actually followed the developments (financing, business shedding and reorganistion) at Zoo? I'm sure if you looked with an open mind, you'd find exactly the same as me.

[aerotus] 25/11/2006 18:07

siwel - You appear to be the new cashmagnet. Living and breathing Zoo. :)

[jacobjohn7] 25/11/2006 17:38

I did realise one flaw with this widely basic/conservative estimate....
and that is the extra funds that come into zoo coffers for production/development of the inhouse titles, which are into the £'s per disc rather than the 25p per disc (ave) which all the other third party discs bring in.
---------------------------------------

jacobjohn7 - 6 Nov'06 - 15:17 - 777 of 1182

Based on 25p per disc royalty. Could look something like this....


400,000 sellers (the big ones): £100,000 per product. (Est, 3-4? products)
= £400,000

100,000 moderate sellers: £25,000 per product. (Est, 8-10? products)

= £250,000

50k niche market popular IP: £12,500 per product. (Est: 10 products)

= £125,000

25k lower niche market sellers: £6,250 per product (est: 40 products)

= £250,000


TOTAL: £1,025,000

Royalty revenue, profits direct to bottom line.

[siwel100] 25/11/2006 17:32

partridge...Considering I recently started buying, thats just a wee bit of a silly question :)
Its easy to be negative, doesnt require any thought, just regurgitate all the one liners I and others used for the last 3 years. But actually look at the restructured and refinanced Zoo, you will be suprised.It may also help you understand why its a good buy.Alternatively you can just stick to the one liners, up to you.

[siwel100] 25/11/2006 17:04

partridge...Those are just the figures for the UK. Zoo software is now used around the world. It also doesnt include the increased Disney contract. It also doesnt include the one off payment for iDVD products produced this year.You also have to bear in mind the cost base has been slashed with the disposal of 2 divisions.
"Very nice if achievable which I very much doubt!"....Perhaps you could mention why? After all, the sector was only really established last year and a substantially larger range of products will be available this year.
I suppose you can post to your hearts content saying "no", or "it wont happen", or "it doesnt work"....but argueing against the trend does look a tad silly when your posts lack reasoning. Its a bit like a kiddie stamping his feet to get attention.

[partridge2] 25/11/2006 16:54

Diamante where have I said the product is no good? I merely questioned how good it was, big difference to stating the product was not good.

Have you used it and found some deficiences developers haven't?
Thats just bloody stupid.

As to sales figures take a look at my mate JJs forecast. Funny how you didn't see this post as it followed right after one of yours.


jacobjohn7 - 6 Nov'06 - 15:17 - 777 of 1182


Based on 25p per disc royalty. Could look something like this....


400,000 sellers (the big ones): £100,000 per product. (Est, 3-4? products)
= £400,000

100,000 moderate sellers: £25,000 per product. (Est, 8-10? products)

= £250,000

50k niche market popular IP: £12,500 per product. (Est: 10 products)

= £125,000

25k lower niche market sellers: £6,250 per product (est: 40 products)

= £250,000


TOTAL: £1,025,000

Royalty revenue, profits direct to bottom line.


Very nice if achievable which I very much doubt!
Next question please.

You are entitled to your opinion as am I lets see who is right in the long run as I said before I will be the first to hold my hand up if I am wrong. Good evening.

[siwel100] 25/11/2006 16:50

ray 164...It used to be a bit of a mish mash company with 3 divisions. A games division which focussed on the distribution of cheap 2nd/3rd tier games (caused last years losses and now disposed of). An iDVD production division ( produced one of last years hits, who wants to be a millionaire. Certainly cash hungry and questions over profitability, now disposed of but cash from this years sales come back to Zoo in the Spring). The core software division which is what remains.
The software division ate a lot of money over the last 4 years but products are now complete, clients signed up and income flowing. 2 main focus, one being the tool to produce iDVD's (80% of the ones you see advertised on telly or in the shops use Zoo software to produce). The second focus is a a growing software suite used by Hollywood studios and subcontractors for DVD production. Disney used the first tool and recently renewed the contract for that and added a second.
This software division is what now remains and makes ZOO an interesting buy. Its software nicely niched, has high margins and is heavily patent protected. It is gaining wide acceptance and hence income flow (the header to this thread list some of the growing number of companies who are users).
Following fund raising/convertible loan the company is well financed and following the streamlining the cost base is very substantially reduced. Currently the market cap is less than cash in the bank, primarily due to the chequered history and perception of management rather than potential for software. Its currently priced to go bust despite adequate funding and growing income streams. Often happens when previous growth stocks fall out of favour.
I suppose the best way to look at it is that 3 years ago it was expensive considering they had no software products or users. Now that they have the products and an expanding client base its cheap.