ZOO Digital Says FY 2021 Off to a Strong Start

Media Localization Provider ZOO Digital Q1 FY2021 Results Good on Dubbing

On July 14, 2020, UK-based media localization provider ZOO Digital published its financial results for the 12 months to March 31, 2020.

Revenues were up 3% to USD 29.8m compared to 2019. Localization activities and OTT digital packaging combined contributed a total of USD 27.6m. Revenues from DVD digital packaging and software services — both declining portions of the business — accounted for the rest.

There was significant growth in OTT digital packaging, while localization revenues, which include subtitling, dubbing, and captioning, fell 8%.

Localization, which remains ZOO’s core segment, was impacted by a change in procurement strategy from a major customer. With the challenging comparables due to this single customer out of the way, ZOO’s localization business should return to growth in FY 2021.

On a regional basis, ZOO’s biggest revenue contributor was the US, which remained flat, while Europe grew 30% to USD 4.5m. ZOO attributed growth in Europe in part to customers seeking content from new regions.

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Adjusted EBITDA grew to USD 2.1m, a fivefold increase on the previous year. The results were in line with the May 2020 trading update and shares in ZOO Digital traded sideways following the results announcement.

Describing the impact of the coronavirus pandemic, ZOO said that the impact on sales had been temporary and that normal trading and volumes resumed quickly. Overall, the pandemic has accelerated demand for ZOO’s services.

“First quarter sales [are] currently expected to be at least 15% ahead of the equivalent prior year period” — ZOO Digital

Following the close of ZOO’s 2020 financial year in March 2020, “trading in the first three months of FY21 has been strong, with first quarter sales currently expected to be at least 15% ahead of the equivalent prior year period,” the company said.

Tidal Change for Cloud Dubbing

A key part of the growth in the first quarter of 2021 came from dubbing services. Between April and June 2020 — after ZOO’s 2020 year-end — the company said they processed dubbing volumes worth more than triple the value of dubbing projects run during the same period in 2019.

ZOO discussed the adoption of the company’s cloud-based dubbing platform, ZOOdubs, in detail in the financial results, saying that prior to the pandemic, “the interest in ZOOdubs was slowly growing in an industry that is traditionally conservative and reluctant to adopt change.”

According to ZOO, the pandemic “accelerated the desire [of customers] to evaluate cloud dubbing” and “served as a catalyst for buyers to try out our services.”

As brick-and-mortar studios were shuttered during the lockdowns, traditional dubbing was suspended, motivating customers to try other avenues. At the same time, “traditional dubbing service providers, who until recently have not been advocates of remote dubbing, are now beginning to promote their own alternatives,” ZOO said.

“Traditional dubbing service providers, who until recently have not been advocates of remote dubbing, are now beginning to promote their own alternatives” — ZOO Digital

Having been essentially the lone voice espousing the virtues of cloud dubbing prior to the pandemic, ZOO remains optimistic about its position to benefit from increased customer interest in the remote service.

Interest is unlikely to wane once impact from the pandemic subsides, and ZOO believes that demand for cloud dubbing will “remain significantly higher than it was prior to the pandemic.”

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Outlining other market drivers of media localization demand, ZOO said that many major streaming providers are expected to increase their content budgets in 2020. Although production of new content has, for now, been halted, it will eventually restart. In the meantime, ZOO said, “the emphasis will once again switch to back catalogue material which, in prior years, has represented the majority of ZOO’s revenues to date.”

“The emphasis will once again switch to back catalogue material” — ZOO Digital

ZOO cited launches of new streaming platforms as another likely tailwind: Apple, Disney, and Warner Media all launched their offerings in 2020, and NBC Universal is expected to launch soon.

Beyond new launches, platforms are also expanding their geographical coverage, ZOO said. Many platforms currently support a modest number of geographies and languages, but are likely to expand further, particularly into the MENA and APAC regions.