US deal can transform Zoo Digital

Under the deal with US packaging company MPS, Sheffield-based Zoo will start selling its unique software to North American companies that export their goods to countries all around the world.

At the moment Zoo's software allows entertainment products such as DVDs to be translated into multiple languages and countries. Under the deal with MPS, Zoo will provide the software that allows companies to adapt their packaging and promotional material to other languages.

Zoo was unable to name MPS's existing clients for confidentiality reasons, but they include major pharmaceuticals, cosmetics companies, video games producers, record labels, personal care manufacturers, sports companies and wine and spirit producers.

Zoo's chief executive Stuart Green said the deal would open up some exciting new areas for the company. "We have all the world to play for, lots of new opportunities," he said. "It's a very similar product to the one used by the big film studios. This partnership with MPS gives us a low-risk way to enter new markets."

MPS is investing just under 900,000 to buy a nine per cent share of Zoo.

In addition it will buy further shares as long as MPS delivers $10m of additional revenues in a 12-month period which can happen at any time in the next three years.

"This deal could increase our revenue by a huge proportion," said Zoo's finance director Helen Gilder.

The news coincided with the announcement of Zoo's results for the year to March 31.

The group swung back into the black over the year with an adjusted operating profit of 530,000 compared to a loss of 460,000 last year.

"We feel like we're on roll," said Mr Green. "Things are coming together now."

The group's shares closed up 13 per cent, a rise of 5p to 43.5p.

Mr Green said the expansion into new areas would not stop the group from increasing its share of the Hollywood entertainment business.

"There are enormous opportunities for us in the entertainment market," he said. "The Hollywood studios and other large media companies are looking for better ways to create, manage and distribute their content. In addition developments such as High Definition TV and video, 3D and web-based distribution of video present new challenges."

Last week Zoo signed up its second "major" movie-maker just a week after its first big deal.

The Sheffield firm said this latest deal will speed up the distribution and accuracy of the Hollywood studio's worldwide releases.

Mr Green said: "We're particularly excited about working with another of the major brands in entertainment and providing a very broad solution that spans most of its formats."

The adoption by one of Hollywood's largest studios, which cannot be named for contractual reasons, represents "a very significant development". In the past, clients have licensed specific products, but this new customer intends to use Zoo's software across its entire home entertainment business.