Zoo Digital Group Plc · LSE:ZOO
Zoo Digital — Investor Day (October 2022)
82 slides from Zoo Digital's investor day presentation, Oct 6, 2022
Slide 1: Globalising Video Streaming
GLOBALISING VIDEO STREAMING ZOO Digital Group plc 6 October 2022 Page 1
Slide 2: Table of Contents
TABLE OF CONTENTS Topic Presenter Page A ZOO primer Stuart Green 5 Background to a Growth Market Dan Bunyan 12 TABLE OF Tech-enabled Media Workflows Kier Booth 31 Demand for Dubbing Ewa Zawadzka 38 CONTENTS Media Services Demystified Mazin Al-Jumaili 43 Extending Competitive Advantage Through Techno
Slide 3: ZOO Digital Group plc
ZOO Digital Group plc 6 October 2022
Slide 4: Event schedule
14:30 A ZOO primer 16:00 International Growth Stuart Green, CEO Gordon Doran, CCO 14:45 Background to a 16:20 Perspective of an Growth Market investee company Dan Bunyan, PwC Rajiv Raghunathan, MD ZOO India 15:00 Tech-enabled Media Workflows 16:30 Long Term Trends Kier Booth, Head of Phill Blundell,
Slide 5: A ZOO Primer
= ZOO AZ00 PRIMER Stuart Green CEO
Slide 6: Page 6
f | ZOO CMD October 2022 ° —
Slide 7: Quote: I coulda been a contender
“You don't understand. I coulda had class. I coulda been a contender. I coulda been somebody, instead of a bum, which is what I am, let's face it.” Page 7
Slide 8: Needs of the Streamers
ZOO CMD October 2022 Final Results FY21 NEEDS OF THE STREAMERS From completion of a new title, work is required to prepare technical materials for distribution (“media services”) and adapt for different countries, languages and cultures (“localisation services”) Localisation Subtitling Dubbing Pre-p
Slide 9: Competitive Landscape
COMPETITIVE LANDSCAPE Language Offering Subset or local languages only Global languages Media services specialists End-to-End Vendors All services Service Line Offering 100s of independent dubbing studios Multilingual subtitling specialists Subset of services Some multinational dubbing studios Corpo
Slide 10: Our customers are the world's biggest content creators
ZOO CMD October 2022 Our customers are the world’s biggest content creators that distribute TV shows and movies to vast multilingual audiences via global streaming services. Page 10
Slide 11: ZOO's Strategy
ZOO’S STRATEGY Five pillars differentiate ZOO in the market and provide competitive advantage Innovation Scalability Collaboration Customer Talent Create value- Operate an Work with like- Secure preferred Engage with adding software extensive minded, world- partner status with experienced and techno
Slide 12: Background to a Growth Market
BACKGROUND TO A GROWTH MARKET Dan Bunyan Partner, Strategy&, PwC
Slide 13: ZOO Digital Group plc Capital Markets Day
ZOO Digital Group plc Capital Markets Day 6 October 2022 FOR INFORMATION PURPOSES ONLY DO NOT RELY ON THIS DOCUMENT NOT FOR ONWARD DISCLOSURE
Slide 14: With you today
With you today Dan Bunyan Partner, Strategy& daniel.j.bunyan@pwc.com Dan is a Partner in our Strategy& practice, and has extensive strategy consulting and commercial due diligence experience across the Media & Technology sectors. Dan is a member of the editorial board PwC's Global Entertainment and
Slide 15: Key topics we discuss
Key topics we discuss 1 Overall growth drivers underpinning the OTT and Video Content market 2 Trends in content budgets and sources of new content production 3 Rise of international content and need for localisation support 4 Emerging new OTT models and impact on future content supply DRAFT - DO NO
Slide 16: Global spend on film and TV expected to continue growing through 2026
Note: forecasts primarily based on data in Q2 this year. They have not been updated for the latest macro-economic outlook Global spend on film and TV is expected to continue growing through to 2026, largely driven by VOD … Global spend on film and TV1 CAGR Categories $bn, 2017-2026 2017-19 2019-21 2
Slide 17: VOD spend growing c. 8% p.a.
Note: forecasts primarily based on data in Q2 this year. They have not been updated for the latest macro-economic outlook … which is growing at c. 8% p.a., with NA, APAC and W. Europe amounting to >90% of spend Global spend on VOD, by type Global spend on VOD, by region $bn, 2017-2026 $bn, 2017-2026
Slide 18: Number of films and series released each year
The number of films and series released each year has steadily increased, but slowed down during COVID-19 Number of films released (US) p.a. Impact of COVID-19 Number of US scripted original series debuting p.a. 2015-2021 restrictions; cinema 2015-2021 Impact of COVID-19 restrictions has been slower
Slide 19: OTT platforms are now material acquirers and producers of content
OTT platforms are now material acquirers, commissioners and producers of content alongside the big media groups… Top spenders on Film and TV $bn, 2020 Acquired Film & TV 12.8 Original 10.9 8.2 7.6 7.6 6.1 6.3 2.3 10.9 1.4 5.1 2.5 6.3 3.4 1.2 2.4 5.4 5.0 4.6 5.0 3.6 1.6 2.2 0.8 1.3 0.2 Netflix YouTub
Slide 20: Streamers significantly increased spend vs. traditional broadcasters
... having significantly increased their spend vs. traditional broadcasters Global Netflix content spend1 Global Amazon content spend1,2 UK Public service Broadcasters $bn, 2016-2021 $bn, 2017-2021 spend on content $bn 2017-2020 17.0 +20% BBC - Television 13.9 ITV 13.0 Channel 4 12.0 11.8 Channel 5
Slide 21: Large share of SVOD content is not local
A large share of the content offered on SVOD platforms is not local (and therefore is in need of localisation services) Origin of film and TV seasons Share and origin of national and non-national EU content on SVOD platforms on SVOD platforms (in the EU) (in the EU) 000s, 2021 %, 2021 493 100% 26% 6
Slide 22: OTT landscape and monetisation strategies
The OTT landscape is made up of a range of services with a variety of monetisation strategies… OTT monetisation models* OTT (accessed through a connected device / streaming) On demand Linear TVOD SVOD AVOD FAST vMVPDs Transactional video on Subscription video on Advertising-based video Virtual multi
Slide 23: Proliferation of SVOD platforms
… and has become increasingly competitive, with a proliferation of platforms available to consumers SVOD services in Europe (as example) Number of SVOD services available by EU country Top SVOD services by country Number of services, 2020 presence in EU 34 Number of countries, 2020 30 29 28 28 28 28
Slide 24: Exclusive original content key to retaining viewers
As SVOD take-up slows down, exclusive original content will be key to retaining viewers… Global subscription OTT video service • Previously, streamers had been able to rely on coveted content users forecast acquired from other studios (e.g. the BBC) to attract customers Millions of users, 2020-2025
Slide 25: Steady investment in original content
… resulting in steady investment in original content from OTT providers; the outlook for content spend remains robust Streamers are expected to invest in a wide variety of DTC content spending at 8 major content producers – 1 content from high-production value shows to lower Wells Fargo est. cost sh
Slide 26: Streaming services and market consolidation
As new streaming services have emerged, there has also been some evidence of consolidation in the market Timeline of new streaming services and consolidation Illustrative New streaming services M&A / Partnerships 2018 2019 2020 2021 2022 DRAFT - DO NOT RELY ON 6 October 2022 Page 26 Strategy& Source
Slide 27: Providers still need to invest in originals
Even in a more consolidated landscape and with combined catalogues, providers will still need to invest in originals • Consolidation will enable streaming providers to Number of distinct titles by OTT - USA Acquired titles combine catalogues and prioritise content investment Number of productions, 2
Slide 28: AVOD and FAST tiers will help sustain content spend
AVOD and FAST tiers will help sustain content spend in an increasingly competitive environment… March 2022 • In an increasingly competitive environment, Disney+ to introduce an ad- streamers have seen a slow-down in supported subscription offering streaming subscription take-up, especially in in lat
Slide 29: Advertisers' appetite for Connected TV
… with advertisers showing a strong appetite for both Connected TV and streaming service advertising Connected TV Ad Spending • OTT is a highly attractive advertising channel for $bn, 2021-2026F brands with Forecast Reach on par with linear TV networks, with an increasing number of consumers who pre
Slide 30: Key Market Trends
KEY MARKET TRENDS A GROWTH MARKET FOR ZOO’S SERVICES • Global spend expected to exceed $230bn in 2022 – 14% up on 2020 (source: Ampere Analysis) • Strongest growth is from OTT operators at 15% CAGR to 2024 (source: PwC) • Content increasingly sourced in non-English languages • At least half of Europ
Slide 31: Technology Enabled Media Workflows
TECHNOLOGY ENABLED MEDIA WORKFLOWS Kier Booth Head of Operations
Slide 32: ZOO CMD October 2022
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Slide 33: Cloud-based project materials
• Project materials centrally held in the Cloud • Only the latest versions being worked on • Highly secure and scalable Page 33 ZOO CMD October 2022
Slide 34: Centralised project tracking and browser subtitle production
• Centralised project tracking and query management • Subtitle production in the browser • Client review as part of the workflow • Real time updates on progress, due dates Page 34 ZOO CMD October 2022
Slide 35: The Freelance Network
THE FREELANCE NETWORK • Freelance professionals tested and onboarded within Cloud ecosystem • Overcoming the ‘talent crunch’ with ZOO Academy Page 35 ZOO CMD October 2022
Slide 36: Engaging with Freelancers
ENGAGING WITH FREELANCERS • Access to proprietary in-browser localisation platforms for ZOO projects • Tools to maximise quality and consistency • Providing a productive and efficient experience for freelancers Page 36 ZOO CMD October 2022
Slide 37: Quality standards and long-term client relationships
Long-term relationships Round-the-clock, real-time Best in class quality standards with demanding clients production workflows Page 37 ZOO CMD October 2022
Slide 38: Demand for Dubbing
DEMAND FOR DUBBING Ewa Zawadzka Head of Dubbing Operations
Slide 39: Dubbing Overview
DUBBING OVERVIEW Dubbing landscape in the past and today • Dubbing overview • Stakeholders • Types of dubbing • Dubbing around the world ZOO CMD October 2022
Slide 40: Case Studies
CASE STUDIES Example projects • Cleo & Cuquin • Mini Pet Pals ZOO CMD October 2022 Page 40
Slide 41: Demand for Dubbing
DEMAND FOR DUBBING Challenges of todays industry • Dubbing demand • Volume increase • Speed and security • New markets and languages • Capacity solutions ZOO CMD October 2022 Page 41
Slide 42: ZOODubs Session
ZOODUBS SESSION Overview, flexibility & benefits • Security • Scalability • Diversity of talent • Efficiency ZOO CMD October 2022 Page 42
Slide 43: Media Services Demystified
MEDIA SERVICES DEMYSTIFIED Mazin Al-Jumaili VP Talent Management & Business Development Europe
Slide 44: Making entertainment content available on global streaming platforms
Making entertainment content available on global streaming platforms • Plugging the ‘gap’ between completion of post-production and availability on the streaming platform(s) • Involves localisation services and media services Page 44 ZOO CMD October 2022
Slide 45: The End-to-End Model
THE END-TO-END MODEL Bundling of localisation and media services • Making life easier for our clients • Managing content partners • Preparing content for the platforms • Proven experience Page 45 ZOO CMD October 2022
Slide 46: Media Services Explained: OV Packages
MEDIA SERVICES EXPLAINED Original Version (OV) Packages OV Video EN Audio Audio SDH / CC Thumbnails 2.0 and 5.1 Description (AD) Video without audio Audio tracks Audio track with Subtitle comprising of Used by the platform (these are supplied as associated with the commentary on what on-screen dialo
Slide 47: Media Services Explained: Supplemental Packages
MEDIA SERVICES EXPLAINED Supplemental Packages (for each language) Foreign Language (FL) Foreign Language Forced Narratives Dubcards Subtitles (FL) Audio Dialogue subtitles for the 2.0 and 5.1 Audio tracks On-screen burnt in text that is A list of credits for those chosen language. Source can associ
Slide 48: Media Services Explained: Localised components
MEDIA SERVICES EXPLAINED Localised components example for a 35 language order OV Video OV 2.0 Audio ENG AD 10 x audio languages 10 x dub cards 153 Components per Average 10 episodes 25 x subtitle languages episode in a season 35 x FN inserts Title Ep1 35 x metadata files 35 x artwork/thumbnails file
Slide 49: ZOO's Approach to Media Services
ZOO’S APPROACH TO MEDIA SERVICES A differentiated and integrated strategy • Automation • Blend of off-the-shelf and bespoke tools • Integration with localisation • Follow-the-sun operations Page 49 ZOO CMD October 2022
Slide 50: Bundling of localisation and media services
Bundling or localisation and media services • Advertising tiers from major OTT operators • FAST channels • Sourcing of content from international locations • Ongoing expansion of new content production • Vast archives of catalogue content Page 50 ZOO CMD October 2022
Slide 51: Coffee Break
COFFEE BREAK RESUME 15:45 Page 51
Slide 52: Extending Competitive Advantage Through Tech
EXTENDING COMPETITIVE ADVANTAGE THROUGH TECH Chris Oakley CTO
Slide 53: The Traditional Approach
THE TRADITIONAL APPROACH Largest competitors are traditional service provider businesses • Facility-first • Off-the-shelf software • Slow and insecure • Projects managed through spreadsheets and emails Page 53 ZOO CMD October 2022
Slide 54: ZOO's Differentiated Approach
ZOO’S DIFFERENTIATED APPROACH Technology-first • Interconnected ecosystem • Security as standard • Integrate with client systems • Embed tech in client operations ZOO CMD October 2022
Slide 55: ZOOstudio – Client Workflow Solution
ZOOSTUDIO – CLIENT WORKFLOW SOLUTION Centre of the ZOOniverse • Specialised ERP system • Embedded within client • Integrated with client systems • Integrated with ZOO’s production systems Page 55 ZOO CMD October 2022
Slide 56: ZOOstudio in Action
ZOOSTUDIO IN ACTION Example title 1 season – 6 episodes into 20 languages Artwork 3-4 different pieces of artwork Dubbing Managing 10’s of dubbing artists per language in multiple dubbing sessions Audio description Services Metadata 3 different types such as the synopsis Subtitles Packaging Total 84
Slide 57: ZOOstudio Video
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Slide 58: Innovation
INNOVATION Award-winning tech innovation • Innovation at core of ZOO’s success • Award winning products • Develop industry changing solutions • Competitive advantage through investment in research ZOO CMD October 2022
Slide 59: AI & Machine Learning
AI & MACHINE LEARNING • Collaboration with experts from academia, private sector and partners • Researching multiple applications of AI and ML to support our workforce • How to meet the challenge of an ever- increasing demand for content ZOO CMD October 2022 Page 59
Slide 60: Current Research Initiatives
CURRENT RESEARCH INITIATIVES Technologies to support creativity Areas of research: • Children’s voices • Identification of idioms • AI-assisted translation ZOO CMD October 2022
Slide 61: International Growth
INTERNATIONAL GROWTH Gordon Doran CCO
Slide 62: Our Ecosystem: hubs and territory managers
OUR ECOSYSTEM Secure, scalable global servicing capacity 1 thanks to our global ecosystem 1 Owned-and-Operated Hubs: Territory Managers: Dubbing, localisation and media services operations are Each regional hub works with ZOO territory controlled by hubs in key locations in the Americas, managers ba
Slide 63: Our Ecosystem: partners and global network
OUR ECOSYSTEM Secure, scalable global servicing capacity 1 thanks to our global ecosystem . ... ... . . .. . ... .. . . . . . . . . . . .. .... . . .. . . . . . . .. . . . .. ... . . . .. .. . . . ... ... . . . ... . . . .... . . . .. . . . . . . . . . . . .. .. . . . . .. . . .. . ... . .. .... . .
Slide 64: Our Ecosystem: technology
OUR ECOSYSTEM Secure, scalable global servicing capacity thanks to our global ecosystem ZOO Technology Ecosystem: All regional hubs, dubbing studios, partners and freelancers work together in the ZOO technology ecosystem. This guarantees consistent security, process efficiency, production quality an
Slide 65: Investment Strategy
INVESTMENT STRATEGY Growing a connected global network through acquisition and strategic partnerships ZOO Korea ZOO Turkey • Enhanced existing facilities • Investments in strategic partners • Flexible, multipurpose facilities • Supporting all service lines • Alignment of regional hubs • All operatio
Slide 66: Perspective of an Investee Company
PERSPECTIVE OF AN INVESTEE COMPANY Rajiv Raghunathan Managing Director ZOO India
Slide 67: About Vista India
ABOUT VISTA INDIA History and capabilities History and capabilities Licensing Audio visual QC Localisation Artwork design Page 67 ZOO CMD October 2022
Slide 68: Vista India Clients
VISTA INDIA CLIENTS Page 68 ZOO CMD October 2022
Slide 69: Benefits to Vista India
BENEFITS TO VISTA INDIA Local clients Local offices of global clients Global clients ZOO INDIA Page 69 ZOO CMD October 2022
Slide 70: Integration
INTEGRATION • Cloud production and management platforms • Enforced quality and security standards • Connects efficiently with freelancers, studios, translation partners, etc. • End-to-end solutions • Enables highly effective remote working Page 70 ZOO CMD October 2022
Slide 71: Indian Language Requirements for OTT
INDIAN LANGUAGE REQUIREMENTS FOR OTT Page 71 ZOO CMD October 2022
Slide 72: Expansion into Chennai
EXPANSION INTO CHENNAI INDIA Mumbai Chennai Page 72 ZOO CMD October 2022
Slide 73: India's Growth Opportunities
INDIA’S GROWTH OPPORTUNITIES Page 73 ZOO CMD October 2022
Slide 74: Long Term Financial Trends
LONG TERM FINANCIAL TRENDS Phill Blundell CFO
Slide 75: Services charged based on minutes of runtime
Services charged predominantly based on minutes of runtime Freelancers paid on same basis Current contribution • margins are lower than the business at maturity, • due to being in a heavy • investment phase • Projects allocated based • on quality of service Sales External COS Internal COS Contributi
Slide 76: Addressable Market
ADDRESSABLE MARKET Addressable Market ($million) • 8-year market forecast by customer 3,000 Assumptions: 2,500 • Market annual growth 7.5% 2,000 • US streamers will continue to take 1,500 market share 1,000 • Market growth will be driven by 500 International expansion by 5 companies - • ZOO current
Slide 77: ZOO Revenue Progression
ZOO REVENUE PROGRESSION ZOO Revenue Progression ($million) Assumptions: 450 400 • Media services growth rate 10%+ 350 • Subtitling growth rate 15%+ • Dubbing growth rate 45%+ 300 • Overall revenue growth rate 24%+ 250 200 150 100 50 Sources: 0 1. Year 1 is FY22 Actual Year 1 Year 2 Year 3 Long-term
Slide 78: ZOO Margin Progression
ZOO MARGIN PROGRESSION ZOO Operating margin progression (%) 80 • Media services gross margins grow from 58% to 70%+ 70 • Subtitling gross margins grow from 35% to 37%+ 60 50 • Dubbing gross margins grow from zero to 25%+ 40 • Overall revenue gross margins improve from 31% to 35% 30 20 • Operating ex
Slide 79: ZOO – a Growth Story
Page 79 ZOO CMD October 2022
Slide 80: Closing Points
CLOSING POINTS ZOO POSITIONED AS A LEADER OF GLOBALISING VIDEO STREAMING • A large and expanding demand for content • Limited suppliers with capability and scale • Differentiated tech-enabled approach • Ongoing expansion of addressable market • Strategic alignment with customers • At the forefront o
Slide 81: Q & A
yy Lore) Page 81
Slide 82: Thank You
THANK YOU Page 82