Shares in subtitling firm Zoo Digital dived by 30% today as streaming cuts and the US writers’ strike mean the business now expects an even faster fall in revenue than previously thought.
Zoo said that “two short-term factors” had hit revenue “in a quarter that the Board already expected to be weaker than the previous year”.
First, streaming giants have drastically cut costs, cancelling programmes and removing existing works from their catalogues. Netflix alone plans to cut $300 million in costs this year.
At the same time, the Writers Guild of America’s strike “is now having an impact on the levels of localisation and media services work on new titles”. The strike is into its third month, approaching the length of the 2007-08 strike, as writers look for improved rules around streaming residuals and for guarantees they will not be replaced by AI.
However, Zoo insisted that it will remain in a strong position going forward as top streaming firms will reduce the number of suppliers in order to cut costs, “with Zoo selected as one of a smaller number of vendors”. As a result, it expects to return to revenue growth in the second half of the year. The slowdown in Hollywood productions could accelerate as the Screen Actors Guild announced a strike of its own this week.
The firm still has $23 million in net cash, allowing it to weather the period of weak trading.The business is also still in “advanced discussions” to buy a Japanese localisation business.
Zoo Digital’s shares are down 31.5p, or 30.1%, to 73p. They are down 60.5% for the year.
