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The Digital Rights Boom as an Investment Theme to Watch in 2020 (KODK, ADBE, IMTL, SSTK, BABA)

The U.S. Digital Rights Management market is expected to show sustainable growth over coming years. This is an underappreciated niche, but it could pay to start focusing here.

In terms of revenue, the U.S. market stood at $291.5 million in 2016 and is anticipated to reach just shy of $1.5 billion by 2025, which represents a massive CAGR of 19.9% over this period. That said, it ties into many themes of intellectual property in an age where the lines are continually blurred.

We look here at five stocks set to define this emerging game: Eastman Kodak Company (NYSE:KODK), Adobe Inc (NASDAQ:ADBE), Image Protect Inc (OTCMKTS:IMTL), Shutterstock Inc (NYSE:SSTK), and Alibaba Group Holding Ltd (NYSE:BABA).

 

Eastman Kodak Company (NYSE:KODK) is an interesting player in the image space. In many ways, it may be the original “image” market stock.

The company provides hardware, software, consumables, and services to customers in the graphic arts, commercial print, publishing, electronic displays, entertainment and commercial films, and consumer products markets worldwide.

The company operates in six segments: Print Systems, Enterprise Inkjet Systems, Software and Solutions, Consumer and Film, Advanced Materials and 3D Printing Technology, and Eastman Business Park. It offers digital offset plate and computer-to-plate imaging, and electro photographic printing solutions; production press systems, consumables, and inkjet components and services; and a suite of software solutions for print production workflow, as well as business process outsourcing services, scan and capture solutions, records conversion services, workflow solutions, content management, and print and managed media services.

The company also consumer inkjet printers, and specialty inks and dispersions; industrial film and chemicals; and motion picture films, as well as licenses Kodak brand to third parties for a range of products, including batteries, digital and instant print cameras, camera accessories, printers, and LED lighting products. In addition, it offers intellectual property licensing solutions; and leases technology center and industrial complex. The company sells its products and services through third party resellers and distributors, as well as directly and indirectly to enterprise accounts and customers.

If you’re long this stock, then you’re liking how the stock has responded in recent action. KODK shares have been moving higher over the past week overall, pushing about 6% to the upside on above average trading volume.

Eastman Kodak Company (NYSE:KODK) managed to rope in revenues totaling $315M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -13.9%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($243M against $371M, respectively).

 

Adobe Inc (NASDAQ:ADBE) is a leading diversified cloud player that plays a central role in the evolution of the online digital image marketplace.

Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content. Its flagship product is Creative Cloud, a subscription service that allows customers to download and install the latest versions of its creative products.

This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers.

The company’s Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management, cross-channel campaign management, audience management, and video delivery and monetization solutions to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. Its Print and Publishing segment offers products and services, such as e-learning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses.

The company markets and licenses its products and services directly to enterprise customers through its sales force, as well as to end-users through app stores and through its Website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, independent software vendors, retailers, and OEMs.

ADBE shares haven’t really done much of anything over the past week, with the stock logging virtually no net movement over that period. ADBE shares have been relatively flat over the past month of action, with very little net movement during that period. Given the risk aversion we have seen in the large cap tech space, this is actually perhaps something of a victory.

Adobe Inc (NASDAQ:ADBE) pulled in sales of $2.8B in its last reported quarterly financials, representing top line growth of 24.1%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($3.7B against $7.8B, respectively).

 

Image Protect Inc (OTCMKTS:IMTL) is a more speculative name to include here. But it’s worth a strong look given the developing story in place according to the company’s recent releases.

The key here is IMTL’s “Fotofy Image Marketplace”, which represents nothing other than perhaps the most interesting solution in the world right now to the problem of image rights infringement. The company is working to drive traction with an in-image ad platform that creates a confluence of satisfaction among image owners and image users. The result is a new “third way” solution to resolving the inherent tension that has been so problematic for copyright enforcers in the digital image market since the birth of the internet.

The company just announced that it has engaged leading digital advertising consultancy firm, Kubient (Kubient.com), to help build, implement, launch, and test the Fotofy programmatic advertising revenue model. In the process, Kubient will help to create ads, engage brands, and assist in generating traffic for the Fotofy ad network.

Image Protect CEO, Lawrence Adams, commented, “Kubient has the experience and capability to step in and guide us during this critical stage of the process as we turn Fotofy’s enormous potential into revenue growth. Perhaps most importantly, we are fortunate to be at this stage well ahead of schedule. While we aren’t expecting huge sales growth right away, this move will establish a base and a functional model from which we can dramatically scale up throughout 2020, when we anticipate substantial top-line growth.”

The company also let on that it is in talks with several external digital image websites as it works to expand the scope of the Fotofy model.

Adams continued, “We are also building something we have started to call ‘the YouTube of Images’, which could be the most exciting part of this whole process. Early indications suggests this is a huge source of potential excitement, and we will have more details on it soon. We hope to have something more concrete in the next few weeks to share with our stakeholders… I want our shareholders to know that this is the beginning of the end of dilutive fundraising as we set in place the foundation of a strong revenue model,” Adams concluded. “I have been buying the stock in the open market not because I thought it would move the market, but to show my commitment to the long-term promise of Image Protect and the Fotofy strategy, and to align myself with our shareholders at this defining moment in the Company’s history.”

The overall picture is something that could be quite special, particularly given the extremely cheap bargain pricing of shares at present. If and when this story starts to click in a bigger way, the upside could be powerful, so it’s worth having on the radar.

 

Shutterstock Inc (NYSE:SSTK) is another key player in the space. The company provides digital content, and tools and services in North America, Europe, and internationally.

It offers digital imagery services that include licensed photographs, vectors, illustrations, and video clips, which is used in visual communications, such as Websites, digital and print marketing materials, corporate communications, books, publications, and video content; and music services comprising music tracks and sound effects that are used to complement digital imagery.

The company provides its services under the Shutterstock, Bigstock, Offset, Shutterstock Select, Shutterstock Custom, Shutterstock Editorial, and Shutterstock Music names, as well as Superior search, Application programming interface, Showcase, and Editor and Editor Pro tools to enhance workflow and project management needs, and search capabilities.

It serves marketing professionals and organizations, media and broadcast companies, and small and medium-sized businesses through online platform.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

The key level for SSTK is clearly pegged at the $42 area. It’s important that the stock holds above the level to keep the basing dynamic in play.

Shutterstock Inc (NYSE:SSTK) pulled in sales of $161.7M in its last reported quarterly financials, representing top line growth of 3.3%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($259.1M against $228.8M).

 

 

Alibaba Group Holding Ltd – ADR (NYSE:BABA) may seem like an unusual name to throw into this mix, but the company is entangled with the digital rights universe in a number of important ways, and the stock is awfully interesting given its radical attachment to the US-China trade war theme.

Shares have been held back due to the trade negotiations despite tremendous overall corporate performance. At this point, we would see any weakness opportunity.

Alibaba Group Holding Ltd (NYSE:BABA) bills itself as a company that, through its subsidiaries, operates as an online and mobile commerce company in the People’s Republic of China and internationally.

This is Jack Ma’s Chinese version of Amazon, or so the popular understanding goes.

The company operates in four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao Marketplace, a mobile commerce destination; Tmall, a third-party platform for brands and retailers; Rural Taobao program that enables rural residents and businesses to sell agricultural products to urban consumers; 1688.com, an online wholesale marketplace; Alibaba.com, an online wholesale marketplace; AliExpress, a retail marketplace; Lazada, an e-commerce platform; and Lingshoutong, a digital sourcing platform.

The company also provides pay-for-performance and display marketing services; and Taobao Ad Network and Exchange, a real-time bidding online marketing exchange in China; and digital payment and financial technology platform services.

In addition, much like Amazon, it offers cloud computing services, including elastic computing, database, storage, virtualization network, large scale computing, security, and management and application services, big data analytics, a machine learning platform, and Internet of Things and other service for enterprises; and payment and escrow services; and movies, TV drama series, online dramas, variety shows, news feeds, games, literature and music, and other areas through various content platforms, as well as develops and operates mobile browsers.

Further, the company provides AutoNavi, a mobile digital map, navigation, and real-time traffic information; DingTalk, a proprietary enterprise communication and collaboration platform; and Tmall Genie, an AI-powered voice assistant, which helps consumers to shop, order local services, search for information, control smart appliances, and play interactive content.

Shares of the stock have powered higher over the past month, rallying roughly 11% in that time on strong overall action.

Published by Chris Brown

About Me: I have a Phd in Economics Gender: Male Interests: Playing games like cricket, volleyball Favorite Music: hip hop, rock, jazz

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