A partnership with one of the largest tech giants is the last thing that The Movie Studio Inc (OTCMKTS:MVES) investors expected. After dropping to all-time lows, the stock has received a major boost, on the announcement the company is set to partner Amazon on the distribution of bundled motion picture content.
Given the potential impact of the partnership, which is set to result in revenue sharing pact, there is no doubt that the share price is set to receive a major boost. The stock has been on the receiving end over the past 12 months, but if investors reaction to the big news is anything to go by, then the stock looks set to power high over the next few months.
Trading volumes in the stock have increased a great deal in recent days as investors take more of the revenue sharing pact.
In February alone, the stock has risen by more than 50%, having erased nearly all the losses accrued over the past one year. The stock is on course to rise above the $0.01 mark, above which it will be on its way to register a new 52 week high.
The Movie Studio Business Description
The Movie Studio is a motion picture production company engaged in the development and distribution of motion picture content across a multitude of devices. The company’s Movie Studio platform consists of three verticals.
In the Strategic Partner vertical, the company enters into agreements with asset partners allowing them to promote their brands in its platform. Under the Locations Pay, US vertical the company gets paid for filming a scene of its move in a client’s location.
Amazon Revenue Sharing Milestone
Renewed investor interest in The Movie Studio has to do with the announcement the company is set to begin monetizing its content, through a revenue-sharing agreement with Amazon. The company is to utilize the e-commerce giant’s Video on Demand Platform to stream its bundled motion picture content.
The Movie Studio is currently integrating its ‘Vu-Me’ app, which is to serve as a backend for generating additional revenue, as a value-added product. The app is to be launched as a subscription-based model, targeting $2.99 a month.
“Without question the most valuable asset of The Movie Studio is our brand and with our new OTT technology platform supported by numerous verticals that when cross-pollinated, and leveraged with our content on a multitude of channels and devices could raise The Movie Studio brand and business model into major independent studio recognition,” said CEO Scott Venters
The Movie Studio has already emerged as an acquisition target for streaming companies looking to invest billions of dollars in original content. Netflix, Inc.(NASDAQ:NFLX) is one of the companies that has announced plans to spend between $7 billion and $8 billion on original content this year.
The Movie Studio brand complemented by the OTT technology platform that can support numerous verticals makes it an exciting pick as an acquisition target. The acquisition of Emerging Pictures means the company has control of a network of 150 theaters as it also continues to secure licensing rights for distributing a catalog of up to 1,800 movies.
That said, the company should remain an exciting acquisition target for the likes of Netflix looking to strengthen their edge in the streaming business. RLJ Entertainment, Lions Gate Entertainment Corp, and Twenty-First Century Fox are some of the other companies that are engaged in the distribution of digital content which could set their eyes on The Movie Studio.
Even as the company continues to be at the center of attention as a potential acquisition target, it continues to expand its footprint in pursuit of more market share in the motion picture distribution business. The company has already executed a Strategic Partnership agreement with Ethos Media.
Under the strategic partnership, The Movie Studio Brand and Ethos Media content are to be merged for potential vertical integration.
“The Movie Studios motion picture content aligned with Ethos Media’s digital platforms fits perfectly into our distribution platform, expands our global footprint focused on the millennial market reaching our target demographic with completed movies and television,” said Jack Namer the President and CEO of Ethos Media Networks.
A partnership with a company of Amazon caliber all but validates, The Movie Studio’s motion picture distribution business and prospects. The partnership should allow the company to generate a significant amount of revenues as it moves to distribute bundled motion picture content across Amazon’s Content Delivery Network.
That said, the stock remains well positioned to continue rising up the charts as investors take note of the potential impact of the partnership. With the company, emerging as an acquisition target for other motion picture distribution companies it goes without saying that the stock appears undervalued given the premium that could come into being on any takeover bid.
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Disclosure: We have no position in MVES and have not been compensated for this article.