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Hulu Headlines Highlight Growing Value In Xumanii

By Jake PeacockStock MarketsJun 01, 2013 02:31AM ET
www.investing.com/analysis/hulu-headlines-highlight-growing-value-in-xumanii-169276
Hulu Headlines Highlight Growing Value In Xumanii
By Jake Peacock   |  Jun 01, 2013 02:31AM ET
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Almost everyone knows Hulu. Hulu is an online video service that offers a selection of hit shows, clips, movies and more at Hulu.com, numerous destination sites online, and through our ad-supported subscription service, Hulu Plus. Hulu's selection of premium programming is provided by more than 410 content companies.

Recent news reports suggest that the company is up for auction and the interest in the company continues to grow as can be evidenced by the quickly advancing valuations of Hulu. On Friday, DirecTV (DTV) and two other bidders offered more than $1 billion apiece to buy Hulu, a source with knowledge of the bidding process said. This is an increase of between 25-67% from the previously reported offer for Hulu, which was $600-800 million by Yahoo (YHOO), earlier last week.

These increasing offers highlight the growing value of online streaming companies such as Netflix (NFLX), Google’s (GOOG) YouTube, Xumanii (XUII), and others. The increasing valuation also might lead to M&A in the space. Although Netflix and Google are unlikely to do anything with their assets or become M&A targets because of their size, Xumanii is a small, quickly growing company that may become in play for potential acquirers with the interest Hulu’s sale process is generating.

For those unfamiliar, Xumanii provides online live content streaming services through its website, xumanii.com. It also offers an embedded player for placing on other Websites for streaming, as well as Xumanii-Facebook application to enable the producer’s viral marketing promotion for their events. The company enables its users to set a price and sell digital tickets, access sponsorship support for their live production by giving the option to sell banner space on profile page; and add pre-recorded commercials to their live streaming content.

Xumanii released news last week that show the growing potential of the company’s services and shares. XUII reported that it had an increase in viewer traffic of greater than 600% over the previous Live Broadcast event.

"Increased log-in numbers of greater than 600% over the last show indicates that through marketing and having access to globally recognized names such as Akon that our model can drive traffic to our platform and that Xumanii.com is a great place for artists to showcase their Live Concerts for fans that are unable to attend," said Alexandre Frigon, Founder and CEO of Xumanii. He continued to say that, "We are compiling more data on every stream and are very optimistic of what we see: increased viewer log-ins, a more stable platform, global audience, high bit-rate etc. I am looking forward to announcing our next event and hope to see everyone there."

The next upcoming live event for Xumanii is expected to be GOOD Music's Grammy Nominated Artist Pusha-T’s July 1st concert in France. Xumanii and Pusha-T recently signed an agreement, which includes the live broadcast of four concert events over the next two years. The company isn’t slowing down in bringing in new artists to the roster and has stated that other acts are in the works as well. There are several large acts that they are currently in various levels of negotiations with the scalability of this Paris Festival as well as the international appeal and exposure for the company are key factors leading it to choose this venue as the 2nd Xumanii live broadcast of Pusha-T.

The quickly growing company has begun working on securing its patent portfolio, which seems like a good idea with the growing interest in the company’s platform. On Thursday, Xumanii said that it has engaged the services of well-known intellectual property law firm, Feldman Gale to file several patents on behalf of Xumanii. The company intends to have the law firm begin filing multiple patents on its proprietary software that is in various stages of development.

The next upcoming catalyst for the shares is expected to be GOOD Music's Grammy Nominated Artist Pusha-T’s July 1st concert in France. Xumanii and Pusha-T recently signed an agreement, which includes the live broadcast of four concert events over the next two years. Other acts, in addition to the company’s recent signings of Pusha T and Akon, are in the works as well. The company has stated that there are several large acts that they are currently in various levels of negotiations with the scalability of this Paris Festival as well as the international appeal and exposure for the company are key factors leading it to choose this venue as the 2nd Xumanii live broadcast of Pusha-T.

The health of the music industry is stabilizing and improving, which should act as a tailwind for XUII. NY Times reported earlier this year that global music sales rose last year for the first time since 1999, raising hopes that a long-sought recovery might have begun. One senior executive suggested that this could be the big turning point for the music industry. “It’s clear that 2012 saw the global recording industry moving onto the road to recovery,” said Frances Moore, chief executive of the International Federation of the Phonographic Industry. “There’s a palpable buzz in the air that I haven’t felt for a long time.”

The demand for live music looks even healthier. The Guardian reported in January on a battle for control of London’s prime venues by the world’s two biggest live music companies. Forbes reported that live music saw dramatic growth over a recent 10 year period. The magazine noted that from 1999 to 2009, concert ticket sales in the US tripled from $1.5 billion to $4.6 billion, vastly exceeding the growth of inflation and population growth.

Getting back to Xumanii, the drivers are in the place for the company to continue delivering excellent growth figures and raising the bar and increasing its share price. Right off the bat the Hulu comparison may make sense here with it being a freshly minted transaction comp. A $1 billion valuation for Hulu would make Xumanii a 2 dollar stock. If the company arrives to the same conclusion that Warner Music Group arrived at two years ago, selling itself at a price of $3.3 billion, then a 6 dollar stock is not out of the realm of possibilities.

Hulu Headlines Highlight Growing Value In Xumanii
 

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Hulu Headlines Highlight Growing Value In Xumanii

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Comments (1)
Michael Goode
Michael Goode Jun 09, 2013 9:03PM ET
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You wrote a similar blog post at The Motley Fool and it was taken down following my complaint. I guess Investing**** is the place to go to put up ******** promotional articles that you were paid by stock promoters to write. . . I am short XUII but I was just as bearish a week ago when I wasn't short (look at my SeekingAlpha article on it, that unlike this piece, was reviewed by actual editors).
 
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