The launch of global video-on-demand (VOD) platform PANTAFLIX at the end of 2016 and the recent announcement of a new JV in China could prove transformative for Pantaleon Entertainment AG (DE:PALG), traditionally known for its hit film productions. The market opportunity is significant, it has a first-mover advantage and capital risk is limited. Although at an early stage of development, the direction of travel is positive and the shares have started to reflect the potential.
Expanding beyond its success in film
An established film production company, Pantaleon in 2016 extended its success to other genres delivering Germany’s first original series for Amazon (NASDAQ:AMZN) Prime (You Are Wanted), as well as its first television series for Sat 1. Moreover, in December 2016 it launched PANTAFLIX, a global transactional VOD service. PANTAFLIX exports local language films to the world’s expatriate and migrant audiences and is targeting 30k titles by the end of this year. Significantly, in May 2017 it announced a new JV with a major Chinese media conglomerate giving access to a huge library of 100,000 films from which to launch a service for the 50 million Mandarin speakers living abroad.
PANTAFLIX VOD platform potentially transformative
The production business has a strong pipeline in FY17 and FY18 and should deliver strong growth in its own right. However, the VOD business is highly scalable and potentially transformative for the group. It stands apart from other OTT platforms by handing control back to the content creators and taking a cut of sales that are on a per stream, rather than subscription, basis. Success will ultimately be driven by the quality of content on the platform; on this measure the JV with Sun Seven Stars Entertainment and Media Group, one of China’s largest private media companies, is an exciting step forward.
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