- Recent research suggests 530% revenue growth potential
- Digital rights management space to grow to $2.5 billion by 2025
- Positioned near 52 week low…great entry point based on industry’s future
- Has executed exclusive contracts with 6 of the top photo producers in the world
- Monitoring millions and millions of photos for their growing client list
- Adds social celebrity star Mia Khalifa… creates opportunities within other A listers
Image Protect Plans To Grow Right Along With The Digital World
Image Protect’s own forecast models were almost identical to ResearchNReports recent Digital Rights management report, which suggests the space should increase over 5 fold by the year 2025. The Company has seen a sharp and undeniable rise in the growth of the core business, at one-point projecting 3,000 actionable Infringement cases for recovered copyright revenue in Q1 2017 alone, versus only 1,500 actionable cases for the entire year of 2016. The Digital Rights Management (DRM) space should grow to a whopping $2.5 billion by 2025.
The company is also positioned at the moment slightly off its 52 week low. At inception of this article, $IMTL was trading at $0.016 much lower than its 52 week high of $0.09 per share. With the industry’s bullish outlook, if Image Protect’s share price could reach its yearly highs, it would be a 562% gain from its current trading levels.
Digital Asset Piracy…What It Is & How Big Of A Problem Is It
Digital Piracy is the illegal trade in software, videos, digital video devices (DVDs), images and music. Piracy occurs when someone other than the copyright holder copies the product and resells it for a fraction of the cost that the legitimate producer charges. It is a serious problem in many countries outside the United States, particularly China. Last year, Google received just over 75 million DMCA-related (Digital Millennium Copyright Act) takedown requests in the month of March, representing a new high as content owners seek to keep pirate websites out of search results and invisible to people searching for leaked album downloads, movies, and other media. The rate at which the requests have grown is truly staggering. Google is asked to remove 100,000 ‘Pirate Links’ every hour of the day and you would think Google with all its power might resist this but it simply complies. The reason for compliance is that images that are copyrighted and registered would fall under federal violations and losing in federal court is not an inexpensive proposition where fines would be assessed.
IMTL Is Expanding Its Global Presence
The company recently shared with its shareholders the execution of exclusive contracts with 6 of the top photo producers in the world. Image Protect has also been furiously working to grow its global presence by adding more than a dozen law firms in the United States, UK, Germany, Austria, France, Italy, the Netherlands, Belgium, Luxembourg, Denmark, Poland, Czech Republic, and Slovakia to its client list.
Working With The Snapwire Marketplace Is A Huge Win
The company recently landed a pivotal client, allowing them to now monitor the 4 MILLION+ photos within the Snapwire Marketplace. IMTL is actively working with the Snapwire community to register their images with the US Copyright Office to better protect their growing community of photographers from online piracy. This relationship has hopes to be an accelerator to attract future “household name” clients. Snapwire Media Inc. is a leading-edge website that hosts over 450k creatives generating a massive flow of visual intellectual property, 1800 clients worldwide such as LinkedIn, Scholastic, Google, and Hertz as well as over 330k photographers in 180 countries. Snapwire, although a big fish, is not the only company Image Protect has had success bringing aboard. Here are a few others:
- Tetra Images – Tetra is a leading player in the premium royalty-free market. IMTL will monitor 100,000+ photos and will also work with their community to register all images with the US Copyright Office.
- Stock Pot Images – will be monitoring and protecting their extensive Cannabis image collection. Legalization and growing awareness of CBD oils, hemp, marijuana and more, have created a strong demand for premium cannabis stock images.
- Caia Images – UK based company, is a collective of photographers, film-makers, producers and art directors producing some of the best rights managed/royalty free imagery and footage available to the creative industry today.
- Capital Art, Inc. – is a Las Vegas based company, trading on the OTC ticker “CAPA”, which acquires and manages photographic images. The Company markets and distributes images for the art, editorial and commercial markets.
As these deals stack up, they represent the building of a potent global brand, which in turn places them that much closer to the next major deal, and the deal after that. In short, this is a massive end market. The online advertising space alone, in terms of image protection, has a $95B global upside. Image Protect believes they haven’t scratched the surface yet.
Future Expansion of Additional Pirated Intellectual Properties?
It is difficult to predict the future, but the implementation of a successful business model, generating revenues in the digital photo management space could allow the company to utilize the same practice to expand into other areas such as music, film, tv programming, computer software, books, video games and more. The internet is a wonderful thing and allows us to have whatever information we desire at our fingertips. The issue arises when the intellectual property owner or creator loses credit, income or simply has it stolen from them. As the internet expands and grows by leaps and bounds, Digital asset owners need some form of management or policing in place to protect themselves.
Protecting Social Media Celebrity Mia Khalifa’s Visual Assets
Every teenage boy and young adult male is familiar with Ms. Khalifa, who boasts a rapidly growing base of over 3.8 million Instagram followers, and is also now the co-host of a brand new Complex News Sports Talk Show titled “Out of Bounds”. Luckily, Image Protect is currently working to monitor, identify and remove any malicious online imagery on Mia’s behalf. Management believes that this may represent a burgeoning market “aka Adult stars” with enormous long-term potential. The stock’s share price was flat Monday, November 20th on the news as we feel that investors may not have grasped just how important this press release is. Mia now may be working on legit respectable entrepreneurial projects, but her claim to fame was from “baring it all”. As we know on the internet, once there is a photo or video uploaded to it, it will be circulating forever. Hence, she is proactively engaged with the paramount importance of protecting her online identity and social media image from illicit infringement and/or defamation — a growing need for many celebrities who increasingly stake their livelihoods online and on social media platforms.
This image monitoring service seems to be an idea that is coming back in vogue. From the last 10Q they reported zero revenue compared to approximately 50% of last year revenue. Expansion of this revenue stream could be boundless because computer algorithms do most of the work scouring the internet for images then the ISP’s hosting the infringers photos get taken down. Other celebrities will want to protect their likeness. The explosion of social media has made it very difficult to police but IMTL seems to have a niche solution that is a must have for celebrities. Expect to see more announcements here this is just getting started and could go viral among the celebs. For the investors this will me a recurring revenue stream that grows virally as celebs talk to one another and adopt it. All the company needs is one A Lister and this could become the celebrities destination site for their image protection.
Large Players Moving into the Space
Facebook (FB) and Netflix (NFLX) have large dedicated teams in house to deal with copyright infringement on illegally uploaded videos. With viral videos and piracy websites it takes a constant monitoring staff to deal with this which is why FB just went out and bought a company. Netflix created its own in house team but the investment opportunity is to see that this field is ripe for the taking. Large companies are going to need this type of service because the leakage of royalties is astronomical.
A potential group larger than the media industry is adult entertainment. A 2014 study showed that globally, porn is a $97 billion industry, according to Kassia Wosick, assistant professor of sociology at New Mexico State University. At present, between $10 and $12 billion of that comes from the United States. These numbers were set to grow by 25% a year, meaning adult internet entertainment is over a $100,000,000,000.00 dollar industry IMTL just tapped into. According to Juniper Research, by 2017, a quarter of a billion people were expected be accessing mobile adult content either on their cellular device or tablet, an increase of 30% from 2013.
Competition
Currently, there are four major competitors in copyright protection. Picscout, Inc. allows for users to discover how their images are being used along with analytics upon which they can make informed decision. It’s this type of metadata that was used in election ads to gauge click through rates and profiling of the demographic. Getty Images, Inc. purchased PicScout in 2011, giving them the ability to service other imaging agencies. PicScout, Inc. does provide copyright protection to its customers but give the access to see where their images are being used allowing them to go after the copyright infringement. Some of their direct competitors are ImageRights, Picture Protection Services, and Pixsy. Similar to INTV these firms find the infringement, give notice, and seek compensation. Each uses their own intellectual property to troll the internet for infringement and their efficiency and results are what make them stand apart. It’s pretty apparent that INTV is pushing the envelope of technology and wining marquis clients demonstrating their prowess in the marketplace. Other public companies, such as Rightscorp (OTC: “RIHT”), who specialize in the music side of piracy, have attempted to work with and go after ISP’s, only to have had little to no luck. If “IMTL” can pull this off with digital imagery, Image Protect’s future is very bright and can far exceed just “images” if their business works!
Convertible Debt Risk
The company does have convertible debt and many series of it. In all it has $183,929. Some of it is due in the short term and price could see some weakness but after December 6, nothing remains. Since about $115,000 of convertible debt was due to convert since the last quarter it’s hard to tell if the conversion is over or if they are holding it as investments. If all was converted this quarter that would leave 68,000 remaining that hasn’t been converted and a sign that investors really like the long term outlook. In the latest quarter there still seem to be excellent demand for their Reg A offering at $.015 raising another $86,710. The interesting observation about the convertible debt is that it doesn’t seem to be leaking its way onto the market too badly. With dilution percentages on some notes over 50% the stock has not experienced the drastic drop investors would have expected. So the risk is out there until the next corporate update but the tale of the tape is showing quite a resilient investor following building.
Investment Thesis
There is a real need for content producers to protect their copyright. The research indicates billions are at risk. Large corporations are bringing in house staff to deal with this leakage but the small companies will need a service provider and IMTL fits the profile. The move into celebrities is spot on and could take off if just the right A’lister is employed and social media will take care of the rest. The company does have some debt but the financials are showing incremental growth in revenue when you strip out the accruals. Based on the pipeline investors could be very close to a break even in the Q1 FY2018. At that point the stock shouldn’t be under any pressure and will be limited by its organizations ability to win awards or monetize its platform of finding copyright infringement.
