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Forbidden Technologies www.forbidden.co.uk/
Full Forbidden Technologies profile here

Forbidden Technologies plc (AIM:FBT, www.forbidden.co.uk) floated in February 2000. The Company develops and markets a powerful internet video platform, FORscene, which is used by broadcasters, in professional web video, in education and by consumers. FORscene is one of the world's most advanced browser-based and mobile applications, operating in the cloud.

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Forbidden Technologies' Olympic breakthrough puts it ahead of the field

Tuesday, July 17, 2012 by Ian Lyall

The 62 per cent rise in Forbidden Technologies’ (LON:FBT) share price in the past month suggests it is starting to register again on the radar screens of investors.

The recent news flow has helped to raise its profile, though whether the market is fully appraised of the true importance of the information remains to be seen.

The most significant announcements of the recent flurry revealed that Forbidden’s cloud-based video editing platform FORscene is being integrated into the YouTube platform used by professional clients.

Not just that, it will be used to compile coverage of a major sporting event taking place in London later this summer.

No prizes for guessing that the major sporting event is the Olympics. What does not come out of the release is that one major user will be the American broadcaster NBC.

You have to scan the internet to pick up this nugget of information (this link shows where FORscene sits in the hierarchy).

Forbidden is not being deliberately obtuse. It has been bound by confidentiality agreements and the Olympics Act covering what it can or can’t say publicly.

What the schematic on that link shows is that FORScene plays a fairly integral role in the process of relaying the Olympics via the worldwide web.

However, the diagram doesn’t communicate the huge importance of this YouTube tie-up to the company and its future prospects.

If the co-operation works without a hitch, then it provides a huge endorsement of the FORscene technology in live sports broadcasting – in fact live broadcasting per se.

This opens up a huge and potentially more lucrative revenue stream several times larger than Forbidden's portion of the broadcast market, where FORscene is used in long-form television post production (ie TV series), and where timing isn’t so critical.

So a successful Olympics allows the company to charge a premium for a suite that is robust enough to stand up to the rigours of the world’s largest sporting event.

A breakthrough on this scale with YouTube can also establish the platform as the standard for the internet.

It is hardly surprising, then, that chief executive Stephen Streater is excited.

“For the first time we can go around the world and say we have been signed up by the world’s biggest video company to provide video editing for the world’s biggest sports rights holder at the world’s biggest sporting event,” he said.

“We are on the map now. We have traditionally done long-form television post production, where they have several months to make each series.

“With news and sport you have to get it out when it is happening. It is a reliability which FORscene already provides.”

This has not been an overnight success for the company and Streater, who was one of the founders of Lara Croft creator Eidos.

Forbidden has been quoted for 12 years, and for that time it has been building this video editing platform, which allows broadcasters to edit programmes via the cloud. It also has a consumer offering called Clesh.

It is only recently that the market has really begun to appreciate the potential of this professional service and its ability to slash costs.

Its uptake is reflected in compound annual revenue growth in excess of 60 per cent for the past four years and the fact FORscene dominates the growing market for cloud-based video post-production. 

FORscene has handled two million hours of professionally shot content.

Streater and the team recently made the rounds of the smaller company and technology funds just to re-acquaint the City with the Forbidden story – it has been more than a decade since it last did this.

“We are still small, but everyone seemed to think we have a really exciting story,” said the chief executive.

“Half said why are you valued so high when your turnover last year was half a million pounds.

“The other half said how come you are valued so low when you are going to have a billion dollars turnover in a few years’ time. So, half of them get the message.”

Streater uses that billion dollars figure several times during the conversation, and for a company with such a small revenue stream it does seem a little ambitious.

However, the potential for the applications of FORscene, or a derivate thereof, is huge. 

Applications include use in social media, camcorders and smartphones.

None of these innovations require a huge salesforce or massive capital expenditure.

They work on a shared revenue model and web and mobile telephony is now advanced enough to accommodate Forbidden’s IP.

“There are a myriad of ways our turnover could be 100 times bigger than it is today,” said the Forbidden CEO.

“We are just getting all our ducks in a row. We have enough of a reputation now to approach big companies in several sectors.”

The main competitor and established player in professional editing is America’s Avid, which was founded in 1987 to commercialise technology to copy videotape footage in real-time to digital hard disks.

With around US$700 million of annual revenue and the current standard for professional editing, Avid is the big beast in the sector.

However, the competitive advantages of FORscene are fairly clear. It is significantly faster for cloud editing and substantially cheaper.

Editing software such as Apple’s Final Cut and Adobe’s Premier Pro is popular. It is used to work on desktops and notebooks, but don’t have the same compression and cloud architecture as Forbidden, or the easy integration with social networks and mobile devices.

In pure cloud editing there are emerging players: WeVideo and A-Frame. Their strategies are similar to Forbidden, although the UK group has an incredible head-start on the pair.

“We are firing on all cylinders,” concludes Streater.

“Broadcast is growing fast, news and sport innovation, well nobody knows how big that could be. 

"We think it will be bigger than broadcast and we think we will get a bigger market share. Our aim is to own that market.

“As for the social network, social media consumer side - the plan it to work through partners who are already in that space.”

Streater draws parallels between his own company and another UK tech success, ARM Holdings.

The chip designer was a slow burner taking almost 17 years before its revolutionary architecture was recognised and picked up by the market. It has taken Forbidden only 12 years to get to this current inflection point.

However, there other similarities, Streater believes: “We also have a disruptive technology and like ARM’s there’s no expensive hardware element.”

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Andrew McCrea is Sub Authorised Representative (SAR: 291331) of Proactive Investors Australia Pty Ltd
(ABN: 19 132 787 654) which is a Corporate Auhorised Representative (CAR: 413802) of RM Capital
Pty Ltd (AFSL: 221938).

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