Canadian-born lawyer and Vue Cinema founder Tim Richard's inspiration came from an unlikely source - Finchley Road in London. While working for Warner Brothers he had been sent to the capital in 1998 to oversee "disco cinema". "I saw a couple walk into the cinema. They took one look at the chaos of flashing lights and noise and walked out again."
Richards knew more could be done for cinema's key customers - baby boomers and adolescents. He also spotted a gap in tailoring cinemas to local demographics and ethnicity. And he knew a cinema chain could be run more cheaply. "Studio executives are probably the only people who make bankers look Spartan."
When he returned to Los Angeles he immediately handed in his notice. He began approaching private-equity houses but found it difficult to attract funding. "It was frustrating because I knew it was a great idea and expected them to sign me a cheque straight away." It was a stressful time - he was "working from his garage and had invested everything I owned in the company". In 1999 he finally secured start-up funds.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Having worked in 15 countries for Warner Brothers, Richards targeted the UK, where cinema attendances were growing yet many cinema owners "had become complacent". His next task was to assemble a management team. "After ten years in the industry I had a pretty good idea of who I wanted but it was difficult to persuade people to join a cinema operator that didn't even own a cinema."
In 2000 the Vue bought its first cinema. This "massive" turning point allowed Richards to "physically show employees and investors what Vue is all about". The firm continued to add cinemas piecemeal until 2002 when it had six sites and hit the "psychologically important" cash flow break-even point. Not content with being a "bit-part player" - as Vue was described by The Times in 2003 - Richards negotiated relentlessly for 18 months with his former employers to buy 36 of their UK cinemas.
"If the deal hadn't gone ahead the amount of professional fees we had racked up could have killed the company". As things turned out, the acquisition "transformed Vue overnight". The company had created a detailed "mosaic profile" of customers at its cinemas. Now it could tailor film schedules to fit.
So, Bollywood films were screened for Asian audiences in Inverness and Polish movies in parts of west London. His new cinemas were also fitted with VIP sections, wine bars, tables and even waiter service for flagship sites such as the Westfield shopping centre. Meanwhile, keeping a keen eye on costs, Vue's headquarters were stationed in "a normal suburban business park, not Mayfair, and executives travel to meetings by Tube not taxi".
Unlike many in the industry, Richards is not worried by new technologies such as the iPad that could change how and where people view films. "We can screen live comedy shows or concerts across multiple cinemas with a digital projector that allows the performer and the crowd to interact." Vue even hosts computer game events, and Richards sees more opportunity to use "technology to interact with new audiences in new ways".
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
