#8 VUE International Founder & CEO, Tim Richards: Streaming Giants Aren't Our Rivals

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0:17Hello, welcome to Big Boss Interview. I'm Sean Farrington. You will have heard plenty of our interviews with some of the biggest bosses around the UK and around the world. And the latest has been done by Will Bain. Will, who have you got? You've been rolling out the red carpet, I hear. Yes, we've had our very own premiere, if you like, for one of the biggest cinema bosses in Europe. Interesting, you talk about international and British bosses, Tim Richards, originally a Canadian, spent a lot of time in Hollywood working for some of the biggest movie studios in the world, and then came here to the UK and saw an opening in the late 90s, shown to open view cinemas, I'm sure most people have seen them on a high street near them and have expanded across Europe and Asia as well.

0:57So we talked all things about the changing trends in cinema, what you should go and see, what he thinks about when you go to the cinema to try and get you to spend a bit more of your money on popcorn and drinks and things like that as well. And I thought interesting too, Sean, that we're back with not just someone who's a boss today, but someone who founded their company too. Very interesting. Yeah. When we had that with John Roberts, you get a little bit of a different tone, don't you, from those who've maybe only been there for a few years? Yeah, absolutely. And you made this point about John Roberts, the kind of enthusiasm point, you know, that he sort of bounced into the studio.

1:28And Tim Richards, you know, for a man who's done this for 30 odd years at this point, absolutely. And I'm sure you'll hear it through the interview today. Loves cinema, loves the experience, loves films. And that really kind of shines through. but it also means that we talk quite a bit about some of the difficult moments, about when a company is more than just a job to you, it's your life's work. He describes viewers like his firstborn at one point during the interview, so those tough times as well, particularly around the pandemic when cinemas were basically shut for a couple of years as well, so very much a clichéd emotional rollercoaster we're going to go on.

2:04So I'll give a plug for that John Roberts interview, the founder and chief executive of AO. You can go back in the podcast feed and hear that one, But right now, let's hear from Tim Richards, the chief executive and founder of Vue.

2:20So our guest today, Tim Richards, chief executive, founder of Vue International, one of the biggest cinema chains in Europe. Tim, thanks so much for coming on the Big Boss interview. No, a pleasure. It's great to be here. And thank you for the invite. A heck of a lot of change in the time that you've founded Vue, Tim. I know that, you know, if you're going to set out as an entrepreneur, as you did, you expect, I don't know, lots of change. And you know what's going there. That's the excitement, right, isn't it? But could you have imagined quite the journey it's been and quite the kind of twists and turns in that journey?

2:51No, I mean, I think it is something that I'm always caught off guard when anybody actually has even heard of you as, you know, we're a main brand right now. But it's been an incredible journey, actually, over 25 years now. And it certainly has had its ebbs and flows over that period. Well, take us right back then, because that, as you say, wasn't even close to your job when you started out for a lot of your adult life. So tell us about how you kind of came to found this company. I guess by training, I'm a New York M &A lawyer, which I don't always admit. But I had joined Freshfields, and I moved over from New York to London with Freshfields, and this was kind of in the late 80s.

3:35And when the recession hit in 1990, and I think a lot of us who were there remember how bad that was. I think people have short memories about the impact those recessions actually had. It was huge. And I had a great job. I loved Freshfields, but I was doing M &A, and the credit markets had completely dried up. and I was bored. And I answered an ad in the Financial Times for a position with an entertainment company. It didn't even say who or what. And it turned out that it was with Paramount and Universal Studios at the time. And my first two or three interviews, I'm not cocky by nature ever, but I was confident.

4:19And also because I didn't need the job and I wasn't really looking for the job. I just didn't have anything else to do. And by my fourth interview, I realized that this is something that I really, really wanted. And at that point, your interviewing skills are gone. But I joined Paramount Universal, and that was kind of the beginning of my last 35 years in the industry. And so what were you doing there? Well, at that point, I was wearing a lot of hats. I was doing home entertainment, and I was doing cinemas. But effectively, I was opening up markets around the world. I was just living on planes and traveling.

4:52And it was that kind of that proverbial, if you build it, they will come moment in our industry, because a lot of the world had really not seen any investment in any areas in media since post-war period. I was going to ask you exactly that. In the 90s, what was that? VHS? Betamax? Like, people don't remember those sort of warming up. What was it? Well, I mean, if you look in the UK, and this is kind of representative globally, but I think certainly cinema attendance peaked in the post-war period at around 1.2 billion. That dropped down to 54 million attendances in the late 80s. And then when the first multiplex was opened in Milton Keynes in 1984, that was the beginning.

5:35Certainly pre-pandemic, we were looking like we were going to be getting up close to 200 million kind of attendance, which is kind of slipped back again. Mad. Okay. So you're there, you're working for one of the biggest kind of what becomes one of the biggest studios in this emerging area in the world. At what point then do you get that next light bulb moment where you think, actually, I've got an idea about how to grow this and do it myself? Well, I think it was kind of a lot of entrepreneurs that you meet kind of have that eureka moment where everything was crystal clear and the vision was there and how you were going to do it.

6:13I didn't have that at all. I didn't have the vision and I didn't have the mentor. This is something that kind of all came together from a variety of different areas. And I think from the business perspective, working for a studio is the kind of lifestyle that is unimaginable, puts banking to shame and why no one leaves. And, I mean, I look at the studio when I was working there and, you know, we had a hairstylist. We had an incredible gym, three restaurants, a bank. Everything was there and a fun place to work. I mean, they're shooting all the time and you're kind of walking through. And on the economic side, it was, you know, first class travel.

6:51And in those days, as a very, very junior executive, you know, we were flying Concorde. But I took a step back and I looked at all that and I just thought, you know, none of that really meant that much to me. And I kept thinking at the time, you know, when are the shareholders going to wake up and realize how much is being spent? And but it did change. But then again, what happened is in 1996 with the AOL Time Warner deal now with the studio, they in our annual report, our division was called a non-core asset. That's not a good sign. So I kind of knew the writing was on the wall there a little bit.

7:30And so I think when I looked at, I had a new five-year contract on my desk to go forward and continue with Warner Brothers at the time. And I was living in Los Angeles for almost seven years. And doing kind of that distribution side of it still. Yes. Yeah. Well, I mean, and just basically living on planes and traveling way too much. And I think part of this as well, you know, one of the other components was kind of family life and wanting to kind of slow that travel down. I mean, I was looking after everything outside of North America, which is where I was based. So, you know, my closest market was an eight or nine hour flight.

8:08And that was really that was that was tough on the family. Right. And so that begins to get you thinking about what using the distribution skills. Had you seen a gap? Well, yeah, I think as close to a eureka moment as I had was there was a cinema up at the O2 in Finchley Road. And at that time, Warner Brothers were very keen on us using their IP, mostly from their animated features. And we had this kind of nightclub feel to the cinema. It was dark. It was very loud with music. So this is when you're traveling. You're coming to London and you're seeing this place. Well, I was running these. Yeah, I was running them.

8:45Yeah, so we were rolling them out across the world and literally across the world from Asia to Central and South America. But I kind of looked in there and I saw this nightclub and I was just reflecting on it. And as I was kind of doing that, and this was on a Friday night, and there was a couple, kind of a fairly affluent couple, who were standing there looking inside. And it was very clear that they wanted to go and see a movie, but they saw this kind of nightclub feel. They saw the drinks at the time being poured out of Daffy Duck's mouth. They saw Bugs Bunny. They saw Tasmanian Devil on the side.

9:21And they left. And I just thought we're alienating some of our customers here, and that can't be right. And it was around that time with all the other factors that it kind of started to gel a little bit. And I put a business plan together and hit the streets. And it was really tough raising capital at that point because this is immediately before the dot-com crash. and I was sitting down with freshly recruited MBA students or professionals who would lean back in their chair and they'd put their feet up on the table and they'd flick their pen in the air and say, we don't look at anything under 50 % IRR.

9:59And I'd say, sorry, can't do that. So it was tough. It was very tough. But when we had six cinemas open, when we started chasing the Warner Brothers circuit that I used to run in the UK. And again, one of these, unfortunately, lessons that I had to learn the hard way, because I didn't have a mentor telling me all these things. But the importance of kind of as a young entrepreneur watching your costs, which sounds obvious, but and because we chase this deal for almost two years, and the accounting fees and the legal fees and the banking fees probably would have tanked us if that deal hadn't happened.

10:41And we got really close. Fortunately, it happened. And the article, and that was a game changer. It was on May 13th in 2003, 5.30 in the morning. And it was a pivotal moment in the company because I knew we were there to stay at that point. So what was that deal? So we bought the Warner Brothers circuit for 250 million pounds. And it was 36 cinemas at the time. And the headline in the business section of the Times was Unknown Bit Player Buys Warner Brothers. I love that. You've got that somewhere still. Well, I certainly do. Tell us about then getting off the ground and competition in that period.

11:27In a time, and we'll come to this when we talk a little bit more about the industry today, but I guess at a time where competition was pretty fierce. Well, it was a changing time in the industry, but it was interesting because I sat down with the head of Odeon at the time and he invited me out to lunch. We had two cinemas open, and I just thought he called me up and asked me out for lunch. I thought that was really nice. It's a very closely knit industry. And we had lunch, and halfway through lunch he said, Tim, I just want to be honest with you. I'm going to be building across the street from you at every single cinema that you build in this country.

12:07And I thought, whoa, before the food had been served. And he just said, I want to send a message to private equity and investors that this is not a market that you can come into. And I thought like, whoa, I mean, we're not even a threat. We're nobody. and he was kind of taking that approach. But I thought in hindsight now, I think that he had reason to be nervous. In terms of the actual premises themselves, were you doing anything? In particular, when you're talking about quality as well, was there something you were looking for in that pre-pandemic period that made a cinema a great experience to you as a building?

12:48There's really only been two or three major changes in our industry that are game changers. in the last 30, 40 years. One of them was the introduction of stadium seats. And the first generation cinemas were sloping floors. So if there was somebody tall sitting ahead of you, you would get an obstructed view. And with stadium seating, there is a computer-designed perfect sight line from every seat. It's a game changer. And we have no shortage of examples. When we opened up in La Maraleja right outside of Madrid, first multiplex in the country, we found that people were driving past five or six existing cinemas just to come to that.

13:32It was extraordinary. Because they knew they'd get a great view. Absolutely right. And that was kind of one of them. So I think for us, it was really looking at when the cinemas were built and did they have stadium seating, which was kind of a qualifier for us. And then just the look and feel if they'd actually been looked after. And so you talked about this line between the pandemic and now. Is that just simply that people started to spend more money in their home for their home experience and that it helped accelerate the pace of streaming that was kind of already coming as well? So I've spent several years in home entertainment and I kind of know the industry from all sides as a consequence.

14:19I have never looked at what happens in the home as being competition. Our competition is out-of-home entertainment, and I worry more about somebody turning right and going to a theme park or a football game or something else. What happens at home, our biggest, most frequent customers are Netflix subscribers or Disney Plus subscribers. People who love movies love movies in all formats. So I've never looked at them as competition. but as that has got more competitive their sector streaming who's got it first who's got the content wars that have gone on there at the moment we're seeing it play out aren't we in the kind of week that we're talking about going on with your former employer warner discovery and everything that's there that we're seeing the first moves of consolidation aren't we for that that you need massive pockets to to be in this space and to be competitive in this space and that is clearly shaping, right, how much those guys want to share with you, that they certainly see you as their competitor, even if you don't see them as one.

15:21I mean, Hollywood is absolutely going through a major change. And that is, again, that kind of pre and post pandemic. And I think as an industry, we had three consecutive growth years leading to 2019, which is the highest grossing box office movie, box office globally in history,$42.5 billion. It was a massive year. As a company, we broke all records. The industry was going forward on all cylinders at pace. And as a company, we broke all records internally as well. And 2019 for us was one of those bizarre years where I think if you were to ask the industry about us, the response I would hope would be very innovative and very analytical.

16:08And we have a lot of world firsts that we don't always wave the flag on. But in 2019, normally we throw 10 things against the wall, two stick, you're happy, you move on. In 2019, everything worked. I mean, it was amazing. Everything we tried worked. And that's why when the pandemic hit, it was that hard. It was that much harder. Because we literally went from a rolling record-breaking period from the end of our year to the end of February on a 12-month basis. We set another record. And then within three weeks, we closed every cinema in nine countries. And it was just one of those apocalyptic moments.

16:47But we suffered, the studio suffered, everyone suffered. We were effectively closed for almost two years. But they filled their coffers, a lot of those companies, didn't they? They got more subscribers than ever before, lots of those places, Netflix in particular. And I was watching something, Richard Osman, the author of the Thursday Murder Club books, on his podcast, Rest is Entertainment with Marina Hyde, was talking about this the other day, and I thought it was interesting, and knowing we were going to chat, I watched it back again the other night. And he's sort of saying, you know, when he signed, before he even written the first of those books, he signs a deal with Amblin, a distribution company, to have the rights to turn his books into a film.

17:31Even partway through writing that series, that shifted and they're coming back to him and saying, this might not be a film that goes to the cinemas. Actually, at some point we might have to go to a streamer and sell this. And he says, well, you know, you've got the contract, you do what you want, but that's a bit of a shame. I'd like it to be in a film. Then you see what it's become. It's come out this year, hasn't it? It's got every British star that you can think of in the last 50 years, from Helen Mirren and Christopher Columbus is directing it. And it's got presumably got a gigantic budget.

17:59And he ends this anecdote by saying two things. One, only Netflix could afford to make a film like that, that no theatrical studio could. And that he says the reason for that is, is that that his listeners there, people watching films, don't go to the cinema anymore in the same way. Is he wrong about that? Yeah, I would disagree because I think that certainly during the pandemic, there was an increase with subscription services because people had no choice. If you want to watch a movie, you could not watch it at one of our cinemas. So there was a natural increase that happened during that period.

18:37But that has not continued. And unfortunately, as an industry, we kind of shot ourselves in the foot with the strikes. And when the WGA and SAG-AFTRA, the writers and the actors, went on strike in 2023, that was just when we were starting to recover. And what people don't realize is that that actually stopped production for almost 12 months. And it's not something you can restart that quickly. But when you see a big blockbuster film like that, or Frankenstein, isn't it, all over the buses in London, all over the tube, another Netflix one that's coming out for this Halloween. and they've got such limited releases in cinemas.

19:18That's presumably a problem, isn't it? That's a direct challenge to you guys. Have you seen the new Glass Onion? No, not yet. It was made for TV. In fact, I'm not sure if that would have received of Theatro Corollis. Right. We're probably best leaving at that. So they're shaping things as well. So there are some films that actually you think, oh, I don't need them in my cinema. No, but it's not even that. Since literally the beginning of the industry over 100 years ago, there's always been made-for-TV movies. And certainly, if you listen to what Ted Sarandos is saying right now, they brought on Scott Stuber, who was one of the most highly respected filmmakers in Hollywood and also one of the best connected ones, according to Variety magazine, in Hollywood.

20:03And also an amazing guy who came onto our board at the BFI to help us out. and they brought Scott on to really drive films and certainly over time when he realized that those films were not going to be seen by an audience in a big screen, he left. When he left, they then switched course and they've said it publicly several times that they are now making made-for-TV movies in the classic sense and the studios, in effect, curate their films. they're not going to spend a huge amount of money marketing and promoting a film they don't believe in and the films they don't believe in go to home entertainment and that's the way it's always been so there's still room for both basically there's always room for both and as a result then what do you have to do in that challenge with entertainment more broadly and what do you have to do with partners who are still making films specifically to be an experience in a place like yours was how do you match those two things together?

21:06What are you trying to do? Well, I think no industry anywhere can be complacent. You always have to continuously reinvent yourself. And one of the things that I love about our industry is just when you think there's absolutely nothing left to do, you find 20 more things to do. And that's what I love about it. And for us, when we came out of the pandemic, and we had, I mean, you know, I was personally at the gates of hell for at least three years. Remember you having you on the programs? It was very, very tough. And I always believed in the business, but we went through a really difficult time.

21:42And when you're an entrepreneur and you build your company, it's like you're first born. I mean, you feel it's personal. It's not professional. It's personal. And it was tough. I mean, how tough? It was well. I mean, I remember at one point when I was speaking to my father in kind of May or June of 2020. And, you know, halfway through our discussion, he said, you know, are you okay? I said, of course I'm okay. I'm, you know, I'm bulletproof. And I look back on that period then, and I just think, no, I was not okay. You know, I was struggling. But I had a singular focus, save the company and save all of our 10 ,000 employees.

22:19And that was it. And when you have a mission like that, you know, failure is not really an option. So because the consequences are too high. So it was a tough period. But when we came out of it and we had our restructuring and we had our – unfortunately, we had to have a small second restructuring because of the Hollywood strikes. When we came out of that in February of 24, that was like the starting gates opened up for me. And I literally have been going 100 miles an hour ever since with a whole host of new initiatives, new way of doing businesses, and it's working. Like what? Well, we set out, we were looking at the customer journey, you know, the classic customer journey from bus seat, car seat to cinema seat.

23:03And I wanted to make it as easy and frictionless as possible. My goal at the time was to have somebody get off the bus and walk into our cinema, grab a whole range of products and go to their seat without touching their phone or their wallet using facial recognition and AI. Amazon Fresh Style. Now, we were probably a little bit ahead of ourselves technologically, but we were set up for it. And what we ended up doing is we ended up having a tap to get in with new gates. And then we had massive big barcodes on our products with big scanners, made it really easy and really quick, 25, 30 second transaction time.

23:47And we put in a kind of a walkthrough self-serve style concept in the entire foyer. And when you see it, you'll understand it is the future of cinema. It is. And I know that because we've had competitors from Australia, Japan, China, US, Mexico, everywhere around the world have come into our first site in Swindon. And what we're seeing there is we're seeing this halo effect, where people are actually telling their friends and family about this new layout, this new way of going to a cinema. And we've actually increased our attendance pretty materially in Swindon. And we're ruling that out across Europe right now.

24:33Fascinating. So who are those customers now in cinema in 2025? Well, I think, I mean, again, in the post-pandemic period, it's been really lumpy. We've had peaks and troughs, and that's really because when we started out, we were 30 % to 40 % fewer films being released because of the pandemic, because of the strikes. Last year, there was 30%, 35 % fewer films. This year, 20 % fewer films released. But what we've seen is we've seen every single record for every kind of genre of film, for every demographic, broken. When you see a movie like Salt Path, which is a great movie, you know, 10 million pounds.

25:18And then when you see the other extreme, you have Minecraft. We've set new records. I mean, look at Conjuring, the ninth film, and it was one of the biggest ones ever. And it just reinforces that our customers never left us. And we do not have a demand issue. We've never had a demand issue. We've just had a supply issue. and that's what's going to change at the end of this year. Really interesting that you pick Minecraft for that as well. Come to the wider supply chain too, but just in all entertainment businesses, right, whether they be professional sports, theatre, music, whatever, how you get younger people who have grown up very differently to you and I would have done and what we did with our leisure time, how you get them through the doors is a challenge for all of those kind of businesses, right?

26:05The theme parks that you were talking about as a competitor as well. We had Fiona Eastwood on this podcast a couple of weeks ago from Merlin talking about that. How do you take that challenge on? And are younger people still interested in coming to the cinema? So we are a very competitive form of out-of-home entertainment. And when you consider how much it costs to enjoy yourself, to really enjoy yourself for two or three hours, and you compare that to any other out-of-home entertainment, we're very competitive. So for families, for kids, for friends, even for adults, I think that that's certainly why we've been counter cyclical to economic downturns.