Tim Richards, the founder and CEO of Vue International, made headlines in February when he penned an open letter to BAFTA, threatening to pull the support of his cinema circuit after the organization awarded four prizes, including Best Picture, to Netflix’s Roma. Since then, Richards tells Deadline, he has had “constructive discussions” with BAFTA and expects the org to “do the right thing.” But in our chat below, he also insists this is “not a war against Netflix,” adding that he doesn’t see the company as a disruptor “because there’s nothing to disrupt… nothing’s broken.”
Richards is here at CinemaCon in Las Vegas where he told an audience on Monday that Vue doesn’t see Netflix as the enemy. Rather, “our hope is we’re going to bring them into the tent.”
Vue is a leading exhibitor, with 286 sites at 2,446 screens in 10 countries. Since its inception in 2003, it has grown organically and through strategic acquisitions — including three in 2018 alone: Cinema3D in Poland, Showtime in Ireland and CineStar in Germany. The company last year had plans to get into Saudi Arabia, but has ultimately decided not to move forward in the controversial Kingdom at this time.
Richards and I sat down ahead of CinemaCon for a Vue status update as well as a discussion on the issues above and other concerns facing the industry — like Brexit which the UK-based Canadian native calls “a disaster” — and what he sees as a leveling of the playing field ahead for indies as virtual print fees (VPFs) fall away. The result, he says, will be “more cost effective for independent filmmakers to get movies on our screens.”
DEADLINE: What has been the result of your BAFTA open letter?
TIM RICHARDS: I’m a huge fan of BAFTA’s… I’ve been a member for 25 years. I think they have taken the BAFTA Awards to the second biggest award festival after the Oscars. But we’ll call it a little speed bump along the way because I think that they lost track with Roma and we’ve already sat down with them now and had some very, very constructive discussions; and they’re listening. I think they’re going to do the right thing.
DEADLINE: So what’s the next step?
RICHARDS: This is true globally, and it’s true historically as well, that there have always been awards for the creative community for everything — video games, short films and made for TV films and for feature films. Roma didn’t qualify, in my view, for BAFTA. It kind of got in through the back door for the Oscars, but I don’t think it should have qualified for the Oscars either. This is nothing to do with the film, which is an incredible film by an amazing director.
The practicalities of it are “Where do you draw the line?” I mean, if you open it up completely, is a brilliant piece of content that was filmed on an iPhone that’s five-minutes long going to qualify? That’s why film festivals and awards festivals have put definitions around the awards on what the award is actually for — and in the case of a feature film, that is an award for a movie that had a wide release and was actually played for a period time. That’s the definition of a movie. If you look at what happened, certainly in the UK with Roma, it represented .5% of screens and it got a very short release.
As I said in my letter, certainly by BAFTA rules, if a movie is released theatrically solely for the purpose of gaining an award, then it’s disqualified. Netflix were on the record with saying they were doing that. But the thing is and really, truly this is not a war against Netflix, I just wish that we could sit down with Netflix. They like to be a disruptor and I don’t think that they are a disruptor because there’s nothing to disrupt because nothing’s broken. When you have a record breaking year in the U.S. and the UK, it proves once again the resiliency of the theatrical business model.
DEADLINE: In terms of the UK technical release, or qualifying run, it’s a bit different there regarding BAFTA versus AMPAS rules, no?
RICHARDS: It is very different in terms of the qualification for it. I think that certainly the Academy, on the back of everything that Spielberg and others are doing, are going to be having a hard look. This isn’t unique to the Academy or BAFTA, this is a kind of an existentialist discussion on “What is a movie?”
It comes back to no director or producer or actor or actress grows up dreaming of making a movie for an iPad. You know? They want their movies seen on a big screen by a lot of people laughing or crying or being scared together collectively… They want to sit in the back of the cinema and hear people laughing their guts out or screaming in terror. That’s what they aspire for and that’s what they’re after. And that’s why for Netflix, until they kind of get that, they’re going to continuously get leftovers.
DEADLINE: Do you think that streaming in general has collapsed certain genres?
RICHARDS: There’s a few game changers that are happening as we speak and one of them is that thet VPFs that were put in place somewhere between 8-12 years ago are all falling away. So there’s going to be, for the very first time, a level playing field where independent filmmakers are going to get the benefit of not having to distribute a print and being able to do it either though hard drive or download. So for the very first time, they are going to be able to get that cost benefit and that is not to be underestimated. That is potentially huge for them.
DEADLINE: The UK has had a run of great box office successes lately, whether with titles like Johnny English Strikes Again for which the UK acts as the domestic market, or worldwide travelers and awards pics that are filmed and financed in Britain like Bohemian Rhapsody. Does Brexit become a concern on that front?
RICHARDS: I think that’s the million dollar question which I don’t think unfortunately anyone knows the answer to today… No one has a clue where it’s going. I had a meeting in the City (recently) with a group of bankers and top CEOs who are normally very opinionated on just about any topic, and literally no one had any idea where this is going. It’s a little bit disconcerting. Normally, these are guys who would say, “This is going to happen and I’m investing here and I’m doing that.” These guys are throwing their hands up in the air saying they’ve never seen anything like it. It’s a disaster.
DEADLINE: On a more international front, what is happening in Saudi Arabia? Yours was one of the first companies to show interest in the market opening up.
RICHARDS: We are taking a long-term approach to growth and the need to optimize the opportunities immediately available to us… I have resigned my Saudi Board position advising the Qiddiya Global Advisory Board and we are not moving forward in the Kingdom this year. If there is an opportunity to revisit the Kingdom in the future, we would keep this in consideration.
DEADLINE: There was all this fanfare and you and I talked about it a lot last year. Movies are still being released there, but everything has gone very quiet in the wake of the controversies of the past year.
RICHARDS: I think there are local players who have done a really good job. I’d probably give a shout out to Vox for the work they have done. They’ve entered Saudi Arabia and are building some world class cinemas and they’ve done a great job in the Middle East. It will certainly be an interesting market to watch, but likely not the goldmine that some thought. We will watch with interest how the Kingdom and infrastructure develops in the meantime.
DEADLINE: You had a busy 2018 with a series of acquisitions. Can you give us a status update on Vue’s strategy?
RICHARDS: We are focusing our attention this year on integrating the three acquisitions we completed last year in Ireland, Poland and Germany into Vue, investing in our European estate, rolling out our new leather recliner seats and a number of other organic growth initiatives. With record admissions and growth in the UK market and three acquisitions to build on in Europe we have a lot to optimize.
DEADLINE: Will you continue to be acquisitive in the next year?
RICHARDS: We’ve done 15 deals in the last 16 years and unfortunately you can’t choose the time of your deals, but equally I think it’s fair to say this is the year that after having bought three companies last year we’re going to really focus on those companies. We’ve got a lot of work to do. We’re really exited about the CineStar acuqistion and we’re really excited about bringing that together with CinemaxX and we’re going to be spending a lot of money and resources to bring the two circuits together. It’s a long way of saying I don’t think we’re going to be doing anything on the M&A side this year. For next year, we already have a number of markets and opportunities that we’re in dialogue on.
DEADLINE: What is your your position on subscription programs? You don’t have one in the UK, right?
RICHARDS: No, not in the UK. We don’t really believe in subscription services. We look at them as being a very blunt instrument that really removes flexibility of pricing for our customers, so we don’t do them right now. We have trialed them in the Netehrlands and in Germany and we like being able to have greater freedom and flexibility.
DEADLINE: What about using data to target your customers? You have a specific film programming model, right?
RICHARDS: Correct. We developed our interpretive model for film programming with a group from San Francisco. We spent two years in beta and went through 52 different models and this is a group that designed all of the logarithmic models for the hedge funds in New York. We gave them 15 years of data and it’s based on AI that determines what movie we show, where we show it and at what time we show it. It’s been phenomenal.
DEADLINE: I always find it interesting that there are these sort of simulators and models in the background that the regular moviegoer has no idea about.
RICHARDS: For me, because we have always been a highly analytical company, it’s the one area that I’ve always found frustrating. Even when we started, we had seven or eight people in our film department and all they did was watch movies and they’d go out and see who was doing what and when, and they’d really — based on 80% gut — decide what movie to show and where to show it. There was no sophistication at all, and we found, through this AI model, stuff that is intuitively kind of obvious. You know, people in different parts of the country eat dinner at different times, so they come home from work at different times and want to see a movie at different times and that had never really been thought through properly or analyzed properly. When you’ve got 15 years of data that somebody can crunch, that’s how it was developed… It was genuinely a global first. There’s now some off-the-shelf software packages that people are using.
DEADLINE: How does the Disney/Fox merger potentially affect you?
RICHARDS: I see it as a very positive move because Disney are one of our closest partners. There’s no one that produces, promotes and distributes movies better than Disney does and having them with more films to work their magic on is a positive thing.
There’s been a lot of concern about the concentration and I look right now and see Amazon is absolutely going to do feature length films, Apple absolutely the same thing and I still believe that Netflix will hopefully join on board and start to release their movies theatrically — and they’ll appreciate that we’re not in competition and that this is an incremental revenue stream for them that does not affect their subscription base.
DEADLINE: Do you think this is going to be another record breaking year?
RICHARDS: There are some extraordinary movies coming out and I think everybody was caught off guard at how well Captain Marvel did, as a connector movie between the two Avengers movies. The new Avengers looks extraordinary. It’s going to be huge. Look at Lion King, its’ an international cross-market, cross-generational film that is going to be absolutely enormous everywhere, in all of our markets. If it is a great film on a standalone basis, it has a chance to be one of the biggest films ever.
I am personally very excited about the industry right now. I don’t think there has ever been a time when there have been so many companies committed to feature film production and you also have Amazon and Apple coming into the market and committing meaningful amounts of capital to produce great first-run feature films for our screens. Certainly a big year for the global entertainment industry, for the in-home sector and for us in the big screen out-of-home sector.
DEADLINE: What about overall? What’s next in the exhibition space?
RICHARDS: I think you’re still going to see a major wave of consolidation. Local markets and international markets are still very highly fragmented so I think there’s going to be a lot of M&A activity in the sector for the next couple years.
I think ultimately you’re going to end up with three or four truly global players of which AMC/Wanda are probably legitimately the only one now and Cineworld are probably pretty close though they don’t have an Asian presence. So I think you’re going to see another big wave of consolidation come up and I also think the future is vertical integration and it’s going to be a big screen theatrical release with a theatrical window followed by a release through a pay-per-view or subscription-based platform.
When you have content producers like Amazon, Apple, Disney, Warner, Universal — everybody who has pay-per-view or a subscription-based platform — when you have content producers that control one platform, why wouldn’t they want to control two platforms? Why wouldn’t they want to control the entire release pattern? At that point, the window discussion kind of goes away and they can monetize every film the best way they feel is appropriate.