By Andrew Patterson
The cinema business these days is a highly integrated business model thanks in no small part to New Zealand based Vista Entertainment Solutions who last week were named as the winner of the supreme award at this year’s American Chamber of Commerce Success & Innovation Awards.
For more than a decade, Vista has been licencing its software technology that handles virtually every aspect of running a cinema; from ticket sales at the box office to ice cream purchases at the snack bar and everything else in between.
These days its software is used by cinemas in more than 55 countries and it has successfully cornered a niche that has made it a global leader in point of sale ticketing systems.
It also officially produces its software in six languages, though as you’ll discover, it has been adapted to run in multiple other languages as well.
The company has its origins back in the 80s during the days of cinema heavyweights Kerridge Oden who dominated the market at the time and Vista, then a small fledgling software company, was contracted to computerise its ticketing system.
However, outside events intervened and Kerridge Oden fell victim to the aftermath of the 1987 sharemarket crash paving the way for Australian cinema chain Village to enter the market and commence construction of multiplexes which became the turning point for Vista’s expansion.
Murray Holdaway, Chief Executive, and one of the co-founders at Vista, says the company’s early beginnings were a combination of timing and luck.
"We connected with a whole lot of former Kerridge Oden staff who ended up working for Village and they asked us to build a system that would handle ticketing for modern multiplexes and that’s really when things started to take off for us."
It was at that point Vista began to appreciate the potential for its product offering and, despite its geographical distance from the world’s undisputed entertainment capital in the U.S., the company got lucky with its timing.
"We were starting to develop the software in the mid-nineties and we just happened to strike the time when you could develop the system with a full windows graphic interface when all the competing systems were built using a DOS platform and were quite old fashioned looking and clunky. So before we’d even finished building the system for Village we were getting enquiries from around the world and it was at that point we realised we had a resalable product before we’d even finished the product."
"So like a lot of software it wasn’t really built as a product it was built for a specific customer but once you finished it you realised there were other customers after the same thing."
"However, our global expansion has happened over time. It’s actually been more than 15 years now so it certainly hasn’t just happened over night."
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The emergence of the multiplex also required the software to be fully integrated in order to handle a single ticketing and snack bar sales point along with a myriad of other functions.
"People tend to think a ticketing system would be really simple to create and operate but they quickly discover that’s not actually the case. We have a development team of around 40 people which reflects the fact that there’s a lot more going on behind the scenes than most people realise."
From the time you enter the multiplex you quickly realise it involves a series of touch points with the customer each requiring separate, but integrated, software functionality.
"Firstly, you’ll check the scheduling board if you haven’t decided on a movie and that’s being run on our software. Then you’ll buy a ticket and maybe some snack items and that transaction will be processed on our software. Alternatively, you may have purchased the ticket online before you arrived and you will have used our software to make that happen too. These days many cinemas also have self-service kiosks where customers can buy their own tickets and, once again, that’s all being processed on our software as well."
"Then as you look around you’ll see digital signage being run on our software and eventually when you enter the theatre itself the usher may scan your ticket which involves yet another software interface."
However, all that involves just the front of house functions. Behind the scenes there’s a completely different set of demands involving software to handle everything from staff rosters to cash handling as well as programme scheduling and reporting functions that lets those at head office know how each cinema in the chain is actually performing.
After all, cinemas are a bit like airlines, they’re effectively yield managers who rent out seats and so the need to maximize revenue per seat becomes critical to their overall financial performance."
"A lot of what we present in the way of information becomes critical for the programming team to make decisions about the scheduling of individual movies such as whether to continue running a movie for another week or replace it with a new title."
Operating in more than 50 countries with software that functions in six languages has its own set of challenges but once again Murray Holdaway says Vista got lucky with its timing.
"One of our first international customers was in Argentina which was part of a project that Village were involved in managing and they asked us to build all their ticketing systems for them. Argentina of course speaks Spanish and has a very complex tax regime and very early on we came to realise our system had to be able to be altered and for the software to be configurable for different languages."
"If we tried to do that now it would be an enormous task but back then we didn’t have much software and it was a lot easier."
One of the clever aspects of Vista’s business is that once you’ve secured a customer in one country there are potentially other customers to be found in that same country if you go looking for them.
“The software is packaged in such a way that most customers can just install the software and run with it straight away. However, we do have teams we can deploy if necessary although we now have offices in London, Los Angeles and Shanghai and we have a network of resellers in different countries who handle the remote areas for us.”
“We actually have customers in a very diverse range of places such as Mongolia, Kenya, Lithuania, Bulgaria, the Czech Republic and Ecuador running lots of different languages so we have a very multi-national customer base. While we officially support six languages, customers are able to configure the software to operate in their own language which they do themselves.
While India is the home of Bollywood and is a big volume market, ticket prices are amongst some of the lowest in the world at just $1-2 limiting the necessity for sophisticated technology solutions. However, many of India’s traditional and dated cinemas that can seat up to a thousand people, generally in less than ideal surroundings, are being reconfigured into modern mini-multiplexes which are creating new opportunities for Vista.
However, surprisingly the company’s single largest customer is Cinepolis, based in Mexico, where it operates a cinema chain with more than 250 locations highlighting yet again the diversity of Vista’s global footprint.
Globally, Vista is the only company that operates such a diverse geographical footprint.
"We have local competitors in nearly every territory we operate in but having such an extensive network of customers globally obviously gives us some unique advantages. The U.S is particularly competitive where there are probably half a dozen or more businesses doing what we do and some of them are very good."
Cinema verses home theatre debate
Mention to Murray Holdaway the strategic threat his business faces that technology and the growth of the home cinema market might eventually do away with the need for cinemas altogether as we know them and he’s already primed with his answer.
"It’s the question I get asked all the time. The fact is television was supposed to kill the cinema, then it was VHS and more recently it’s been DVD and the same thing is now being said about home cinema. But to large extent they’re actually symbiotic and in fact research shows that people who have got really great home theatre set ups are some of the most frequent movie goers of all. There’s still the thrill of watching a new release on the big screen, particularly now if it’s in 3D."
"Then there’s the social aspect of the movie experience too. 14-24 is still a very big target market and they’re going for a different reason other than the technology in front of them."
So next time you visit your local cinema, spare a thought for all that home-grown software that is making your experience and millions of other movie goers around the world that much easier. It might just make the actual ticket price slightly more bearable.
|Staff:||115 (75 NZ based)|
|Turnover:||NZ$ 30 million|
|Annual growth rate:||25%|
|Fastest growing markets:||USA and China|
|Biggest customer:||Cinepolis (Mexico)|
|International offices:||London, Los Angelos, Shanghai|
|Export / Domestic sales split:||95% / 5%|
|Recent highlights:||Supreme Award winner at this year’s American Chamber of Commerce Success & Innovation Awards|
|Ownership:||Private (4x major shareholders own 70%, balance held by various company management and staff)|
|Likely to IPO ?:||no|