Vista runs the show in world's cinemas
Story by Fiona Rotherham. The Dominion Post, Wellington, New Zealand. Oct 29th 2012
Privately-owned Vista Entertainment has carved out a 23 per cent global market share in big multiplex cinema management software, and hasn't stopped there. Fiona Rotherham talks to Vista about world domination, screen by screen.
When you walk into a multi-screen theatre the ticket you buy, even the popcorn and coke you add in a weak moment, is done via software developed by Auckland-based Vista Entertainment. They're the backroom boys nobody sees, but the software is as vital as a projectionist to the smooth showing of films.
Vista Entertainment is the world leader in its field, having secured a 23 per cent market share of movie theatres with more than 20 screens. It now has 125 staff, revenue has grown to $30 million annually, and profit is a tidy $6m a year. With 90 per cent of revenue derived from overseas, the company hawks its software to 53 countries.
There's a map of world domination on the wall in the Auckland head office which has red pins denoting which countries it has already conquered. There are a lot of pins already but the empty space represents opportunity. The goal is to increase its market share to 50 per cent in the next three years. They've already bought the pins.
Chief executive Murray Holdaway and Vista's other majority shareholder - finance and legal director Brian Cadzow - are not short on ambition and the previous start-up experience they had under their belts gave them a running start.
The pair, in their 50s, had previously been involved in Madison Systems, a guns for hire software developer. It had done a bit of work for local cinema companies and then in the mid-90s struck up a 50/50 joint venture with film exhibitor Village to develop a cinema ticketing system for its new multi-screen theatres. The pair say they knew from the outset they wanted a share of any potential gains from the software they created. The entity underwent ownership changes over the years, culminating in the Vista founders and 12 other shareholders, including key staff, taking 100 per cent ownership.
When Vista was set up, multi-screen cinemas were just starting to be built worldwide. It was global in its outlook from the outset because the New Zealand market was just too small to sustain it. Village also wanted to use the cinema management system in its new operations in Argentina and Fiji, so the software needed to be multi-lingual and able to deal with tax complexities in various countries.
Vista's software handles all aspects of running a cinema, and is used not only by exhibitors but also distributors wanting to keep track of those using their films and tax regulators wanting to figure out their take of box office revenue and food concessions. There's a one rupee entertainment tax on every cinema ticket in India, for example, and the software has to be certified that it will report that information correctly and securely. Vista makes money by licensing the software and charging ongoing maintenance fees.
Last year it also introduced an internet-based software-as-a-service model, Veezi, for smaller cinemas that couldn't afford the deluxe Vista version. It's a pay-as-you-go cloud-based offering. Wanaka's year-old Ruby Cinema uses Veezi and manager Jordi Shill says, "We were the guinea pigs for it, I think". It was easy to use, even when off-site, and she described Vista as "an amazing team to work with".
Former partner Events Cinema said it was often used to test drive new developments. General manager Carmen Switzer said she particularly liked the way Vista handled loyalty programmes, which were an important part of her business.
Holdaway told other entrepreneurs at the annual Morgo conference this year that the company had succeeded because it had never regarded itself as an exporter. "We just have customers in other countries. If you start talking about being an exporter you start to think your business over there is different to what you do here and there are barriers." He also reckons talk of cultural barriers is over-stated.
"They are a cinema company that needs software. We provide them what they want - a good product and service. That's the same wherever we go." Vista has opted for a mixed distribution model, selling direct in some countries and using local business partners in others depending on what it thinks will work best.
In Shanghai it has set up an office staffed primarily by New Zealand-born Chinese, after struggling to find the right partner. In India it chose a business partner, a partnership that has lasted a decade. Vista is now the only cinema software company operating through all major Indian cinema chains and has a 65 per cent market share. It spent six years trying to get established in the United States through resellers before pulling the plug and opening its own office in 2009, a move it admits it should have made sooner.
Holdaway says one of the keys to successfully operating overseas is being able to close a deal. He gives the example of a deal in Thailand when he thought he had three days to negotiate. He wasn't too worried when no deal had been struck at the end of the second day until he discovered the next day was a public holiday. Not wanting to have to fly back to have a second go, Holdaway remembered the customer had said he was going to be at a particular Bangkok shopping mall the next day. He turned up and texted the customer, asking how he was going. The client suggested a quick meet at the local icecream parlour and the deal was done by the time the icecream melted.
Another key differentiator of Vista is staff retention. Staff turnover is less than 2 per cent, meaning staff are knowledgeable about the company and its product.
"Some companies are miserly over small things," says Cadzow (and yes, he's the money guy). "When the developers said they wanted real coffee we bought two machines so they don't have to walk down the road to get it. In a staff survey 95 per cent said they had the tools to do the job. It doesn't cost you that much but they appreciate you doing things to make their jobs easier and more enjoyable for them."
And every employee from the bottom up gets a yearly bonus based on a share of profit. Quarterly meetings are held to update staff on the profit and loss. Younger people get a bigger percentage than more senior ones because they earn less. "It's a question of incentive," Cadzow says. "We've never not paid the bonus but then we've never not made a profit in any year."
The culture is also important in attracting new staff. Vista is hiring another 25 people in a market where software skills are in short supply. It recruited an HR person for the first time last year but the founders are adamant looking after staff remains the role of those at the top. "You can't abrogate that responsibility," Cadzow says.
Beyond sticking more pins on the map, the pair are considering breaking out a fast food management system to attract other customers in what is a huge sector globally. They're still trying to work out what their point of difference would be to existing operators.
The advice they were given through a Better by Design audit was to stick to their knitting because there is still so much market share up for grabs in the cinema sector.
Since then the company has grown its global market share by 10 per cent in three years. It galvanised them on their goal of becoming world leaders in their niche and to "really go for it."
LESSONS FOR SUCCESS
- Be careful about the fit with resellers or business partners and cut the ties early if it's not working.
- Think global and treat the rest of the world the same as your local market.
- Learn to close a deal. Be flexible around finding solutions for potential customers if you don't want to have to hop back on the plane for another round of negotiation.
- Stick to your knitting, if there is still plenty of growth in the niche you have carved out for yourself then really go for it, not for sideshows.
- Be transparent in your dealings with staff and let them know the financial progress of the company. Don't penny pinch in providing the tools people need for the job.