The Branson empire strikes back

Virgin has taken a simple name and attached it, with great success, to a range of dissimilar products
Click to follow
The Independent Online
Richard Branson, already the purveyor of commercial radio, condoms, cola and air travel, is now poised to bring the "Virgin Experience" to British filmgoers, with his pounds 195m purchase of the MGM cinema chain.

The move, in partnership with an American firm specialising in corporate reorganisations, makes Branson's Virgin Group the biggest cinema exhibitor in Britain, and provides him with another test of the value of brand names in catering to fickle public taste.

Virgin has taken a simple name and attached it, with great success, to a range of outwardly dissimilar products. Doubters were unimpressed with Mr Branson's launch into transatlantic air travel. Yet he proved that attention to detail, "value for money" and pampering passengers at prices seen merely as standard by the industry could create a worthy competitor to British Airways.

Likewise, staid City advisers laughed at Virgin's launch of personal equity plans, but had to swallow their words when the funds took in pounds 60 million between March and June, well ahead of forecasts.

The brand name, derived from Mr Branson's early pioneering efforts to launch an innovative independent record label, was the launching pad for a dizzy series of deals.

There have been some setbacks. Mr Branson failed to win the contract to operate the National Lottery. He also had trouble getting a commercial radio licence, although when the breakthrough came, Virgin Radio ended up a huge success nationwide. And he was outpriced by a Canadian-led group in his bid to run Channel 5, the new television service. He may still get the channel, if the Government rules out the high bidder.

Today, with the music company sold, Mr Branson's main businesses range across three pillars: retailing, the airline and entertainment. Retailing includes: the Virgin Megastores; Virgin Cola, launched last year; Virgin Vodka; and, most recently, Energy, the soft drink designed with young ravers in mind.

Youth is at the heart of the Virgin experience. The brand scores high among the target 15 to 35 age group. But an NOP poll last year proves the brand resonates across generations - 96 per cent recognised the brand, and scored it very high on the key attributes of quality, innovation and "value for money".

Virgin hopes it can translate that awareness into higher profits at the old MGM chain. Received wisdom has long suggested cinema attendance have little to do with a chain's name.

But Branson and his key entertainment executive, Robert Devereux, are out to disprove this. By creating "entertainment centres", they want to attract a family audience, ready to spend far longer than the normal two hours at a cinema.

A Virgin cinema might have a Sega game centre and a Planet Hollywood restaurant. And cinema-goers shouldn't be surprised if they are inundated with adverts about other Virgin products. Mr Branson is selling a concept as assiduously as he is selling movies, PEPs, drinks and air tickets.

Business comment, page 19