Tim Richards: The cinema boss who made room for a Vue

The Business Interview: Business is booming for cinemas, just as it did in the Great Depression, and Vue Entertainment boss predicts an exciting future

Recessions are famously good for the cinema industry. The Great Depression of 1929 ushered in a golden era for moviegoing and the pattern was repeated in the slumps of the 1970s, '80s and '90s. Last year was no different, with the UK box office grossing more than £1bn for the first time.

Tim Richards, the affable chief executive of Vue Entertainment, admits that many industry executives feared this downturn would be different. "Many people were nervous, but in the end 2009 was a very good year."

The UK Film Council will next week publish statistics showing the UK box office grossed £1.05bn in 2009, 11 per cent higher than 2008. Its data shows cinema admissions held up in the recessions of 1974 to 1976, 1980 to 1982, and 1990 to 1993.

The Film Council's view is that people have scaled back on buying cars and holidaying abroad, and spent more on activities at home. It also says that recession leads to an "increased demand for escapism as a psychological response". Mr Richards agrees, questioning whether feelgood Abba musical Mamma Mia! would have become the biggest movie in UK history in a non-recession year, though he also puts 2009's success down to a combination of "great movies and poor weather".

The quandary for Vue, as well as for UK competitors Odeon and Cineworld, is that profits depend on the Hollywood studios. The high-water mark for recent cinema attendance was 2004 when it hit 176 million, but just two years later it was in the doldrums. Mr Richards says: "Ultimately we are movie driven and Hollywood doesn't always get it right. In 2006, the movies just didn't capture the imagination. "We operate in a narrow band, and the difference between an incredible year and a horrible year is not great."

Last year was superb. Cinema attendance was boosted by the success of Slumdog Millionaire and the latest Harry Potter movie. And then there was Avatar. James Cameron's 3D magnum opus opened on 18 December and still came in as the fourth highest grossing movie of the year at £32.8m.

Mr Richards believes the format is driving a new front in cinema. "3D is universal, it's an incredible product, it really is," he says. "We've seen the evolution over the past few years with the onset of digital 3D."

Cinemas have been showing rudimentary forms of 3D films since the 1920s, but Mr Richards thinks the quantum leap of digital 3D began in earnest with Disney's release of Chicken Little in 2005. Last year, 14 films were released in the format and at least 20 are expected next year. Mr Richards adds: "Avatar has taken 3D to the next level. I have no doubt there will be another level beyond that as it has caught the imagination."

Vue has 68 cinema sites with a total of 654 screens across the UK, and it is investing in state-of-the art digital projectors to replace those running 35mm film. It now has 100 of these around the country and it opened its first digital multiplex in Hull. "Digital guarantees the perfect print, the way the director wanted you to see it," Mr Richards says. "But if we change our entire circuit we can't charge customers for it, even if it is a better product."

The move saves the studios billions of dollars in processing and transporting the 35mm prints, and in the US they have agreed to shoulder 75 per cent of the cost of replacing the projectors. Mr Richards hopes a similar agreement will be signed in the UK by April.

He points out that the new cinemas are a world away from the rundown flea pits of the 1970s. Audience numbers peaked in the 1950s but years of underinvestment led to hundreds of shabby cinemas that were left to decay. "Customers voted with their feet and just stopped going, and attendance hit rock bottom in 1984," Mr Richards says. A year later UCI Cinemas opened the first multiplex in Milton Keynes, "and that was the beginning of the revolution in the UK. It has been pretty much straight-line growth ever since." The second revolution in cinemas came with the introduction of stadium seating in 1996, giving every viewer a perfect sight-line to the screen.

The Vue chain is only six years old. Mr Richards had given up a lucrative career as a lawyer with Freshfields in London in 1990, replying, on a whim, to an advert for a job at an entertainment company that turned out to be UCI, a joint venture between the Paramount and Universal studios.

He joined rival Warner Brothers four years later but became frustrated, saying: "I saw the phenomenal amount of money spent and was thinking I could do it better and cheaper. I kept thinking, when are the shareholders going to wake up?" He started shopping his own business plan around and quit in 1998. "My friends thought I was crazy; I was giving up the corner office and a five-year contract and moving into my garage."

Mr Richards raised funding to launch his own SPC International Cinemas in 1999 and opened the first in Scotland the following year. "That was the most exciting time ever, and there's a part of those days that I miss. We didn't have an office, and were living by the seat of our pants. My challenge at Vue has been to keep the entrepreneurial spirit alive."

The next significant stage in the company's evolution was its decision to buy Warner Village's 36 UK cinemas, including the flagship in Leicester Square, in 2003. After the deal it was renamed Vue, discarding hundreds of names including simply "C".

Despite the significant investment in the name, it seems, the brand doesn't matter hugely. "It pains me to say this," Mr Richards says, "but 65 per cent to 75 per cent of people leaving the cinema can't tell you the name of it. They can tell you about the services but not the name." So he doesn't see Odeon and Cineworld as rivals. "I look at it as an industry. It's not very often that we go head-to-head; generally for customers there's a gravitational pull to whichever cinema is closer. That is why we are reasonably open on sharing best practice, because we all benefit."

When one of the original private equity backers wanted to quit, Mr Richards oversaw a management buyout in 2006, taking board and equity control. It now has two minority shareholders in Bank of Scotland and private equity group Och-Ziff. "We have performed and delivered every year," Mr Richards says.

He is infectious about cinema. "I've always loved films. What do I do when I'm not working? Watch a film. It's what I love, and when you can say that about your job it's great." He says he enjoyed The Hangover and The Orphanage recently, and ranks Doctor Zhivago, Lawrence of Arabia and The Godfather among his favourites of all time. For someone who grew up in Brazil before moving to Toronto at the age of 10, and who has worked in cities across the world, he says he is very comfortable in London at Vue.

Nor does he believe his work is done because "cinema has to continually look at reinventing itself". Vue comes up with ideas and tests them in select sites. Recent successes included introducing VIP seating, adult-only screenings and licensing the cinemas. The "evolution" scheme, which brought in beanbags, sofas, pods and VIP seats, however, "just didn't work," Mr Richards admits.

Vue is investing heavily in its site in the Westfield shopping centre in London. The 14-screen cinema will be all digital, with bigger screens than the Leicester Square complex, and with better sound. It will also introduce VIP screens with leather reclining seats, with a "club room-style" wine bar and exclusive screening area.

The chain is set to move into continental Europe, as well as show more live events. Broadcasts of a Take That concert sold out across the country, and the group is looking at putting computer game events on. Sport, including next year's football World Cup, is also looking lucrative. "I'll be very disappointed if we're not showing the London Olympics in 3D," he adds. The mention of the Olympics comes with slight regret for Mr Richards, who quit school to ski competitively but gave up when he was 18. "The one thing I wanted to do was be in the Winter Olympics. I carried the torch recently, that's the closest I'll get." While he still skis for fun he remains fully focused on Vue.

Mr Richards reckons cinema is seen as stronger than ever: "I've noticed a change in how other media industry players view our industry. Even three years ago they were predicting our demise. When the VHS came out many said that was it for cinema. Then with the DVD they said, 'this really is it' and now there's Blu-Ray, but we still haven't seen [the end of cinema.

We are at a turning point in the industry and the next few years are going to be hugely exciting".

Richards in 3D: From skier to movie buff

* Tim Richards, chief executive of Vue Entertainment, is married with three children

* Lived in Brazil then Toronto, quit school to ski competitively but gave up at 18.

* Studied economics and political science before obtaining a law degree from McGill in Montreal.

* Joined Freshfields in 1988 and worked as a corporate lawyer specialising in mergers and acquisitions in New York and London.

* Joined UCI in 1990, before moving to Warner Brothers in 1994. Launched SPC five years later. Rebranded to Vue in 2003.

* Interests include skiing, tennis,windsurfing, reading and, of course, films.