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ANALYSIS: Grand Vista for cinema software expansion

Monday 24th June 2019

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Vista Group has mightily rewarded investors since its November 2014 float, the share price having risen more than fivefold.

And unlike so many technology companies, Vista was already profitable before it listed and has grown revenue at a compound annual 29 percent pace since listing.

Founder Murray Holdaway admits his company still flies under the radar of much of New Zealand’s investment community, despite having joined the benchmark S&P/NZX 50 Index nearly three years ago and having three domestic institutions as substantial shareholders.

It’s not the sort of company to do much beating of its own drum.

Holdaway says when only about 1 percent of your turnover is in New Zealand, “there’s not a lot of point in shouting from the rooftops,” other than to ensure investors are kept informed of the company’s progress.

However, Vista is no shrinking violet in its key market, the cinema business. “If you happen to be in LA talking to film people, then everyone knows who we are.”

Because Vista now has a 48 percent share of the global market for specialist cinema management software in multiplex cinemas with 20 or more screens, excluding China where the company is also now growing fast.

Its software is running in about 7,500 multiplexes around the world and, at the end of 2018, its small-cinema software offering, Veezi, was running on more than 900 sites in 36 countries.

Vista has more than just doubled in less than five years. At the time of the 2014 float, Vista Cinema was in about 3,000 multiplexes and Veezi, whose development began in 2012, was in just 50 locations.

But Holdaway and his three partners had no idea what they were creating at their then software development company called Madison in 1995 – one of those partners, Brian Cadzow, still sits on Vista’s board with Holdaway.

Vista is more like Topsy who 'just growed.' There was no “grand plan or great idea,” Holdaway says.

Australia-based Village Roadshow had been waiting and waiting for an endlessly delayed new software system when somebody who had worked for the New Zealand arm’s previous incarnation, Kerridge Odeon, and knew of Madison from that era, suggested it might be a better alternative.

The first system built by what would become Vista went live in the now-defunct Highland Park Cinema in the Auckland suburb of Pakuranga on Christmas Eve 1995.

“I guess you get lucky every now and then,” Holdaway says, because Village’s brief coincided with the advent of Windows 95 drag-and-drop software. Village had also wanted a single system to deal with both box office and its food and beverage offerings.

Before that, cinema ticketing systems had run on DOS systems. And because Village was then operating in about 20 countries, it was natural for what would become Vista to follow its customer into Fiji and Argentina.

Holdaway says Argentina was a particularly difficult country to work in and had forced his people to develop software flexible enough to work in an international environment.

Today, Vista runs essentially the same constantly updated software around the world, although with tweaks to fit particular countries, particularly China.

Because Village had tentacles all around the world, by 1997 word got out about the systems Madison was building and people were starting to approach it to install systems outside the Village group.

“By that stage, we realised we had something that was saleable around the world,” he says.

Village and Madison had then formed a joint venture. After the Village business underwent several ownership changes, the Vista founders bought back the other 50 percent of the business in 2011.

While the 2014 prospectus alluded to the potential for Vista’s software to be applied in other industries with large customer databases and loyalty programmes, its current strategy is expanding up and down the movie industry’s value chain.

From the core cinema management products, Vista Cinema and Veezi, it has expanded up the chain to movie distributors and studios through Movio. Movio Cinema accumulates data from its customers and Movio Media harnesses that data to build anonymised profiles of movie goers.

“It’s easily the biggest database of movie-going habits in the world,” Holdaway says.

Harnessed to other larger databases, it can identify those with the most propensity to see any given movie, allowing studios, distributors and cinema owners to more precisely target promotions where they will be most effective.

“The mission is to connect everybody with their ideal movie,” he says.

Some $40 million of the float’s $92 million proceeds were earmarked to buy out the other shareholders in Movio, distribution company Maccs and to fund other businesses, including Veezi.

Vista Cinema, including Veezi, is no slouch, lifting earnings before interest, tax, depreciation and amortisation by 29.3 percent in calendar 2018 and accounting for 87 percent of group ebitda. But Movio is the fastest growing after lifting ebitda 72 percent.

Holdaway says Movio caused a lot of excitement at the time of the float because it was attempting to do something that hadn’t previously been attempted.

But expectations got a little ahead of the actual results and it wasn’t until 2018 that Movio really began to fire financially.

It’s been an enormous education process to persuade the movie industry, still heavy users of traditional promotions such as billboards and television advertising, to move into digital promotion, he says. Even now, even Vista doesn’t quite know what Movio Media’s full potential is.

“There’s still a lot of room for Movio to grow” and that’s the part of Vista that probably has the greatest upside, Holdaway says.

Vista has also expanded down the chain to actual movie-goers with offerings such as Flicks, a movie review and showtimes app, and Stardust, an app for movie fans to share views and information on movies. Both are still described as “early-stage investments.”

In April last year, Holdaway stepped away from the chief executive’s role, although clearly he is far from done with Vista. He handed over to Kimbal Riley who had been heading the core Vista business for the previous four years.

“I had done it for 20 years and five years in a listed environment. I just felt it was time to let someone else have a go at it.”

Holdaway says he felt he could be more valuable to the company working on product development and customer relations.

“I have an in-depth understanding of how the film business works from a data and software point of view. There are stages in a business’s life cycles where you need different capabilities. Certainly in smaller companies, being founder-led is really important. I guess you get to a scale where the impact of one person becomes less.”

Just over a year down the track, Vista chair Kirk Senior – who had been Village’s chief executive – says the management change had delivered the one-and-one-makes three success he had hoped for.


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