Richard Segal Long ago, in a galaxy far, far away, there were funny old picture palaces called Odeon. They had been born during leisure's Jurassic period - strange creatures, right on the high street, all deco-glitz and faux-luxury. As cinemas moved into modern times, how the new breed of exhibitors laughed at the sad one- and two-screen "fleapits", as they built their modern, million-pound multiplexes. The city slickers had been replaced, lock, stock and two smoking barrels, by the out-of-towners. But, just when Odeon's future was looking blacker than Darth Vader's body-armour, along came a brave young Jedi knight with a vision, who was to transform the ailing chain into a vibrant, living, breathing business that was not only "fanatical about film", but determined to communicate that passion to the movie-going public. The unlikely saviour was London-born chartered accountant Richard Segal, Manchester University graduate, Arthur Andersen trainee and, from 1988 onwards, Rank goldenboy-in-waiting. Now chief executive of Odeon, the industry market-leader with 4,000 staff, over 600 screens on 111 sites and owned by venture capitalist Cinven, 38 year-old Segal presides over a thriving group of new-generation leisure venues. "A few years ago, the staff were working for a tired organisation, but today we're a dynamic leisure retailer that's in tune with its customers" Segal says. "My job is to give our people an understanding of the direction we're going in and their role in it. Our new culture is inclusive - we tell people what we expect of them, give them regular feedback on performance, motivate them verbally and financially and allow them to be entrepreneurial within set parameters." The new approach is clearly appreciated - "Richard Segal is this company" says Chris Hilton, general manager of the Odeon Leicester Square; "without him, I'm not sure we'd be here." Take a tortuous climb up well over 39 steps, high above one of his central London units and you reach Segal's workplace, a scruffy, airless room way removed from the Hollywood mega-office suites so beloved of those whose product his cinemas place before an adoring public. And, in amongst the film bookers and the one-man department that produces, in-house, every piece of Odeon marketing material, the jacket off, hands-on Segal is in his element. He is voluble, friendly, casual even and his enthusiasm is contagious. His operational career at Rank began with a management training programme which ended abruptly when he was chosen to head Lotco, Rank's bid, with Prudential, Commercial Union, 3i and others, for the National Lottery. "We came second. To say I was devastated does not do it justice - I was certain we'd win." Segal was then appointed operations director of Top Rank/Mecca Bingo, where he remained for more than 2 years and in January 1997 became managing director of Odeon Cinemas - coincidentally, so he claims, the UK's biggest ever year for cinema admissions. "Some operators were confused about whether they were selling records, airline tickets or cinema seats and we wanted to capitalise on that" he says, as we discuss the 1998 creation of the 'new Odeon' brand. "We had to get more in tune with our core audience, two thirds of whom are under 25. We now have a much cooler image." The company's flagship venue in Leicester Square, famed for hosting headline-grabbing, star-studded premieres, was the first to be refurbished, with the new branding subsequently being rolled out to key-city multiplexes and then to the town-centre and edge-of-town cinemas which account for over 90% of the Odeon estate. In line with Rank boss Mike Smith's policy of divestment, in February 2000 Segal found himself heading Britain's biggest cinema group when Cinven acquired Odeon and merged it with the ABC chain, previously bought from Virgin. Since then, the company has opened 4 new sites and refurbished 23, with 15 more, mainly former ABC sites, as suitable cases for treatment this year. 25 underperforming cinemas have been closed, with all but 5 being already sold for alternative use. Odeon's share of the British box office is around 24%, against Warner Village's 16%, UCI's 15%, UGC's 14% and Showcase's 9%. "However you slice it or dice it" Segal says, reminiscent of Hannibal Lecter, "Odeon is market leader in box office take and in number of sites, which is important for marketing - we can offer promotional partners a national network across the country." Deals have been struck with national newspapers, as well as the likes of Kellogg's, Woolworth's, WHSmith and Häagen-Dazs, helped by the fact that "cinema tickets are a bloody sexy promotional product!" Like all good leisure managers, Segal keeps a firm eye on matters governmental, on which he is frank and outspoken. "I have written" he says "to six ministers about a law that dates back to when film was highly inflammable. It rules that no-one under the age of 21 can be left alone as a cinema duty manager. I mean, a 19 year-old can manage a nightclub alone! People's careers are being put on hold because of this and I still can't even find out which department is meant to be dealing with it!" "We work closely with local authorities on urban regeneration projects, but I do get wound up when obstacles are put in our way from those with heritage interests at heart" Segal comments when I cite their high-street units as a perfect fit with new planning legislation. "At Sutton Coldfield, which is about three miles from Star City, 30 screens, on the motorway, you couldn't find a development which flies more in the face of central and local government city centre regeneration policy, yet there was an objection to us changing the signage to our new branding which is now on every other Odeon! Here I am trying to invest in a traditional three-screen cinema and up go the barriers!" Nevertheless, Sir Jocelyn Stevens invited RS to speak at an English Heritage conference - told him to "liven things up!" He said he'd achieved his objectives perfectly. Segal has sparked ire in some town halls, notably in Bristol, for his controversial policy of selling non-viable town-centre units and applying restrictive covenants. "We have sold cinemas to other operators" he says, "but it is rare. We sell to developers to create nightclubs, pubs, health and fitness clubs, housing and offices and I got a bit of stick over that in Bristol! Planning was granted for a number of out-of-town multiplexes and people turned their backs on our town-centre cinema. I'm sympathetic to the small number of loyal customers who have supported it, but a health and fitness club on that site will be of far greater value to the local area than the cinema was. Restrictive covenants are part and parcel of the UK property sector, have been around for centuries and are a perfectly legal instrument." The industry-wide view that there are very few UK towns left where there is an opportunity to develop a multiplex is endorsed by Segal. "Certain firms came piling into the UK market and created a situation where a number of towns have too many screens - in some towns, it's total lunacy! But what is healthy is that companies like Ster Kinekor, Hoyts and Cinemark have tried to come here, realised they can't do it and baled out. Three years ago, I used to get six calls a day from developers, now I get one call every three months! There are no sites in play, which indicates that sanity prevails and that lessons have been learned by the nonsense that happened in America." Odeon has looked, in the last year, at acquiring other cinema operators both in the UK and overseas and Segal stresses that, if the right opportunity came along, his board would like a slice. He is, not unexpectedly, ebullient about the industry's future. "The first UK multiplex opened in 1985 and since then admissions have more than trebled - other industries would die for that kind of increase! I confidently predict further growth for this year - in fact, I'd bet a large sum of money on it." Growth will come, Segal believes, by brand extension and broadening the audience, allied to a belief that Odeon is a retailer of leisure and entertainment rather than a firm that shows films. He is anxious to shed the traditional exhibitor mentality and has created sub-brands, such as the MovieMob Saturday-morning shows for kids, Odeonprojections for one-day special screenings and bfi at Odeon, bringing art-house movies to the high street in association with the British Film Institute. Historically, one visits a cinema just to watch a film, but Odeon has always has always been at the forefront of alternative programming, with big football and boxing matches being on offer in strategic locations. This policy continues, with another successful alternative use being a corporate package to host conferences by satellite-linking cinemas to talk simultaneously to staff country-wide. In surveys, cinemagoers are prone to grizzle about the cost of ancillaries and Segal is addressing this with a series of value food and beverage offers for kids. A small-popcorn-and-soft-drink for 99p promotion in February flew off the shelves so quickly that the price has been upped to £1.25 and is now endorsed by teeny pop-band S Club 7. "We are retailers, so we like to see what McDonalds and Burger King are doing." he says. Kids' birthday party packs containing popcorn, a drink, sweets and gifts such as small cameras are all part of the mix and sales of cinema ticket gift vouchers have quadrupled and Odeon retail areas tend to be self-serve, to encourage higher-volume impulse purchase. With visits to the cinema per head per annum in UK running at 2.4, we are way behind the rest of Europe. "This presents a real opportunity for UK exhibitors to expand the market. For a retailer of leisure, accessibility and quality of the offer is of prime importance" Segal says. Odeon is a key player in embracing new technology to ease the ticket sales process and the company has invested substantially in developing its telephone booking call-centre and website. "On a must-see film, people make the decision on where to see it by how hassle-free the booking experience is." Young people especially like to be amongst the first to see a film and so, during the early weeks of a blockbuster opening, around 15% of tickets are advance booked, 12.5% of them through the dedicated call-centre. Odeon expects the website, which has only been up and running since June, to take the lion's share of bookings within five years. Young people's obsession with text messaging is also being exploited - two million Vodafone subscribers received mobile memos from Odeon in August when 'Planet of The Apes' opened. "This and e-mail is a whole new marketing spin never used before, which will help us to grow the business" Segal says; "it's effective, direct and - God bless it - very cheap! With digital projection being the talk of the USA cinema industry, it is no surprise that Odeon is right up there. Although admitting to disappointment at the paucity of product so far available in digital format, Segal commissioned a trial system for the Odeon Leicester Square, co-funded by Odeon, equipment supplier Texas Instruments and BVI, Disney's film distribution arm, making the unit the first UK cinema to play a digital film - 'Toy Story 2'. "It was an investment, but in the great scheme of things, it was not that material" says Segal. In future, the cost of providing the hardware and software will mostly be met by film producers and distributors and, with the cost of producing and delivering a traditional 35mm print running at over £1,000, they could find they are actually saving money. Segal says "We see digital as part of our future, but it's essential to understand it. The trial hasn't really taught us that much, because we've been unable to test the robustness of the equipment. Within the next decade, we will see digital and traditional projection running alongside each other, but it'll be a long time before digital totally replaces film." Richard Segal's objectives are clear in his mind: "I want to make Odeon the most dynamic cinema brand in the UK by entertaining and exciting our customers. I want to get our people to embrace change, to create a consistent brand, exploit the opportunities within our property portfolio and achieve impressive financial results." When and how Cinven exit is an interesting discussion topic and flotation is an option, along with many others. But, Segal says, "at the moment, I'm having too much fun to worry about that!" "Within 5 years there will only be one cinema market that counts and that's the global market" he predicts. So take up your light sabre and onward towards your goal, young Jedi. And may the flaws never be with you.