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Entrepreneur Sees Virgin Multiplex Territory

Japanese movie houses are often run-down and crowded. Richard Branson has big plans to open a string of luxury theaters.

May 23, 1999|MARK MAGNIER | TIMES STAFF WRITER

HISAYAMA, Japan — Luxury movie theaters might seem an unlikely blow on behalf of consumers, but the latest entrant to Japan's musty cinema industry purports to be just that.

Virgin Theaters, a venture by entertainment and airline entrepreneur Richard Branson, opened its first Japanese cinema in April in a suburb of Fukuoka. The company plans as many as three more theaters this year as part of a $100-million, 20-site plan for the next five years.

Although those numbers are relatively modest, Virgin is raising the stakes with its approach--a high-end 14-screen multiplex with separate "first-class" seating and lounge. The challenge has been noted.

"Competition within the industry will now become more severe," said Takashi Murakami, an entertainment analyst with Daiwa Research Institute in Japan.

Branson enjoys playing the role of irreverent underdog fighting for the rights of beaten-down consumers. And there are few consumers more beaten down than Japanese moviegoers, who routinely endure crowded, run-down single-screen theaters that often overbook, forcing viewers who've shelled out $15.50 for a seat to stand or sit in the aisles.

Protecting this state of affairs are a tightly controlled distribution system, restrictive zoning practices and a murky industry system for allocating movie prints that prevents two companies from showing the same first-run movie in the same city. These practices are designed to limit what the Japanese see as disruptive competition.

But pressures on Japan's closed retailing world are building these days, and Virgin hopes to help crack it open.

Theaters around the world are experimenting with high-end features, but in Japan, the contrast to existing cinemas is especially marked. Virgin has assembled a glitzy mix of some top-of-the-line THX, SDDS, DTS and Dolby Digital Surround sound systems; oversized screens; and plush interiors.

"Currently we believe this is the best cinema in the world," Branson said immodestly at the theater's opening. "We learned something from our airline."

Then again, if there are no good movies to show, who cares about the sound system? Competitors say the closed distribution system might prevent Virgin from getting the best movies.

Sources say Virgin has already been told to expect only one copy of certain blockbusters, despite its 14 screens and relatively isolated location.

"There could be some difficulties," concedes analyst Murakami.

Virgin's customers can choose between "economy seats" at $15.50 or first-class seats at $20.50. The first-class customers get a separate auditorium with 94 wide, reclining seats.

They also gain entry to a special lounge before the show starts, and may enjoy waitress service at their seats before the movie begins. Virgin is considering offering shiatsu massages on weekends to limber customers up for the film.

For those who prefer the less pampered life, there are 13 "economy" theaters in the building, including what Virgin claims is the largest screen in Japan. All told, the 14 auditoriums have 2,813 seats.

"This will really raise the bar in Japan," said Jack Panzeca, Los Angeles-based chief executive of Universal Cinema Services, which has installed top-end sound systems in several of the newer Japanese theaters, including Virgin's.

* Etsuko Kawase in The Times' Tokyo bureau contributed to this report.

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