The new owners of Secret Cinema have got their Hollywood ending. Nearly three years after setting sights on the immersive filmgoing experience, they are reigniting its global expansion plans as part of a strategy to become the Netflix of live events.
When they first came to London in early 2020 to discuss a possible takeover, the company was celebrating a hit adaptation of a show from that streaming platform – more than 100,000 fans would ultimately attend its real-world imagining of Stranger Things.
But two months later the UK entered lockdown and Secret Cinema, used to charging as much as £139 a ticket for its £9m immersive screenings with actors and elaborate sets recreating worlds from Star Wars to Dirty Dancing, found itself embroiled in a row over almost £1m in emergency aid it received from the government’s culture recovery fund.
“We first met with the management of Secret [Group] in January 2020, right before the pandemic,” says Brian Fenty, a co-founder of the US-based digital ticketing firm TodayTix Group, which acquired the parent company in an $100m (£88m) deal late last month.
“They had Stranger Things going on in London, which was exceptional, and had woven these relationships with [Hollywood] studios. They were attracting audiences of all ages and backgrounds. Then the pandemic got thrown at us. We had to focus on our team of 300 employees, so that took a pause.”
Along with the rest of the live events industry, Secret Cinema took a hammering throughout the pandemic. Turnover fell more than 60%, from £15.7m to £6.1m, between 2019 and 2020, and slumped to just £452,000 last year, with pre-tax losses topping £12m over the last three years.
Under the leadership of Max Alexander, the former telecoms executive and former managing director of Andrew Lloyd Webber’s theatre empire Really Useful Group, the UK-based cultural phenomenon had been on the brink of going global.
Just before lockdown, Secret Cinema launched its first international event, taking Casino Royale to Shanghai, after a UK production with 120,000 attenders and an £8m box office. Unfortunately, Covid meant its run was cancelled after six weeks.
And a freshly signed multi-year deal with Disney, which would ultimately lead to its production of the Guardians of the Galaxy, currently running at Wembley Park, promised to unlock a treasure trove of crown jewel franchises to drive expansion plans.
The deal with TodayTix, founded by the Broadway producers Fenty and his lifelong friend Merritt Baer (they met at theatre camp as kids), was supposed to provide the financial muscle – until Covid shuttered live events.
“Everyone around us in the first quarter or two of the pandemic was saying ‘What is your streaming pivot, isn’t streaming your saviour?’ or ‘Are you getting another job, Brian?’” says Fenty, who began his business career developing marketing and ticketing for the New York Yankees. “But for us [in-person] events were not just the past but also the future.”
TodayTix, which has branched out into creating its own events including a supper club in New York’s Times Square and holding concerts with Broadway stars in Brooklyn, now wants to go beyond ticketing tech to become a full media company.
“Think about other tech companies that got into content,” says Baer, whose résumé includes producing The Merchant of Venice starring Al Pacino and receiving a Tony award for Death of a Salesman. “Netflix is a great example. In the early days, they were looking to learn from just renting out other people’s movies. Now look at their content business. TodayTix Group has a fantastic opportunity.”
Secret Cinema is part of that strategy. With backers Bain Capital and Great Hill Partners, TodayTix intends to set it back on the path to global expansion.
The search is on for permanent locations in London, Los Angeles and New York, to allow longer runs of the most successful shows, and a US tour of productions is planned for next year.
“We want to extend the same approach and strategy to rotate shows, and let them run,” says Fenty. “Any West End producer, when they have a hit on their hands, will keep them running. It’s about flexibility.”
TodayTix acquired Secret Cinema from Active Partners, a London-based private equity firm co-founded by the former BBC chair Gavyn Davies, which has invested in businesses including Soho House, the food chains Honest Burger, Leon and Caravan as well as the cycling brand Rapha.
Active Partners had acquired Secret Cinema founder Fabien Riggall’s majority shareholding in 2016. Riggall, who started the business in 2007, retained a minority stake and, while not actively involved in the business day-to-day, only resigned as a director last month.
Riggall seems keen to stay in the creative industries, starting four new companies this year under the Metrodome name, although it is understood that the buyout of Secret Cinema includes non-compete clauses that restricts setting up a copycat operation.
One of Riggall’s new companies is transforming the derelict Allders department store in Croydon, south London, into an arts and entertainment space. Shopping centre Westfield abandoned plans to develop the site last year.
The British taxpayer also has a £4m stake in Secret Cinema through the government’s Future Fund, which is managed by the state-owned British Business Bank, set up during the pandemic to provide loans to startups.
Like all of Secret Group’s investors, the government will receive staged payments for its stake over a three-year period based on the performance of the business.
Fenty and Baer say they fully back the Secret Cinema management and model, despite the business never having made an annual profit in its 15-year history.
“It is about giving them access to marketing, to working capital,” says Fenty. “Secret Cinema’s home is London, and forever will be.”
