Posted by: itm2011 | May 13, 2011

The Big Top That Wasn’t Big Enough: The Case of Cirque Du Soleil

The Big Top That Wasn’t Big Enough: The Case of Cirque Du Soleil

Lindsey Strittmatter

Background:

With the worldwide success of Cirque du Soleil, a number of opportunities have recently presented themselves to the company. Since its creation in 1984, Cirque has grown by adding additional shows or cities to tours, and they have just begun to embark into television and movie productions. These additions, as well as, smart business planning have already made Cirque a success.

Currently, Cirque has the means to grow even more, by diversifying into other outlets, and ultimately, bringing in more revenue. On all outward appearances, there is absolutely nothing wrong with this, but to CEO, Guy Laliberté, all of this raises concerns. In 1997, Cirque tried to decentralize by having three separate headquarters and profit centers in North America, Asia, and Europe. This proved to be a failure and the company recentralized in Montreal. Could these new possibilities have the same fate?

Pressures from Danielle Pouliout, in strategy and planning, and Mario D’Amico, executive vice president of marketing, do not offer reassuring thoughts either. Pouliout recognizes that “Cirque people don’t really like to be managed,” but at the same time she urges for six-month plans. D’Amico views Cirque as a “luxury good,” but he is worried about over-saturating the U.S. market.

Is Cirque growing too big too fast? Will they lose loyal fans and employees during this opportunity for growth? Since its creation, Cirque’s main focus has been on creativity. Laliberté can not lose sight of this. It is fair to say that Cirque has already changed greatly from the early days, when it was just one traveling show, with significantly lower ticket prices. Has Cirque gone too commercial?

History:

In 1984, in Bale-Saint-Paul, a village near Quebec City, a troupe of street performers was in the process of forming Cirque du Soleil. The troupe was called, Le Club des Talons Hauts, which translates to, The High-Heels Club. Musician/fire-breather turned CEO, Guy Laliberté, was one of the founding members. Back then, 73 people worked for Cirque, while today there are over 4000 employees worldwide. This number includes 1000 artists as well. In the beginning, Cirque toured one show at a time, to an average crowd of 270,000 people a year. Since then, there have been over 100 million spectators for Cirque productions.

Cirque left Canada for the first time in 1987. With a loan for 1.5 million dollars from the Canadian government for equipment, Cirque traveled to Los Angeles to perform, “We Reinvent the Circus,” at the Los Angeles Festival. The show sold out and Cirque continued to tour other cities in the United States.  In 1990, Cirque had the financial resources to be able to fund its first European and Asian productions. Cirque’s first show, “Fascination,” toured Japan in 1992. After 1992, the tours lasted longer and stopped in more countries. “Saltimbanco” toured from 1992-2001 and visited North America, Japan, Europe, Ottawa, and Asia-Pacific.

In 1999, Cirque du Soleil Images, Cirque’s multimedia division, released its first feature film, “Algerie,” as well as a television special called, “Cirque du Soleil presents: Quidam.” In 1998, the value of the Cirque was estimated to be 800 million dollars, according to Canadian Business Magazine. In 2000, Cirque created, “Journey of Man,” an IMAX film production distributed by Sony. Cirque opened its first store in its new permanent theater in Walt Disney World Resort in Orlando. “Varekai” and “Alegria” begin to tour in 2002.

Product:

Cirque is known as, “the circus without animals.” It combines clowns, acrobats, streets performers, and gymnasts, who perform spectacular feats while creating theater and dance dramas. The music transcends cultural boundaries by being in a Latin-like language. As an audience member has said, “Cirque makes you want to live your life.”

http://www.youtube.com/watch?v=01lsnfjVwUs

Company Policies:

Cirque understands the needs for its workers for a home-away-from-home. They provide food and housing directly. On top of offering impressive salaries, they also provide language training and classes with expert artists. If transportation is a concern, they will also send a shuttle to transport their employees to and from work. Headquarters, located in Montreal, is known as, “The Studio.” This facility includes: a 75-foot high training room, a dance studio, a cafeteria, and an outdoor terrace. As Martin Dumont, interim tour director of “Dralion” stated, “we try to make the best possible working conditions for everybody.” The company handbook or code of behavior is absent. Cirque is trying to harness creativity, not hinder it.

Industry:

Cirque du Soleil is part of the entertainment industry. According to Hoovers, their top three competitors in the industry are: Feld Entertainment, Live Nation, and Six Flags. Ringling Brothers and Barnum Bailey Circus and Disney Live are owned and operated by Feld Entertainment. Also taking advantage of diversifying opportunities, Feld recently added Feld Motor Sports to their repertoire.

Feld has 30 million spectators each year in more than 60 countries. Ringling Brothers alone visits 90 cities in North America and admission costs from $10-$35. For the June 2011 Zarkana shows in New York City, Cirque is charging $52-$250 for admission. These prices are drastically different; however, Ringling Brothers and Cirque du Soleil are completely different shows. Even the off-Broadway production of, “Spiderman: Turn Off the Dark,” costs from $69.50 to $302. For competitor, Blue Man Group, prices range from $91.25-$105.25. Cirque often offers a different experience and serves different markets than its competitor’s do, which allows it to stand out in the industry.

The Challenge:

D’Amico said, “At Cirque, creativity is at the core, the customer is not. Cirque is about letting pure artists work the way they want to work; they have something to say, they express themselves.” What happens though when 1,000 artists express themselves? The answer is: problems. Currently, Cirque’s challenge is to stick to Laliberté’s motto, “I will not go public,” while dealing with an ever-changing world. Many employees are critical of the new opportunities Cirque has and will continue to take advantage of in the coming years. These recent changes make many wonder if Cirque is losing its way and is only concerned about conquering more and more markets and industries. Industry experts, however, may suggest that Cirque is doing exactly what it needs to in order to stay competitive in an already active market.

Alternatives:

Options Description
One- Maintain and improve Keep Cirque as is, for now. Focus on improving an already success
Two- One at a time Choose and imply only one opportunity right now
Three- Act slowly Take advantage of all opportunities but in a slow-paced manner, so as not to oversaturate markets
Four- Act now Begin taking advantage of all possible opportunities immediately

Option One

One alternative would be to keep Cirque the way it is, for now. Shows have been added since its creation. Cirque could focus on making their shows even better and ensuring that their artists are still performing at their best. Cirque requires 100 new artists every year. Instead of worrying about expanding and capturing more markets, Cirque can concentrate on being the best in the industry, by continuing and improving on what they have always done well.

They could also stay within their current markets, until demand grows more in unsaturated markets. This will cause a stronger demand for Cirque in new cities and/or countries. People are always intrigued by what they can not have and yet have heard so much about. This will create a lot of buzz for Cirque. This option would appease D’Amico’s concerns because it would allow Cirque to maintain its “luxury good” status and not become oversaturated, since only select areas could see the performances. With this option, Laliberte could wait and plan everything out further, in order to ensure the smoothest and most successful transitions.

Option Two

The second option would be to only utilize one or two of the opportunities at this time. All of the current opportunities will make Cirque grow, in one way or another. Growth will lead to market saturation, which causes D’Amico to think that Cirque may wear out its welcome. Cirque could add shows, which is a safe move, since they have been doing it for years now. The shows would need to display the same creativity and artistry the others have before, because that is truly what Cirque is all about. Cirque could maintain its current shows, as well as, continue to branch out into other forms of media and merchandising.

A criticism to not adding new shows would be that Cirque may lose some of its innovative, creative aspect. People may grow tired of the same show after awhile, something Broadway experiences now and then. Adding new business models will provide Cirque with a back-up plan, if one sector proves to be less successful.  With increasing competition in the industry, being able to diversify Cirque’s business will be crucial. The traditional revenue may be threatened, but there will now be new sources from the new markets.

Cirque could also just focus on structuring their business platform. Cirque continues to grow so there will be a need for more business-like ways of handling their assets and plans. A six-month plan would outline all planned and projected expenses and profits. Pouliout believes there needs to be a balance between Cirque’s business and creative sides, but she also does not see any harm in making more structured plans for the future. In order to maintain this, Cirque should promote from within or hire people that share that characteristic themselves. If they hire the wrong people, they could come in and try to change everything. The hiring process will be crucial.

As the company and assets continue to grow, the need for this structure will be dire. Just because these people work at “headquarters,” doesn’t mean they have to be totally corporate. It doesn’t matter if they wear suits or not, what does matter are the ideas and thoughts that will come from their heads. Cirque was never all about the money so if it becomes too profit-driven, than the old Cirque has already been lost.

Option Three

Another way to deal with these opportunities would be to slowly take advantage of each of them. It would not be smart to attempt to tackle all or any of them too quickly, in case they failed. Cirque could continue adding new shows or cities, but nothing too drastic. Adding a few extra stops to a touring show would not cause Cirque to over saturate a particular market. Researching new cities and countries would be crucial in order to see how Cirque would be received. Cirque should add “test-cities,” where they add a city to a tour, and see how tickets sell and audience members thoughts of the show. This will allow them to test the waters, instead of planning multiple stops in countries that do not want Cirque.

Adding a few more employees to the executive forum could also be a smart move. Seeing the way business is handled at first would be smarter than changing everything immediately. Hiring or promoting from within only a handful of employees would save Cirque from unnecessary training and/or firing of employees, if the new ways were not received well. This option is dependent upon how much of a hurry Laliberte is in to make these possible adjustments.

Option Four

The final option is to take advantage of all the opportunities right now because Cirque is in such a competitive industry. If they do not use this time for growth, perhaps a competitor will. Cirque is all about originality, so it would be crucial to not appear as if they have used someone else’s ideas. It is possible for Cirque to continue to add shows and have a stronger executive forum, while not over saturating markets. This will require much strategic planning. Shows should be added to cities where mass audiences have already expressed a demand for performances. In many states and countries, touring in one city will not satisfy the demand, so hitting more cities could solve that issue.

However, another option to this plan would be to do the opposite: to add shows in countries that currently have none. This would continue Cirque’s global growth. The most important part to all of these alternatives is that they allow Cirque to maintain its identity. If Cirque loses its core then it runs the risk of losing loyal fans and employees. Its demand could be lessened in many markets if these additions are not well-received.

Competitor’s Similar Challenge:

Formed in 1987 in New York City, by three friends, Chris Wink, Matt Goldman, and Phil Stanton, Blue Man Group is an organization that combines music, comedy, multimedia, and theatrics into one show. The men began playing shows all around Manhattan. Their first full-length show, “Tubes,” opened at the Astor Place Threatre in 1991. With the success of this show, the group toured in Boston and Chicago.

Blue Man Group started its largest production, at the time, in Las Vegas in 2000. The group’s first international show came in 2004 to Berlin. Stops in London and Toronto came in the following year. As the amount of shows grew, so did the number of understudies. Wink, Goldman, and Stanton are no longer the only performers. Other changes have also taken place over the years, including diversification.

With the success of Blue Man Group, a parent group was formed, Blue Man Group Productions. They are made up of over 50 people, who all help to produce all of Blue Man Group’s shows. Over the years, Blue Man Group has ventured into other outlets. They have been featured in countless advertising campaigns, as well as, various television guest appearances. The group also has its own touring children’s museum, “Making Waves,” as well as, The Blue School, a formal education program for children. They have released two CDs since 1999, “Audio” and “The Complex,” both containing music from shows. The group has toured in 9 countries from their two tours: Moby’s Area2 tour and the “How to be a Megastar Tour 2.0.” In 2009, it was announced that they would also begin performing on the Norwegian Epic by Norwegian Epic Cruise line.

With over 17 million spectators worldwide, Blue Man Group has come a long way from performing in venues such as Central Park. The group started off small, just like Cirque. They were also ultimately faced with the decision to expand their company and markets, as well. The group has taken advantage of many opportunities, but none that seem foreign to their original namesake. Group is smaller than Cirque, but the decisions made seem very similar. In the entertainment industry, the question to expand or not is always relevant.

Conclusion:

Years ago, Laliberte was faced with many opportunities that could literally make or break his company. Over the years, Laliberte had added products, shows, and new cities to Cirque’s tours. The chance to continue to do this and on a broader scale, was what had to be decided. Laliberte had a few possible alternatives that he could take and he ultimately decided to take advantage of every opportunity, as long as it still held true to Cirque.

In 2000, Cirque had four touring shows and three permanent shows. The first entertainment complex, containing a permanent theater for productions, opened in Montreal in 2003.  In 2004, “KA” is launched at MGM Grand in Las Vegas, a resident show. Cirque’s first arena show, “Delirium,” premieres in Montreal in 2006 and continues to tour North America. South America is also toured for the first time with, “Saltimbanco” and Cirque teams with CKX Inc. to work on a new Elvis Presley project. In 2008, Cirque launches three new, permanent shows: “ZAIA” in Macau, “ZED” in Tokyo, and “Criss Angel: Believe” in Las Vegas. Three new productions were added in 2010: “Viva ELVIS” in Las Vegas, “Banana Shpeel” in Chicago and New York, and “TOTEM,” a traveling show. Discussions also began with James Cameron for work on future 3-D projects.

Today, Cirque has visited over 250 countries and has 22 permanent and touring shows all over the world. Cirque is currently working on a collaboration with Michael Jackson Inc. to develop a series of projects based on Jackson. A night club and permanent production is also in the works for Las Vegas, set to have cutting edge technology such as, 3-D images and holograms. Licensing and merchandising has also been a huge success, with more than 2000 products in apparel, gifts, accessories, fine arts, and handcrafts.

Production-wise, there are currently 22 permanent and touring shows in countries such as, Japan, Russia, Australia, Canada, Philippines, etc. Expected sales for 2011 are $1 Billion dollars. One Billion dollars is a lot of money to manage, which is why, years ago, Cirque’s executive forum became more structured by adding additional employees. Cirque is doing what it needs to stay in the game. They are being more creatively and business smart.  They have not lost sight of their core values.

Laliberte made a risky decision because he took the risk of turning Cirque into a “sell-out” corporation; however, Cirque has only prospered from its expanding businesses. Laliberte and current CEO, Daniel LaMarre, only embark in projects and shows that remain true to Cirque’s core beliefs. Since 1984, Cirque has continued to grow and shows no signs of stopping anytime soon.

Sources:

http://blogs.forbes.com/indersidhu/2010/11/12/profiles-in-doing-both-why-cirque-du-soleil-isnt-clowning-around-about-business-models/

http://www.cirquedusoleil.com/en/home.aspx#/en/home/about/details/history.aspx

http://hbsp.harvard.edu/product/cases

http://www.hoovers.com/company/Cirque_du_Soleil_Inc/hhytci-1.html

http://knowledge.insead.edu/CirqueRecessionProof081013.cfm

http://news.cnet.com/8301-13772_3-20054454-52.html

http://en.wikipedia.org/wiki/Blue_Man_Group

http://www.blueman.com/about/whatis

http://www.lvol.com/bios/e28.html

http://www.google.com/imghp?hl=en&tab=ii&biw=1280&bih=548

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