Lane Community College Cirque de Soleil Case Study Discussion Based on the case Cirque de Soleil from the textbook: a) Provide an answer (min. 300 words,

Lane Community College Cirque de Soleil Case Study Discussion Based on the case Cirque de Soleil from the textbook:

a) Provide an answer (min. 300 words, max 500 words) to the following questions: 1. What are some key factors that affect the profitability of the circuses? How did Cirque Du Soleil reinvent the circus business?

b) Post 2 (two) comments and/or questions to others’ responses.

Please write in simple language.

Case reading will be attach below named file 1 and 2.
file named America and Amber will be use for b, comments or question to other responses. CASES
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CASE 35
CIRQUE DU SOLEIL*
The founder of Cirque du Soleil, Guy Laliberté, after seeing the firm’s growth prospects wane in recent years,
was thinking about expanding his firm in new directions. For three decades, the firm had reinvented and
revolutionized the circus. From its beginning in 1984, Cirque de Soleil had thrilled over 150 million
spectators with a novel show concept that was as original as it was nontraditional: an astonishing theatrical
blend of circus acts and street entertainment, wrapped up in spectacular costumes and fairyland sets and
staged to spellbinding music and magical lighting.
Cirque du Soleil’s business triumphs mirrored its high-flying aerial stunts, and it became a case study for
business school journal articles on carving out unique markets. But following a recent bleak outlook report
from a consultant, a spate of poorly received shows over the last few years, and a decline in profits, executives
at Cirque said they were now restructuring and refocusing the business-shifting some of the attention away
from the firm’s string of successful shows and toward several other potential business ventures.
Cirque du Soleil had also suffered other setbacks. Plans for a new show that would have been based in
Dubai fell through after the city had financial problems that stemmed from the 2008 recession. Cirque also
recently suffered its first death during a performance, when an acrobat tumbled 94 feet during a stunt in a Las
Vegas performance of the show Ka in 2013. After a hiatus of more than a year, Cirque brought a revamped
version of the stunt back to the show with more stringent safety measures. “The recent struggles,” said Chief
Executive Daniel Lamarre, “certainly brought a lot of humility to the organization.”1
For the first time in recent history, Cirque du Soleil failed to generate a profit in 2013. Its market had
dropped 20 percent from $2.7 billion in 2008. In recent interviews with The Wall Street Journal at Cirque du
Soleil’s sleek headquarters in Montreal, top executives, including founder and 90 percent owner Guy
Laliberté, revealed rare details of the firm’s financial status and new business plans. The company was seeking
to position itself as an attractive bet as Laliberté began to look for investors to buy a significant portion.
Debate swirled over whether Cirque du Soleil should return to its roots or aim for constant reinvention. At
the end of 2011, Bain & Co., contracted by Cirque, reported that Cirque’s market had hit saturation and the
company needed to be careful about how many new shows it should add. Bain suggested Cirque seek growth
by moving its concept to movies, television, and nightclubs. “Guy Laliberté always said we are a rarity—but
the rarity was gone,” said Marc Gagnon, a former top executive in charge of operations for Cirque du Soleil,
who left in 2012.2
performances, which were run in a tent on a lot adjacent to downtown’s Little Tokyo. Its success in Los
Angeles led the troupe to open shows across the U.S. in cities such as Washington, San Francisco, Miami,
and Chicago. Soon afterward, Cirque du Soleil performed in Japan and Switzerland, introducing its concept
to audiences outside North America.
In 1992, Cirque du Soleil took a show called Nouvelle Experience to Las Vegas for the first
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time. It was performed under the big top in the parking lot of the Mirage. The success of this
show led to the building of a permanent theater at Treasure Island for a show called Mystère, a nonstop
perpetual-motion kaleidoscope of athleticism and raw emotion that thrilled audiences. It became the first of
the troupe’s permanent shows and led to several others that opened in other hotels along the Las Vegas strip.
The most spectacular of these was 0, which included acts that were performed in a 25-foot-deep, 1.5 million-
gallon pool of crystal clear water in a custom-built theater at Bellagio.
By the end of 2011, Cirque du Soleil had 22 shows—seven of them in Las Vegas. It had become an
international entertainment conglomerate with 4,000 employees working in offices around the world. It had
established its headquarters in a $40 million building in Montreal, where all of Cirque’s shows were created
and produced. Much of the building was devoted to practice studios for various types of performers and to the
costume department that outfitted performers in fantastical hand-painted clothes. Cirque du Soleil recruited
many types of talent, among them acrobats, athletes, dancers, musicians, clowns, actors, and singers.
Growing with the Concept
Cirque du Soleil hired key people from the National Circus School in its formative years in order to develop
its concept of the contemporary circus. Its first recruit was Guy Caron, the head of this school, as the Cirque’s
artistic director. Shortly afterward, the troupe recruited Franco Dragone, another instructor from the National
Circus School, who had been working in Belgium. Dragone brought with him his experience in commedia
dell’arte techniques, which he imparted to the Cirque performers.
Together, Caron and Dragone were behind the creation of all the Cirque du Soleil shows during the firm’s
formative years, including Saltimbanco, Mystère, Alegría, Quidam, and the extravagant 0. Under the watchful
eye of Laliberté, Cirque developed its unique formula that would define its shows. From the beginning, it
promoted the whole show, rather than specific acts or performers. Cirque eliminated spoken dialogue so that
its shows would not be culture-bound, using instead strong emotional music that was played from the
beginning to the end by musicians. Performers, rather than a technical crew, moved equipment and props on
and off the stage to avoid disrupting the momentum as the show transitioned from one act to the next. Most
importantly, the idea was to create a circus without a ring or animals, as Laliberté believed that the lack of
these two elements would draw the audience more into the performance.
Even though Laliberté and his creative team were clearly innovative in their approach, they were not
reluctant to obtain inspiration from outside sources. They drew on the tradition of pantomime and masks
from circuses in Europe. They learned about blending presentational, musical, and choreographic elements
from the Chinese. Caron readily admitted that Cirque took everything that had existed in the past and pulled
it into the present, so that it would strike a chord with present-day audiences.
All of the Cirque du Soleil shows were originally developed to be performed under a Grand Chapiteau,
Big Top, for an extended period of time, before they were modified, if necessary, for touring in arenas and
other venues. The troupe’s Grand Chapiteau were easily recognizable by their blue and yellow coloring. The
facility could seat more than 2,600 spectators and was accompanied by smaller fixtures that were necessary to
accommodate practice sessions, food preparation, and administrative services. However, after the contract to
develop Mystere for Treasure Island in Las Vegas, Cirque began to develop shows that were to be performed
on a more permanent basis in specially designed auditoriums.
Losing Its Touch
Cirque du Soleil continued to expand even as the recession cut into demand. It launched 20 shows in the 23
years from 1984 through 2006, none of which closed during that time other than a couple of early ones. Over
the next six years, however, it opened 14 more shows, 5 of which flopped and closed early. The reasons for the
failures differed. One show, Zarkana, couldn’t make enough money to cover its production costs playing in
New York City’s 6,000-seat Radio City Music Hall. Iris, in Los Angeles, played in Hollywood, a seedy
neighborhood that despite heavy tourist traffic was commercially marginal
. Zaia, in Macau, simply didn’t
appeal to local audiences. Perhaps more troubling, the company’s nearly perfect record of producing artistic
successes began to waver. Viva Elvis and Banana Shpeel were among several Cirque shows that garnered
terrible reviews. Both shows closed quickly. “Shows like that diluted the brand,” said Patrick Leroux, a
Starting a New Concept
Cirque du Soleil developed out of early efforts of Guy Laliberté, who left his Montreal home at the age of 14
with little more than an accordion. He traveled around, trying out different acts such as fire-eating for spare
change in front of Centre Pompidou in Paris. When he returned home, he hooked up with another visionary
street performer from Quebec, a stilt-walker named Gilles Ste-Croix. In 1982, Laliberté and Ste-Croix
organized a street performance festival in the sleepy town of Baie St. Paul along the St. Lawrence valley.
By 1984, Cirque du Soleil was formed with financial support from the government of Quebec as banks
were reluctant to support the band of fire-eaters, stilt-walkers, and clowns. Its breakthrough 1987 show We
Reinvent the Circus burst on the art scene in Montreal as an entirely new art form. No one had seen anything
like it before. Laliberté and Ste-Croix had turned the whole concept of circus on its head. Using story lines,
identifiable characters, and an emotional arc, Cirque du Soleil embodied more than a mere collection of
disparate acts and feats.
Despite its early success, Cirque du Soleil was struggling financially. It took a gamble on making its debut
in the United States as the opening act of the 1987 Los Angeles Festival. Cirque managed to sell out all of its
868
869
*Still in performance.
Source: Cirque du Soleil.
professor at Montreals Concordia University who had closely studied Cirque du Soleil.3
One problem, said Cirque du Soleil executives, was that audiences didn’t understand the differences among
various shows carrying the Cirque brand. As a result, many people would dismiss the opportunity to see, for
instance, the show Totem thinking they had already seen something similar in the older Varekai. On the other
hand, Cirque tried to move in different directions with each of the new shows that it developed. “We’re
constantly challenging ourselves,” Laliberté said.4 Audiences, however, complained that some newer shows
were not as focused on the acrobatic feats that they had come to expect and enjoy from Cirque.
By August 2012, Laliberté was concerned and convened a five-day summit for executives at his estate
outside Montreal. There, he and others drew up plans to lay off hundreds of executives and performers and
pare the number of big new touring circus shows Cirque produced. The cuts began soon after and continued
through 2013 and amounted to around $100 million of savings, according to Laliberté. They included
everything from giving out fewer suede anniversary jackets for employees to cutting out child performers and
tutors.
Laliberté also reexamined core production costs. The payroll for Cirque’s show 0, in Las
Vegas, for instance, had ballooned thanks to a surge in contortionists. “I said, Why do we need
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six contortionists?” Laliberté, 55, recalled while chain smoking in his office. In addition to the layoffs,
Cirque also suffered a blow to morale when acrobat Sarah Guyard-Guillot was killed in 2013 during a
performance. The company overhauled the show’s finale, a “battle” staged on a vertical wall with performers
suspended from motorized wire harnesses. After the performer’s death, Cirque continued to stage the show,
replacing the live finale with a videotape of the scene from a past performance.
EXHIBIT 1
Cirque du Soleil Shows
A New Direction?
Cirque du Soleil managed to generate profits out of a business model that was quite challenging. Kenneth
Feld, of Ringling Bros. and Barnum and Bailey circus, commented: “If you think about spending $165 million
on a show that seats 1,900 people, the economics are just staggering.”6 But Laliberté’s stroke of genius was
realizing that no Cirque show ever had to close. The troupe could either keep touring or play in locations such
as Las Vegas and Orlando that drew a lot of tourists. By keeping as many shows running as possible, the
troupe managed to build a repertory of shows that could all be running at the same time (see Exhibit 1).
However, the rising costs of new shows and the increase in the number of early flops had cut Page 273
into the firm’s revenues and profits. Although revenues dropped to $850 million in 2013 from
$1 billion in 2012, Cirque still managed to return to profitability because of stringent cost controls. Chief
Executive Daniel Lamarre said the company expected to reduce its revenues from Cirque-branded shows to
60 percent in 5 to 10 years, down from 85 percent now. Already the special-events unit had increased revenue
to $37 million from $15 million, said Laliberté.
Laliberté’s executive team had come up with a business restructuring plan to manage this diversification
through the creation of discrete business units under a central corporate entity to try to beef up the noncircus
side of the business. New Cirque subsidiaries included a musical-theater production arm based in New York
City and a special-events producer that was beginning to operate under the name 45 Degrees Events. Other
new areas that Cirque was venturing into included small cabaret shows at hotels, children’s television
programs, and theme parks. Executives said that currently the company’s biggest growth area wasn’t a show at
all. It was an expanding deal to provide ticketing services to the arena company AEG.
Yet circus experts said Cirque du Soleil was walking a fine line as it sought to expand into new ventures
without damaging its central brand as a creative entity. But Laliberté was convinced that Cirque could apply
its unique talents to other businesses. “We’ll be more about intelligent analysis of each project,” he remarked
to critics who questioned the new direction. For Laliberté, the stakes were high. He was seeking to sell 20 to
30 percent of the company to outside investors by emphasizing the more disciplined company structure and
growth plan. The additional funding would help Laliberté to keep taking on new and different challenges.
Resident Shows
Grand Chapiteau & Arena Shows
1990 Nouvelle Experience
1993
Mystere
Treasure Island, Las Vegas
1992 Saltimbanco
1998
0
Bellagio, Las Vegas
1994 Alegría
1998
La Nouba
Downtown Disney, Lake Buena Vista
1996
Quidam
2003 Zumanity
New York New York, Las Vegas
* Case prepared by Jamal Shamsie, Michigan State University, with the assistance of Professor Alan B. Eisner,
Pace University. Material has been drawn from published sources to be used for purposes of class discussion.
Copyright © 2015 Jamal Shamsie and Alan B. Eisner.
1999 Dralion
2005
ka”
MGM Grand, Las Vegas
ENDNOTES
2002 Varekai”
2006
Love
The Mirage, Las Vegas
Zaia
The Venetian Macao
1. Alexandra Berzon. Cirque’s next act: Rebalancing the business. Wall Street Journal, December 2, 2014, p.
B1.
2005 Corteo
2008
2006 Delirium
2007 Kooza
2008 Zed
Tokyo Disney Resort, Tokyo
2008 Criss Angel Believe
Luxor, Las Vegas
2009 Viva Elvis
Aria Resort & Casino, Las Vegas
2. Ibid., p. B4.
3. Ibid.
4. Christopher Palmeri. The $600 million circus maximus. Business Week, December 13, 2004, p. 82.
5. Berzon, op. cit., p.
B4.
6. Palmeri, op. cit.
7. Berzon, op. cit., p. B 4.
2007 Wintuk
2009 Ovo”
2011
2009 Banana Shpeel
2013
Iris
Dolby Theatre, Los Angeles
Michael Jackson: One
Mandalay Bay & Resort, Las Vegas
JOYA
Riviera Maya, Mexico
2010 Totem
2014
2011 Michael Jackson: The Immortal World Tour
2012 Amaluna
2014 Kurios: Cabinet of Curiosities
870
871
Cirque du Soleil is one of the most famous shows around. Even with that said, they still have struggled with their financials
because their shows are so expensive to put on. Some of the key factors that affect profitability in this industry are the
tourism industry, ticket sales, and paying close attention to costs behind the scenes. Cirque Du Soleil was able to save $100
million by making cost-cutting decisions when they decided to lay off executives and cut out performances that were
unappealing or outdated. Simultaneously, they kept as many shows running as they possibly could. Their extreme cost
controls allowed them to venture out into the non-circus side of the business as well with new Cirque subsidiaries like small
cabaret shows, children’s television programs, and arranging small shows at theme parks.
The circus has been reinvented by Cirque Du Soleil in many ways. One way they did this was to promote the entire show
instead of promoting the acts themselves. Instead of focusing on only circus acts, they presented their show as a whole new
art form. They introduced the use of story lines, created identifiable characters that appeased the crowd, and eliminated
spoken word to be more universal in any culture. Dissipating the language barrier by omitting it altogether was a concept
that was developed when they hired the National Circus School in its earlier years. Instead of talking they would use
dramatic lighting and music to express the emotions of the performers.
1. Some key factors that affect the profitability of the Circuses are market saturation, unsafe practices that caused a death,
the recession of 2008 and not being able to differentiate the new shows. Cirque de Soleil was admired for being unique in
its market and changing the structure to circuses but after a few years, many caught on joining and saturating the circuses
market. People would originally seek out Cirque de Soleil for its differences but in 2011 when many circuses were now the
same there would be fewer people seeking it and less profit coming in. A death occurring at Cirque de Soliel did not make
things better and caused them to stop the act until recreating a safer version. The recession of 2008 also took its toll, some
of the acts planned for Cirque de Soliel had been shut down due to the city running into financial issues. Finally, Cirque de
Soliel was not able to sustain customers during productions of new shows because people believed they were the same as
acts they had already seen from them. It was difficult for them to separate the brand from the acts and even when people
did go to shows, the customers were disappointed with the changes because there was certain things customers associated
with the brand affecting their brand and reputation negatively.
2. Cirque De Soleil reinvented the circus business by starting a new and original theatrical show that incorporated circus
acts as well as street entertainment into one and adding extravagant costumes and music. As time went on they went on to
expand and perform in various new cities and eventually began to build a permanent performance theater. After that
theater gained success they began to build more theaters and ended up having about 40,000 employees working around
the world.
Another factor that set them apart in their reinvention was their Cirque de Soliel’s thorough research on the market. Cirque
hired many people in its formative years to develop its concepts and brought in various athletes, dancers, and talents to
explore its acts. Cirque studied down to the music and how it’should flow, as well as how to keep the audience engaged
throughout the whole show while promoting the whole theater and not specific acts or performers.

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