1

2

CIRQUE DU SOLEILRe-inventing Circus

1212057 : Sreeharsha Rangarajan 1212058 : Sridhar R1212059 : Sriharsha Chunduru1212060 : Sudheer Dhurjati1212061 : Sudhir T S

3

Circus Industry in 80’s

• Major part of circus was dominated by Ringling Bros. and Barnum & Bailey

• Three-ring circus• Shows were only tweaked versions of previous acts with little/no new

content• Slow and declining industry growth

– Decreasing interest among audiences– Emergence of TV, movies as substitutes

• Rising cost of production– Rising labor costs (cost of hiring performers & animal trainers)– Shortage of open spaces (open spaces taken up for sports/civic events)

• Increased concerns from animal rights activists• Aisle concession sales

4

Circus Industry in 80’sThreat of New comers

• North American market was dominated by Ringling Bros, Bernum and Bailey• Product Differentiation• Low Switching cost

Competitive Rivalry• Two Big American families had more than a century of circus tradition (Cost of exit, Equal size, similar strategies)• Most of the circuses offered more or less the same content with little innovation and competed in a ‘red ocean’

Buyer Power• Audience had a wide range of entertainment to choose from.• Audience faced little switching cost.

Substitutes• Audience had a variety of substitutes to choose from like:1. Movies2. Theatre3. Opera4. Video games etc

Supplier Power• Competition for popular acts increased supplier (animal trainers, famous performers) power, costs

Factors of Differentiation in Traditional Circus• Tweaking the existing acts• Hiring famous clowns• Thrilling and dangerous stunts• Equestrian/Animal acts• Some moved from tents to permanent arenas to cut costs and

so that show can run in winter• Likes

– Family Event– Less focus on commercialization – More emphasis on artistry– Fun and Thrill

• Dislikes– No innovation– 3-Ring Circus– Unethical use of animals– Death defying stunts that people did not

really appreciate– Lack of theme– Ordinary venues– Concession sales

6

Distinctive Features of CirqueReduce

• Dangerous stunts• Concession sales

Create• Theme• Multiple productions• Original Score and dance• Permanent/Resident shows

Raise• Unique Venue• Intellectual component• Refined environment

Eliminate• Star performers• Animal shows• Three ring circus• Free tickets

Increased value• Reduced costs by eliminating

unwanted elements• Higher customer satisfaction

leading to greater revenue• Delivery of

creativity/innovation through a scalable model

7

Value Curve

Variety

of acts

Dangerous S

tunts

Star p

erform

ers

Aisle Conce

ssions

Animal s

howsPric

e

Theme

Refined watch

ing environment

Multiple pro

ductions

Original S

core

and danceTraditional CircusOperaCirque du Soleil

High

Low

8

Strategy : Products• Touring shows (traditional business)– Colorful big tops & arena shows– Lifecycle strategy with tours in various continents for

many years• Resident shows (Partnering with organizations to

share production costs)– Shows at Vegas, Orlando

• Other products– Merchandise sales (10% revenue)– Documentaries, DVDs of shows, TV shows– Movies

9

Strategy : Products (cont..)• Pursue dual goals of artistry and profit• Exclusivity (Clowns, yes. Clones, no)• Organization as the heart of Cirque’s creative process - not a

particular group of individuals. – Rotation of stage directors

• None of the activities outsourced (unwilling to compromise on quality or artistic integrity)

10

Strategy : Performance & Profitability• Eliminating high cost elements– Animals – Star performers

• Increase buyer value by offering Theme Based shows• More importance on innovation and creativity• Blue ocean strategy of creating new market by

partnering with resorts and theme parks• Improving circus industry by attracting corporate

clients and adults• Multiple productions - giving people reason to visit

CDS more often

11

Strategy : Performance & Profitability (Cont..)

• Sharing production costs with partners• Rotation of stage directors• Re-investing in business to support innovation• Organization Structure based on independent

creative cells ensuring increased accountability and scalability

12

Challenges to Growth and Diversification

• Cannibalization of its shows due to increased no. of shows (e.g. 8 shows at Vegas)

• Brand dilution by moving away from big tops to arenas and theatres

• Risks in choosing the right partner• Diversification beyond gambling or existing

destination cities• Saturation in US market that still drives

majority of revenue.

13

Factors Influencing Structure of Industry

• Innovation & creativity– Ability to garner larger market share (Blue Ocean strategy)

• Advent of newer technologies– Advent of newer technologies could act as formidable

substitutes. E.g. 3D movies

• Environment policies– usage of materials used for the shows

• Diversification– Creating local content suiting the local audience as the

industry grows to other geographies (e.g. tailored content for middle east)

14

?

References

• The Evolution of circus industry, INSEAD, W. Chan Kim• Even a clown can do it: Cirque du Soleil recreates live entertainment, INSEAD,

W. Chan Kim• Cirque du Soleil – The high-wire act of building sustainable partnerships,

Harvard business school, Ramon & Maxime• From the Streets to the Stars, Da Yi and Ebube Anizor• The big top that wasn’t big enough, JournalOfInternationalManagement.com• www.cirquedusoleil.com• Blue Ocean Strategy, The Wharton School, Roch Parayre

Thank You!

Indian Institute of Management BangaloreBannerghatta Road, Bangalore – 560 076, INDIA

www.iimb.ernet.in