Case AB Circus Industry

8/10/2019 Case AB Circus Industry

1/15

II\{SEAD

The

Business

School

for

the

World'

06/2009-4999

Matt

Williamson,

INSEAD

MBA

2000,

und.er

the supervision

of

Professors

W.

Chan

Kim,

M'

Bensaou,

all

at INSEAD.

It is

intended

to

be

*"d

".

a

basis

for

class

discussion

rather

tive

or ineffective

handling

of

ar

administrative

situation.

Copyright

@

2OO2,

INSEAD-EAC,

Fontainebleau,

France.

To order

copies

of INSEAD

cases

see

details

on the

back

cover.

copies

may

not be

made

without permission.

BIue

Ocean

Strategy

Institute

The

Evolution

of

the

Gircus

Indus+ry

(It)

BOS007

.

overall

winner

of

the

2009

European

case

clearing

House

Awards

'

Winner

of

a

2006

European

Case

Clearing

House

Award

in

the

category

"Strategy

and

General

Management"


2/15

INSEAD

Blue

Ocean Strategy

Institute

"Ifyou

ask

a

kid

to draw

a circus,

they

draw

a tent."

Pam

Miller, Big

Apple

Circus,

New

York.

Indeed, the

circus tent is

a

unique

and

evocative icon

that has

featured

prominently

in

circuses

for centuries.

Relying

heavily

on

a

flamboyant

entry

into town,

the

big

top

was

their primary

tool

to

attract

audiences

to the

spectacle

taking

place

inside.

Nevertheless,

wfiile

the

symbolism

of

the

tent

is important

in the

contemporary

interpretation

of circus,

most

early

shows,

particularly

the,Europea4

p{ecursor;,of

wha

would

be recogqizqd

today

as

circus,

took

place

in

theatres

ana

aeAicated

6uildings.

The

Origins

of the

Gircus

The

circus

was

created

in

1768 by

Philip

Astley,

an

Englishman

who

set

up

a

ring

format

for

equestrian events,

still

in

use

today.

Classical circus is

considered

to consist

of

four

elements,

whether

inside

a tent

or a large

arena:

equestrian

acts,

clowns,

acrobats

and

jugglers.

The

word

circ

competitive

arena

for

horses,

Maximus

cal

example.t

The

circular

spa

galloping

ary

for

any

other

form.2 The

c

by a horse

diameter

ring

enabled

the equestrians

in

the

show

to

stand

on

horseback

and

perform

other

similar

tricks.

Juggling,

tumbling

and

trained

animal

events

had

been

popular

through

the

ages,

but

by adding

a

clown

to

the

mix

to

parody

the

other

events

and

add

some

humor,

Astley

transformed

these

separate

acts

into

a real

show.3

Astley's

innovation

spread

quickly

throughout

Europe

and

showed

up in

America

in

substantially

the

same

form

in the

summer

of

1785.

Building

on the

basic

equestrian

component,

legends

such

as

P.T. Bamum and

lesser-known

players

like

W.W.

Cole

and

George

Bailey

sponsored

elaborate

acts

from

trained

zebras

to

trapeze

artists.

Around

the

core

circus, promoters

grafted

sideshows

such

as menageries,

human

and

animal

'curiosities,,

and

carnival

gzrmes

to

enhance

the

spectacle

of

their

shows.

Bamum, perhaps

the

most

celebrated

huckster

of modern

times,

was

so

successful

that

many

of

his

efiortr

ha'n"

entered

the

modern

lexicon.

He marched

Jumbo

the Elephant

across

the

newly dedicated

Brooklyn

Bridge

and

proclaimed

General

Tom

Thumb,

a midget

from

Connecticut,

the

smallest

human

ever to

have

lived.

The

Development

of

the

Traditional

Gircus

Though

an

extremely

popular

form of

entertainment

during

the 19ft

and

20tr

centu4z,

the

circus

conjures

an

image

of

drifters

and

dreamers

with

gaudy

clothes,

aggressive

hawkers

and

a

standard

routine

of

acts.

Whereas

whole

towns

had

once

tumed

out

to

see

historical

re\ues

and

the

latest

mechanical

marvels

along

with

other

events

as the

circus

passed

through

town,

I

Personal

communication

from

Fred

Dahlinger

Jr.,

Director,

Collections

and

Research,

Circus

World

Museum,

May

9,2001.

2

Author's

interview

with

Dominique

Jando,

Associate

Artistic

Director,

Big

Apple

Circus,

May

8, 2001.

3

John

culhane,

The American

circus (New

york,

USA:

Henry

Holt

and

company,

1990),

p.

l.

Copyright

@

2002 INSEAD-EAC 06/2009-4999


3/15

INSEAD

Blue

Ocean Strategy

Institute

the

uninspired

circus

on offer

in

post

World

War

II

America

catered to

the

tastes

of

an

audience

ofchildren.

Not surprisingly, for modern

North

American

audiences,

circuses

are

most

directly

associated

with

the masterwork

of

the legendary showman P.T.

Bamum,

the

proverbial

"Greatest

Show

on Earth", the

Ringling

Brothers

and

Bamum

&

Bailey's Circus

(hereafter

referred

to

as

the

Ringling Brothers

&

Co.). The

name

itself points

to the

family

origins and

twisting

path

that

the

circus has

followed

over the

last

cenfury.

Starting

with his

own

show,

"P.T.

Bamum's

Grand_Traveling

Mqqeq4,

M_erragerie,

C4rav4n,

4qd

Circusll,

Baqusltcamed

up-

in 1882

with

James A.

Bailey

to

stage

"P.T.

Barnum's

Greatest

Show

on

Earth,

and

The Great London

Circus,

Sanger's

Royal

British

Menagerie

and

The

Grand

Intemational

Allied

Shows

United".

In 1907,

after both Barnum

and

Bailey had

passed

away)

the

five original

Ringling

brothers

paid

US$400,000

to

purchase

what they

had

left

behind, i.e., the

largest

competitor

to their

own

eponymous

circus.

The shows,

which had toured

separately

since the purchase,

were

combined

in

1919,

forming

a

town

in

itself,

with

over

1,200 staff

and

a

hain

of 100 rail cars.

After

surviving

the

Depression

and

World

War

II,

the

operation was

a slightly

threadbare

shadow

of its

former

greatness.

Changing

societal

interests,

competition

from

increasingly

available

and

sophisticated

television

and

movies,

and the

rising

cost

of

producing

a

traveling

show

were

seriously threatening

the

profitability

of

'The

Greatest

Show

on

Earth."

Open

space

near

city

centers

was

increasingly

taken

up

with civic

and

sports

arenas.

fusing

labor

and

rail

costs

further

eroded the

economics

of

the

traditional

traveling

tent

approach.

The

Ringling Brothers

&

Co.

circus

performed

its last

show under the

big

top

in Pittsburgh

on

July

16,

1956.

By dropping

the

tent

and

moving

performances

to

the

large

civic

arenas which

had

begun

to crop

up

around

the

country,

they

gained

a

new

lease

on

life for

what was

increasingly

seen as a relic

more

adapted

to

small

town life. The

show

continued

to struggle

on

until

John

Ringling North,

nephew

of the

founding brothers, sold

it

to

Irvin

Feld

in

1968.

While

Feld

managed

to

retum

the

show to

profitability,

building on

his experience

booking

the

major

arenas

as

a

music

promotet,

the

substance

of

the

show

remained

the

same.

The

dominant players

in the American

circus

and

the frontier

spirit

of the

country

at

the time

had

a

significant

impact

on how the

circus

developed

thereaftei.

With

only

New

York large

enough

to

host

a

permanent

circus

similar to

those

existing in

Paris

and

London,

the

majority

of circus

acts

in

the country

were on

permanent

tour,

with rail

travel

significantly

increasing

the

touring abilities

of

shows

after

the

Union

Pacific

and

Central

Pacific

railroads

met to form

a

transcontinental

railroad

in 1869.

Seeking

to

make

the

maximum

impact

during

their

whirlwind

tours through

towns

large

and

small across

America,

the

circus

establishment

emphasized

the

spectacular

nahre

of

the

acts

and

attractions.

The circus

not

only

brought

elephants and

other exotic

animals

but

also

electric lights, moving pictures

and

a

series

of

'educational

entertainments'

featuring people

and

historical

montages

from

around the

world.

The

19tr century

emphasis

on spectacle

continued

in the

three-ring

format

of

the Ringling

Brothers

& Co.

circus.

Early

American

circus

shows

followed

the

European

pattem

of

single

ring

tents

and theaters.

However,

the

materials

of

the time

and

the requirements

of a

mobile

circus

limited the

size of

the

arena

that

could

surround

that ring.

Worse

still,

the number

of

people

packed

around a

single ring

could

not be

significantly

increased

without

extending

the

distance

between

the

audience

and the

performer

and

subsequently

diminishing

the

quality

of

the

show.

With wagon-based

traveling

shows

only

able

to move

a couple

of

miles between

Copyright

@

2002 INSEAD-FS,C

06./2009-4999


4/15

INSEAD

BIue

Ocean

Strateqy Institute

stands,

small towns

had

remained

the

most frequent

venues

and

so

this

size

limitation

was

not

really

a

problem.

However,

a switch to

rail

travel

enabled

by the

expanding

rail network of

the

late

19'n

century allowed the

circus

to

skip

directly to

larger towns

and

the larger potential

audiences

they

contained.

Responding

to

increasing

criticism from the

back

rows

of

his

20,000 people

tent,

P.T. Barnum

added

first

one

ring

and

then

another,

lengthening

the

tent

rather

than increasing

the

diameter.

In

true

Barnum

fashion, he

lelentlessly

promoted

the

added spectacle

of

simultaneous

events

taking

place

in

side-by-side

rings.

The

uniquely

American three-ring

circus,

originating

on the

business side

of the show,

soon came

to be

inseparable

-from

the

show itself.

The Traditional

Gircus Format

-

It's

a Three

Ring Gircus

in there

The nature

of

the

three-ring

format

has

placed

enornous

formative

pressures

on the

circus.

The typical

clown in

the

Ringling

Brothers

& Co. circus

has

garish

face

paint

and

costumes

to

overcome

the

visual

distance

from the

audience; oversized

shoes

have

a

similar

objective.

Seen up

close,

they

are

actually

frightening

to

the

many

small children

who

make

up the

target

audience."

While

moving

toward

spectacle

and, in

effect, de-emphasizing

the

artistry

and

skill of

the

circus

performer,

the

major

three-ring

circuses

continued

to

pursue

the

biggest name

acts.

Putting

on

a

circus

was,

to a certain

degree,

merely

piecing

together

different

acts to

create a

show that would

draw

crowds.

From

1793,

the names

of

star

performers

were

announced

on

the

marquee,

in newspaper

ads

an{

by heralds

posted

in and

around the

town

prior

to a

show

to

indicate the

quality

of

the

acts.5

Perforners

such

as

Clyde Beaffy,

a

wild animal trainer,

Tom

Mix, a rodeo

rider, and John

Robinson,

an

equestrian, transformed

their

immense

popularity

into

circuses

of

their

own.

Individual acts

are

often hired

as

subcontractors

for

a

specific

totr.

An

elephant

or other

wild

animals

are frequently

owned

by

their

trainers

and

only

leased

to

the

show.

While

the

Ringling

Brothers

& Co.

circus owns

its

own

elephants,

raising

them

on its own

elephant

ranch in Florida,

other

shows have

been known

to pay

US$6,000

per

week for the

services

of

an elephant

and

its

trainer.6

kving

Feld

purchased

the

Williams

family circus

in

1969

for

US$2

million

simply

to

ensure

exclusive

rights

to feature

Gunther

Gebel-Wiltiams.

Nevertheless,

in

this type

of

circus

there

is

no

unifuing theme

but

rather

a rich,

almost

bewilderine

assorhnent

of

acts.

The

Traditional

Gircus

Industry

Traditional

circus performed

from

early

spring

to late

fall,

leaving

the

tents

and arenas

dark

in

the

deepest winter

months

while

a

new show

was prepaxed

in

the circus'

winter

quarters

to

tour

in

the

coming

year.

Although

a

number

of acts

were

carried

over

from

one

year

to the

4

Author's interview

with

Pam Miller,

Director

of Special

Events,

Big Apple

Circus,

May 2,2001.

5 Personal

communication

from

Fred

Dahlinger

Jr.,

Director,

Collections

and Research,

Circus World

Museum,

May 9,2001.

6 Author's interview

with

circus historian

Fred

Pfening,

May 15,

2001.

Copyright

@

2002

INSEAD-EAC 06/2009-4999


5/15

INSEAD

BIue

Ocean

Strategy

Institute

next,

in

general

a

given

show

would only

be on

tour

for

a

year.

Maintaining

the

exciting

aura

of

novelty

surrounding

the

circus

would

not

have

been

possible

otherwise. Irvin

Feld's

creation

of two

troupes for the

Ringling

Brothers

& Co.

circus,

a Red

and

a

Blue,

enabled

the

show

to

extend

each

tour

to two

years

yet maintain the

ability to

present a

new show

each

year

to

its

major

audiences.

The logistical

requirements

of setting

up

and

tearing

down

the

sites

were

a

significant

success

factor

for

circuses

once they

were

taken

on the road.

In

their heyday,

the

troupe traveled

gyenri=gftt.b.c-twge-n

,towns

and

was

ready to

perforrn.for

an evening

show,

even an

af,ternoon

matinee,

on

the

day

of

arrival.

To supplement

the

core

workforce

of roustabouts

and

elephants

traveling

with

the

show,

the

circus hired

local

young

people

and the unemployed

in

exchange

for free

tickets.

Unionization

of

local

workforces

and

tightening

restrictions

on

the

use

of

child

labor in the post

World

War II

era

made

this

practice

increasingly

untenable,

forcing

higher

labor

costs and

adding

to

the

setting-up

and

tearing

down

costs.t

The transition

to indoor

arenas for

the

major

circuses,

such as

the

Ringling Brothers

& Co.

circus, not

only

cut

the

need

for

roustabouts

dramatically

but

also

enabled

the

show

to

go on

through

the

winter

months.

Shows

generally

have two

main

sources

of revenue

to

draw

upon:

ticket

sales and

concessions.

The percentage

breakdown

from

these

sources

varies depending

on

the

specific

show

and

the size

of

the show,

with

concessions

hovering

around

20o/o

of

overall

revenues,

Smaller

shows

seek

only to

cover

costs with

tic\et

sales,

ensruing

high

attend.ance,

and

making their

profits

on sales

of

food

and

novelties.o

Hawkers

weaving

through

the

aisles

to

the

seated audience

sell

drinks,

peanuts,

cotton

candy and

other

foods.

These are

supplemented

by sales

at

stands

outside

the

main tent

or

arena that

sell both food

and

novelty

items

such as

posters,

programs,

dolls

and

other toys.

Seat

sales

are

normally

the

largest

portion

of

revenue

for

any

circus.

Straight

general

admission

seating

is

common

at

smaller

circuses.

This may

be

modified

with discounted

seating

for

children

or

families,

Some

provide

'free

kids'

tickets,

only

charging

adults who

accompany them.

Larger

shows

with

seats

rather than

bleachers

are

able

to

sell specific

seats

with

a tiered

pricing

structure

based

on

proximity

and

viewing quality.

For instance,

for

the

Madison

Square

Garden

stand

of the

131"

Edition

of the

Ringling

Brothers

& Co.

circus,

seats

ranged

in

price

from

US$48

for

a ringside

seat down

to

US$17

for

an upper

tier

seat.

Number

of

seats and

prices

vary

according

to

the

city

and venue,

but

is

usually in

the range

of

10,000

to 20,000

seats

for

a

given

show.

Because

of

their

small

scale and

itinerant

nature

it

is

difficult

to

estimate

the number

of

circuses

and

viewers

worldwide.

US Economic

Census

data

indicate

that in

1997

there

were

approximately 90

traveling

circuses

in

the US

with

27

of

those operating on

a seasonal

basis

(approximately

the

same

number

that

existed

at the

tum of

the

last

century). The

majority

of

these

circuses earn

between

US$50,000

and

US$1,000,000 per

year.

Most touring

companies

are

regional,

privately

owned

and

range in

size from

15

to

80 perfonners.

As in

earlier

decades,

they

find their

most

appreciative

audiences

in

small

cities and

towns.

As

a

result,

this

is

an

industry

that

is

segmented

and

localized.

1

8

Culhane,

p.213.

Author's interview

with circus

historian Fred

Pfening,

May

15,

2001.

Copyright

@

2002

INSEAD-EAC

06/2009-4999


6/15

'\

a-

INSEAD

s

the

circus

is coming

into town,

566ing

up

its

the

area.

In

fact,

the

circus

tents

and

the

ents

of

the

marketing

mix.

Even

the

most

&

Co. circus,

makes

a

show

of its

enfrance

to

hants,

camels,

lions

and

zebras

from

the

foain

Blue

Ocean

Strategry

Institute

Copyright

@ 2OOZ

INSEAD-EAC

06,/2009-4999


7/15

The

Business School

for

the

llfiorld*

trate

Institute

BOS008

ffi ffiK$

Even a Clown Gan Do

It:

Cirque du Soleil

Recreates

Live Entertainment

Case

B

This

case

won

the 2008 European Case

Clearing

House Award

in the category

"Strategry

and General

Management"

05/2008-4999

This

case was

prepared

by

Matt Williamson, INSEAD

MBA

2000, under the supervision

of

Professors

W.

Chan

Kim,

Ren6e Mauborgne and

Ben

M. Bensaou, all

at INSEAD. It is intended to be used as a basis for class discussion rather

than to illustrate

either effective or ineffective handling

of

an administrative situation.

Copyright

@2002

To oRDR coplEs

oF

INSEAD

cAsEs. sEE

DgtAIIs

oN rr{E BACK

covER.

Copus t"ttv wor

BE

MADE

wrltlour

pERMIssIoN.


8/15

EI'-

INSEAD

Le

Girque

Reinvent6

Girque

du

Soleil

Reinterprets

the

Performing

A,rts

"Cirque

du

Soleil

began

with

a

very

simple

dream.

A

group

of

young

entertainers

got

together

to

amuse audiences,

see

the

world,

and have

fun

doing

it.

Every

year,

the

audience

becomes

bigger,

we

continue

to discover

new

places

and

ideas,

and

we're

still

having

fun.

I4te

also

dream

of

suffusing

our

new

proiects

with

the

energy

and

inspiration

that

are

the

essence

of our

shows.

And

we

want

to

help

young

people

express

their

dreams...

and make them

come true'

"

Guy

Lalibertd,

President

and Chief

Executive Officer,

Cirque

du Soleil.

In

1984, a determined

Guy

Lalibertd

set out

to

reinvent

the

circus

industry.

This

was

no small

challenge given that the

very

core

of

the

product

was

delivering

spectacles

and surprise

on

a

daily basis.

As with

many

other

industries,

this

one

had its share

of white

elephants

and dogs.

It

was rife with

promoters,

hustlers

and fire-breathers

of

all sorts,

but had

its impassive

iron-

men as

well.

An amalgam

of

strong

traditions

and a

quest

for

novelty,

it was

a

circus.

Daniel Gauthier

(right)

and

Guy LaLlberte,

Founding

Co-Presidents

of Cirque

du Soleil

(Photo:

Cirque

du Soleil)

From

its

original

incarnation

as a troupe

called

'Le

Club

des Hauts

Talons',

so

named because

of

its

host of stilt-walkers,

Lalibert6's

Cirque

du

Soleil

rapidly evolved

from a

pack

ofunder-

employed

kids

into

one

of

Canada's

largest

cultural

exports.

Almost

30

million

people saw

one of

the troupe's

productions between

1984

and 2000.

In

that

last

year

alone,

approximately

50,000

people took

in

the

Soleil experience,

as

productions

appeared

in 120

cities around

the

world.

From

a

production which

put

on its first

show

in

an 8OO-seater

tent

purchased with

an Arts

grant

from

the

Quebec

government,

it

now

boasts

three

separate

travelling

productions

housed

in

2,500-seater

tents, and

four

permanent shows

in

purpose-built

theatres

in

Orlando,

Biloxi

(Mississippi)

and

Las

Vegas.l

shows

around the world.

Nevertheless.

the

irque du Soleil

is based

in

Montreal,

Quebec,

and

runs

majority

of its

performances

take

place

in the United States.

Copyright

@

2002 INSEAD

05/2008-4999


9/15

INSEAD

The Origins of Girque du Soleil

Cirque

du

Soleil was

created

in

1984 by

a

group

of

young

street

performers

who

had

pooled

their

talents

to

form

the

'Club

des Talons

Hauts' two

years

earlier.

Initially

part

of

the

celebrations

of the

450tn anniversary

of Jacques Cartier's

arrival in

Quebec,

the

brainchild

of

Guy Lalibertd

was based

on

a

totally new

concept: a

mix

of

the circus

arts

and

street

entertainment

featuring

wild costumes,

staged under

'magical' lighting

and set

to

original music.

As

such,

Cirque

du

Soleil

was

part

of

a

movement

that many

call

the New

American

Circus.

The Original Cirque du Soleil Troupe

(Photo:

Cirque du Soleil)

Cirque

du Soleil scrambled

the existing traditions

of

the circus

and

the

performing

arts,

and

reinvented the wheel. The resulting

dream

world,

populated

by

operatic,

choreographed

and

acrobatic

sprites

was like no other

place

on earth; a reflection

of

the

arts

which inspired it.

Sharing elements

of dance, circus and opera,

Soleil

competes

with them all

but

remains

utterly unique.

Nor

has Soleil failed

to

draw attention

to its

novel

position

as a

non-circus;

early

productions

such as We Reinvent

the

Circus

and

Nouvelle Expdrience

gave

warning

that

the show

would

be

unlike anything

ever seen

before, under the

Big Top

or anywhere

else.

It was not, however, the

first to

take this new route.

Paul Binder

and

Michael

Christiansen,

founders

of

the

Big Apple Circus

in

1979,

andLarry

Pisoni, founder

of

the Pickle Family

Circus,

brought

the

more

classical one-ring

circus back to

America

after over

100

years,

when

even the

smallest circuses

spread their

shows over three rings.2

Also

in 1979,

Guy

Caron

established the circus

school that would

eventually

become the Ecole

Nationale

du

Cirque

and

train

a

significant

number

of

the original

performers

in

Cirque

du Soleil's

initial

l3-week

tour.

Each

of

these

key

players

were

outsiders

in

the

tradition-bound

world of

the

circus,

with

roots

more akin to

the

hippie

counterculture than

anything

else.

In

contrast

to

the

consciously

intimate

scale and deference to

skill

and artistry

above

commercialism

of

the

Pickle Family

and

Big Apple

Circuses, they never hesitated

to

make

theirs

a

commercial

enterprise.

With

a US$1.7 million

contract from

the

provincial

government

of

Quebec,

the

show

travelled

the province,

attracting

some

powerful

fans

that

it

would later

need.

Closing the

first

season

with

a surplus of US$50,000, Lalibertd

decided to

promote

his new

show and invested

heavily

in a

new tent

and

other equipment.

Although it finished

1985

to critical

acclaim,

Cirque

du

Soleil

was nevertheless

US$750,000

in debt from

its investments

in equipment,

despite

extending

the

run

several cities

beyond

the

initial route. Rene

Levesque, then

the

Prime

Minister

of

Quebec

and an

avid fan from the

1984

opening show, saw the

cultural

value

in

supporting the enterprise

and refinanced the

debt.3

The troupe took

another huge

gamble,

spending all its

remaining funds after the

1986

season

to

join

the Los Angeles

Arts

Festival in

1987,

its first

serious

foray

outside

of

the

Quebec

region.

This time the

gamble

paid

off:

Cirque

du

Soleil

was

a

huge

success

and

almost

immediately

sold out

its later

shows. Patronage

of celebrities

like

Steve

Martin,

David Bowie,

2

Emest

Albrecht, The New American

Circus

(Gainesville,

FL: University Press

of Florida),

p2

3 Albrecht,

p75.

Copyright

@

2002 INSEAD

05/2008-4999


10/15

INSEAD

Madonna, Elton

John

and

Francis

Ford

Coppola

helped

seal

its identity

as

a

sophisticated

new

form of

entertainment.

The Gontent and Style of

Girque

du

Soleil

Cirque

du

Soleil

has

a unique

approach to

developing

its

shows, setting it

apart from most

other circuses.

"A

Cirque du Soleil

performance

is like no

other

circus

ever

seen

in

the

United

States or

anywhere

else.

It

is

relentless

in its

drive

to

be

nothing

shorl of spellbinding."

A

thematic line, though frequently rather

vague

(and

intentionally

so),

is manifested throughout

the

show

in

costumes,

music and

the types

of acts

performed.

While not

rising

to

the

level

of

a

storyline,

the

theme brings harmony and

an

intellectual component to

the

show,

without

imposing

limits on

its

potential

for

acts. Rather

than taking existing

acts and

compiling

them

into

a show,

Guy

Caron, Franco Dragone and the creative teams at

Cirque du Soleil

who

have

followed

them,

begin

with

a theme,

such as

Saltimbanco or

Quidam,

and

build

a show

to

suit.

The result

is

a

seamless

entertainment experience

for

the

audience

rather than a

punctuated

series of acts.

Moreover,

unlike

traditional circus, the company has

multiple

productions;

shows

have

distinctive

themes

allowing

the spectator

to

see

Le Cirque

several times.

In

creating the

performance

that

rocked

the

Los

Angeles

Arts

Festival,

Caron

took his

team on

a

week-long retreat

to

focus simply on developing the theme and how it

would be

conveyed

through

each

component

of

the show. The theme, rather than

simply being

a

new

edition of

the

circus, is

a

performance

in itself.

It serves as

the audience's

guarantee

of

a

high

quality,

exotic

experience.

The most

important element

of this

thematic

drive,

and

the

starting

point

from which

the

creative

team

begins,

is

an

original

score. Since

the

inception

of

Cirque

du

Soleil,

Rene

Dupere

has

taken the creative

director's

expression

of

the theme

and

transformed

it

into

a

full-

length

original

score.

The

music for a Soleil show drives

the

selection of

the

visual

performance,

lighting

and

timing

of

the acts, rather than the reverse.4 Says Caron,

"In

the

movement

you

see the

music

and

in

the music

you

hear the movement."5

More

than

just

the theme sequencing

of a

production,

Cirque

du Soleil

represents

a true

mixture

of

the performing

arts.

It is not

quite

a circus, nor

is

it

quite

opera

or

theatre,

but

it

combines elements

from

them

all. While

the signature blue and

yellow

tent and the

circus

acrobatics and

clowns

that form

much of

the

show's

content are

clearlv

circus.

the

show

takes

place

on a stage

without a ring

and seating on three sides.

In

constructing

the

physical

dimensions

of

the

show, the creative

team

draws heavily

upon

circus arts, featuring

jugglers,

trampolinists,

trapeze

artists,

teeterboard

virtuosos and,

of

course,

clowns.

Nevertheless,

each act, even each movement, has a

purpose

within

the

show

and

contributes to the

development

of the overall thematic

element.

Owing to this

singularity

of

purpose,

big

name acts have

no

place

in

Cirque

du

Soleil. The

presence

of

a Gunther

Gebel-Williams

and

40

wild cats or

a

drum

roll leading

into

a

Gaona

quadruple

somersault

would

undercut

the

dreamlike

development

of

the theme.

4 Albrecht, p77.

5

Guy Caron

in

Albrecht,

p77

Copyright

@

2002 INSEAD

05/2008-4999


11/15

IIiSEAD

Performers

in

Cirque

du

Soleil,

while highly

accomplished

in their

own right,

play

roles

within

the

larger

show. In

part

because

of

the

outlandish

costumes, but also

because

of

the

lack

of

a

ringmaster

announcing

the

acts, and a

printed

programme

which

buries the names

of

the

individual

artists

in

a

cast

list

at the

back,

individual performers

are essentially

anonymous

to

the audience.

This

was

not

lost

on

the

initial

cast of Cirque

du Soleil

and many

were

dismayed

to

learn that

Lalibertd

might not

always include

them

in future

productions.

A

final striking

detail

of

the

Cirque

du Soleil experience,

which

sets

it

apart

from most

traditional

circuses,

is the

complete absence

of

performing

animals.

This

is

a dramatic

departure for

a

medium

that originated

in a

horse

ring and

has been

synonymous

with

elephants

and

other wild

animal trainers.

Leaving

animal acts

behind, Lalibert6

has created

something new

and different,

not

quite

circus

but

not quite

anything

else.

Circus

historian

Fred

Pfening

notes,

"There's

one

question

that

always

annoys

me:

'But

is

it

circus?' That's

utterly irrelevant.

It

is

what

the audience

thinks

it is.

It

is Soleil."6

The Business

of

Cirque du

Soleil

Clearly, the

initial

vision

that

drove the

founders

of the

various New American

circuses was

more

artistic

than

commercial.

The

family

nature

of both

the

Pickle Family

Circus

and

the

Big

Apple

Circus

was more

reminiscent

of

a

hippie

cornmune than

a typical

start-up.

Somewhat

in

contrast,

Cirque

du Soleil took

little

time

to

become

immensely profitable

after its

success at

the

Los Angeles

Arts Festival.

Unlike the

others,

Soleil

pursued

the

dual

goals

of

artistry

and

profit,

exemplified

in

the

initial

agreement

between

Caron and

Lalibertd

to lead

these

two

components

separately.

Over time,

Soleil

has

come

up

with

a

lifecycle

strategy

that

features

an opening

in

Montreal

followed by

a

North

American

tour,

stretching over

several years.

The show

then

remains

on

tour

for

up

to

four

more

years,

travelling

first

through

Europe,

usually

followed

by

a

jaunt

through

Asia.

Instead

of

travelling

to

audiences,

three

permanent

shows tap into

the

continuous

flow

of

potential

viewers through

such

places

as

Las

Vegas and

Disney

World.

Mystere,

La

Nouba and

"O"

have

run

in

such

permanent

installations

from

the

beginning,

while

Alegria,

one

of

Soleil's

older touring

shows,

has

performed

in

the

riverboat

gambling

casinos

of

Biloxi,

Mississippi

on

what

was

to

be

a

permanent

engagement,

only to begin

touring anew

two

years

later

in the

spring

of

2001. Surprisingly,

not

since

Nouvelle

Experience

has

a

Soleil

show stopped

touring.

Quidam

is

exemplary

of the typical

touring

Cirque

du

Soleil

show. It

was

produced

for

approximately

US$5.9

million

and

first

staged

in Montreal

in April

1996.

Following

a three-

year

tour

of

Norlh

America, the

show

travelled

throughout Europe. Expected annual

gross

revenues

at the

start

of

the

tour

were

US$14.6

million,

a

figure that

has

been exceeded

year

after

year

by

a

significant

amount,

according

to

Soleil

staff.

Cirque

du Soleil

draws

its

revenue

in significantly

different fashion

from

the

traditional

circus

and

other

shows

which

take place

in

civic

arenas and

sports

stadiums. The

show derives

the

great

majority

of

revenues

from

ticket

sales,

though

sponsor

partners

and

concession

sales

also

contribute

to

profit

margins.

Author's interview

with circus historian

Fred

Pfening,

May 15, 2001.

Copyright

@

2002 INSEAD

05/2008-4999


12/15

INSEAD

Soleil's

focus on

providing

sophisticated

entertainment

enables

a

different

approach

to ticket

pricing.

Rather

than a

family event with

free

or

discounted

tickets

for

children

or

other

age

groups,

seats

are

generally

sold

at

full face

value.

"Sure

there

are

a couple of

kids

at

a Soleil

performance,

but children

make

up

a

much smaller

share of

the

audience. With

the Ringling

Brothers and

Barnum

&

Bailey's Circus

(hereafter

referred

to as the Ringling Brothers

&

Co.)

the audience

is almost

all families or kids."7 Reflecting

the

adult market for

live

entertainment, Soleil

tickets

are available

at a

substantially

higher

price,

in line

with

major

theatre

or

opera

tickets.

Tickets

for Dralion's 2001

New

York engagement sold

at

US$65-85.

VIP

packages

including food

offered

in a separate

pre-show gathering

tent sell at up

to

US$230

per

seat. Meanwhile,

"O"

sported the

most

expensive

seat

for

Vegas-based

productions

after boosting

the

price

to

US$110

per

seat

in November

2000.

It remains one

of

the hardest

tickets to

find.

Shows are

regularly sold out

and boast

the highest seat occupancy

in the industry, consistently

approaching 85-95%.

Soleil

keeps a

traditionally large

source of

circus

revenues

-

concessions

-

at arm's

length.

Not

surprisingly, less

lhan

llYo of

revenues

come

from

concessions

at

a

Soleil

show.

In

keeping

with

the

performance-centred

ethic

of

the troupe,

nothing

is

sold

during

the

performance

or

inside the tent. For the Ringling Brothers & Co. shows,

this figure may

be

dramatically

higher

-

closer

to

20%o

-

as

the sales effort

is

substantially

stronger.

At the

Ringling Brothers & Co. circus, hawkers

pass

amongst

the

seated audience selling

food

and

toys;

concession stands

are

also

packed

tightly

outside

the

performance

space.

Sponsorships

are

a

low-key

but

significant source of revenue for Soleil.

Originally

a key

revenue

eamer

from the days

when

the

show

operated as

non-profit, many

of

the travelling

shows

have

a

primary

sponsor,

usually

associated with

the

VIP

tent.

Lincoln

Automobiles

is

the

primary

sponsor

of Dralion, with five

other corporations taking

minor

sponsorship

roles

entitling them

to

discreet mention

in

the

playbill,

advertising

and banners

around the

tent.S

For

a

typical 'shrine'

circus,

or

even

a larger show

such

as

the

Big

Apple

Circus, a

main

sponsor

guarantees

a

gate

to

the circus and sells the tickets

independently.

Sponsors

in

this

vein

are

normally

powerful

local non-profit

organisations

who

use

the

event

as

a

major

fundraising opportunity.

They

view

it

as

a chance

to associate

themselves

with

the

panache

of

Soleil

and

the

upscale consumers

attending the

show.

The

arrangement

is much

more

like a

sponsor

at a

sporting

event such as the Masters or the

US

Open.

Using

its fantastic creative team and seeking to

build on

the

brand

the

live

shows

have

created,

in

recent

years

Soleil has

somersaulted

into

film and other

ventures.

Beginning

with

videos

of

live

performances

and

behind-the-scenes documentaries,

the troupe has

graduated to

film, creating

Journey of

Man in

the

IMAX

format. Pieced together using

performers

from

several

of

the

different

productions,

the

frlm

creates a

dreamlike vision of

the

trajectory of

one

man's

life

using

the brushstrokes

of

Soleil's

signature

costuming

and

circus

arts.

Though

the

IMAX

format limits

the

potential

box office

take

-

both

the

projection

equipment

and

special

dimension

screens are

extremely

expensive and limited

in

numbers

-

longer

term

engagements

at

the

science museums that often

host

these

films

enable

Soleil

to

bridge

the

film

barrier by adding

a

physical

dimension through rides

and

interactive displays that

would

not be available at a normal cinema.

At

the Franklin Institute

in

Philadelphia, for

instance,

7 Author's interview with circus historian Fred Pfening May 15, 2001

8

Author's

personal

observation,

May

30,

2001.

Copyright

@

2002 INSEAD

05/2008-4999


13/15

INSEAD

movie-goers

willing

to pay

an

additional

US$2

can

bicycle on a

high-wire

10

metres

above

the

heads

of

other

patrons

standing

in

the

ticket

1ine.9

Finale

One

might

think that in

the

performing

arts and

the

circus

the need

for innovation

is

obvious.

Yet

even

in

such an

innovation-friendly

environment,

the

circus industry had

become

stagnant,

generating 'new'

acts

by dressing

up what

already

existed.

Circus

families

and

individual

artists

created

highly

developed

and ever

more

challenging

variations

on

the

same

formula

of

trained

animals

and 'death-deffing'

stunts

that

had

been

popular

in the

past

century. Irving

Feld

was

well

known for pressing

performers

to

add

yet

another

somersault

off

the

flying trapeze

or

one

more

tiger

to

a

simultaneous

roll-over

act. Yet

the

added difficulty

and danger faced

by the

performers

was

all but lost

on the

vast

majority

of the

audience.

This

was

novelty

but not

innovation,

adding

little

of

value

to

the

audience's

experience

yet

requiring significant

expenditure

by

the circus

company. By

reinventing the circus industry,

Cirque

du Soleil

created

a

phenomenon

that

has

inspired

and

amazed millions

of

fans. In

the

process

it

has

produced

an

exciting line

of

shows that have

attracted

millions

of

people,

and

generated

revenues

that

would

have

made P.T.

Barnum

blush

(See

Exhibits

I

arfi2).

Author's

personal

observation,

May 5, 2001.

Copyright@

2002 INSEAD

05/2008-4999


14/15

INSEAD

Exhibit

I

Circus

Revenues

Exhibit

2

Cirque du

Soleil

Attendance

Figures

Major

Circus

Revenues

\Lf

-

a

n

i-l

I

(r)

F-)

IFeld

Entertainment,

Inc.*

Cirque

du Soleil

1000

500

0

g+

9.p

{).t

g'F

f$

Estimaes hased

on

d:re

data of Hoovers

Online. NotqRBB&B

is

a

major

division of feld

Cirque

du Soleil Attendance

Estimates

based

on

ar,ailable

cdnpany information

6

u)r

tr.f

#+

-.

1

\-/a

oJ

Q,)

Q)a

Yt

=l

0

^x

\9o

"$t"

G,

g$"

gqs

g'P

.9"

EDralon

ILaNouba

lo

trQuidam

lAlqtia

WMptere

Copyright

@

2002 INSEAD

05/2008-4999


15/15

ORGANIZATIONAL

MANAGEM

ENT

CASE ASSIGNMENT-CIRQUE

DU

SOLEIL

L. How

would

you

assess

the

attractiveness

of

the

circus

industry

in

the

early 1980s?

What

would

you

conclude

from

your

industry

analysis?

-'

'2'-'-\AAa+-were+hefaeters+hetraditiffal-circusconiparlies-compEtefon?Whet

dtttou like

or

dislike

about the traditional

circus?

3. When

you

compare

Cirque Du

Soleil

with

the

conventional

circus, which

are the factors

kept

by Le

Cirque? Which

ones

were

downplayed

and which

ones

were

played

up?

4. Which factors

were

totally

eliminated

by Le Cirque

and what

are the

operational

and

financial

implications?

5'

Which

factors were newly created

by

Le

Cirque and

where

do

you

think the

inspiration

for

these

factors

came from?

6. How

does

Cirque

du Soleil

create

superior

profits?

How

does

it

improve

industry

growth

and

generate

Sreater

revenues?

How

does

it

raise

profitability

and

reduce it

cost

structure?

Documents

Case AB Circus Industry