Extend Cirque du Soleil's creative experience through new programs, partners and locations
1. CIRQUE DU SOLEIL
EXTENDING THE EXPERIENCE:
PROGRAMS, PARTNERS, & PLACES
THE WHARTON SCHOOL | TEAM 2
RAYMOND FLORES | CASEY KLYSZEIKO
CAMERON ROUZER | MINDY ZHANG
2. Problem Definition
PROBLEM STATEMENT
Which opportunities should Cirque du Soleil pursue in order to
grow sustainably and continuously push the creative frontier?
WHAT OPPORTUNITIES?
PROGRAMS PARTNERS PLACES
• How to balance
touring and resident • Who will provide
programs? the right synergies? • Which geographic
• New experiences • What is the optimal markets?
and revenue deal structure?
streams?
3. Since its founding, Cirque du Soleil has successfully
differentiated itself in the entertainment industry
Redefined Experience
Unique Positioning
Win-Win Partnerships
Customer Loyalty
Context Programs Partners Places Implementation & Results Conclusion
4. Cirque du Soleil has redefined the traditional circus
experience
TRADITIONAL CIRCUS CIRQUE DU SOLEIL
Redefined Experience
Circus performers and Street performers, no
animals animals
Low-brow amusement Provocative, sophisticated
Unique Positioning performances
Incorporates elements of Emphasis on innovation
“typical” circus experience and creativity
Win-Win Partnerships
Targets kids and families Targets sophisticated adult
population
Customer Loyalty
Context Programs Partners Places Implementation & Results Conclusion
5. Cirque du Soleil has redefined the traditional circus
experience
TRADITIONAL CIRCUS CIRQUE DU SOLEIL
Redefined Experience
Circus performers and Street performers, no
animals animals
Low-brow amusement Provocative, sophisticated
Unique Positioning performances
Incorporates elements of Emphasis on innovation
“typical” circus experience and creativity
Win-Win Partnerships
Targets kids and families Targets sophisticated adult
population
Customer Loyalty
Cirque du Soleil Mission Statement
“To invoke, provoke, and evoke the imagination, the
senses, and the emotions of people around the world”
Context Programs Partners Places Implementation & Results Conclusion
6. It’s uniquely positioned away from competing forms of
performing arts entertainment
PERFORMING ARTS MARKET
Intense
Redefined Experience
Unique Positioning
Low price High price
Win-Win Partnerships
Customer Loyalty
Mild
Context Programs Partners Places Implementation & Results Conclusion
7. It has been able to realize success through its “win-win”
partnerships
Cirque du Soleil’s brand brings consumers to
Redefined Experience
partner venue
1. Contributed to doubled earnings growth
Unique Positioning of three largest casino partners
2. NY-NY experienced 23% increase in net
revenues given the addition of Zumanity
Win-Win Partnerships
3. MGM increased 13% increase in slot
revenue attributed to Kà
Customer Loyalty
Context Programs Partners Places Implementation & Results Conclusion
8. The typical Cirque du Soleil customer is affluent and loyal to
the brand
• 70% repeat customer base
Redefined Experience
• Targets sophisticated and educated adults
• $75,000+ in average annual income
Unique Positioning
Win-Win Partnerships
Customer Loyalty
Context Programs Partners Places Implementation & Results Conclusion
9. Due to its differentiated strategy, Cirque du Soleil has
realized tremendous financial success
Revenue (CAD$ millions)
800
700
Redefined Experience 600
500
400
300 70 million tickets sold by 2007
200
Unique Positioning 100
0
Win-Win Partnerships 12 Annual Tickets Sold (millions)
10
8
6
Customer Loyalty 4
2
0
Context Programs Partners Places Implementation & Results Conclusion
10. However, the industry is becoming increasingly competitive
Fragmented Industry Past directors are
Emergence of niche
• 60 circuses in U.S. creating their own
circuses
alone shows
How will Cirque du Soleil maintain its distinctive
advantage?
Context Programs Partners Places Implementation & Results Conclusion
11. And Cirque du Soleil’s business model is changing to a
mixture of touring and resident shows
Touring Resident
Number of Cities 100 1
Price $40-$90 $100-$150
Seating Capacity 2,500 1,750
Occupancy to Break-Even 65% 60%
Average Occupancy Variable 95%
Performances/Year 350 480
Partners Limited Sponsors Casinos in Las Vegas; Disney
Cirque’s Capital Investment $50 Million $15 Million
Touring model allows for greater
Resident model drives more
exposure, more touch points with
profits, better efficiency, and lower
consumers, and better
capital risk
diversification
Note: Figures are approximate and from case
Context Programs Partners Places Implementation & Results Conclusion
12. Cirque du Soleil is presented with many new opportunities
• On a weekly basis, Cirque du Soleil is offered opportunities
with new show partners across the globe
• Corporations have a growing interest in associating with
Cirque du Soleil
Cirque du Soleil is a growing global brand that people want to
be a part of and associate with
Context Programs Partners Places Implementation & Results Conclusion
13. There are many regions for continued global growth
Touring
Coverage
Resident
Locations
Note: Planned 2010
Opening In Dubai
• High brand awareness
– Shows regularly sell-out
• Only 3 countries with resident programs
– 7/10 U.S. shows in Las Vegas
Context Programs Partners Places Implementation & Results Conclusion
14. Cirque du Soleil is at a crossroads with new opportunities
and threats
Strengths Weaknesses
• Scalable creativity • Increasingly complex business
• The Cirque du Soleil experience model
• Loyal customers • Dependence on specific people
• Profitability • Lack of diversification
• Investment capability
Opportunities Threats
• Many partnership opportunities • Uncontrolled expansion leading
• Untapped market potential to brand dilution
• More global audience • Competitive entrants
• Leverage brand in new platforms • Partners’ demands on creative
control
Context Programs Partners Places Implementation & Results Conclusion
15. Problem Statement
Which opportunities should Cirque du Soleil
pursue in order to grow sustainably and
continuously push the creative frontier?
Context Programs Partners Places Implementation & Results Conclusion
16. Cirque du Soleil has leveraged its current model for
engaging consumers extremely well
CURRENT MODEL
Customer interacts with Cirque du
Soleil mainly through its tour and
resident shows.
Context Programs Partners Places Implementation & Results Conclusion
17. However, Cirque du Soleil can extend its distinctive
experience through new platforms
CURRENT MODEL NEW MODEL
Customer interacts with Cirque du Customer interacts with Cirque du
Soleil mainly through its tour and Soleil through new
resident shows. programs, partners and places.
PROGRAMS
PARTNERS
PLACES
Context Programs Partners Places Implementation & Results Conclusion
18. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and 1. Expand successful Global expansion:
resident shows partnership models to 1. Dubai
simultaneously hotels 2. Sydney
2. Launch new nightclub 2. Introduce corporate 3. Berlin
experience sponsors for touring 4. London
3. Develop flagship shows
theatre
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
19. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and
1. Expand successful Global expansion:
resident shows
partnership models to 1. Dubai
simultaneously
hotels 2. Sydney
2. Launch new nightclub
2. Introduce corporate 3. Berlin
experience
sponsors for touring 4. London
3. Develop flagship
shows
theatre
4. Invest in social media
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
20. Existing and new programs will extend and improve the
Cirque du Soleil experience
OBJECTIVE
To create brand extensions that increase opportunities to engage
with the Cirque du Soleil experience
Recommendations
1. Continue pursuing both touring and resident shows
simultaneously
2. Launch a nightclub and flagship theatre
3. Leverage social media to further engage consumer
Context Programs Partners Places Implementation & Results Conclusion
21. Existing tours and resident shows serve as complements
and should be pursued together
• BROAD ACCESS • EXCLUSIVE EXPERIENCE
• Lower-priced tickets • Higher-priced tickets
• Serve non-resident show cities • Serve selective cities with
large tourism industries
TOURING RESIDENT
Touring shows encourage
SHOWS SHOWS
customers to seek out
resident shows in the future
IMPLICATION
Cirque du Soleil should pursue both programs simultaneously to extend customer
lifetime value and increase financial and brand impact
Context Programs Partners Places Implementation & Results Conclusion
22. A nightclub and flagship theatre will further extend the
Cirque du Soleil experience
NIGHTCLUB OBJECTIVES
AND Creative Potential
FLAGSHIP Compatibility with Brand Experience
THEATRE Feasibility of Implementation
Financial Opportunity
Evaluate opportunities
1. LAUNCH NIGHTCLUB WITH
2. BUILD FLAGSHIP THEATRE
EXISTING PARTNER
Context Programs Partners Places Implementation & Results Conclusion
23. The nightclub will extend the experience in a new realm
with limited financial and operational risks
1. LAUNCH NIGHTCLUB WITH EXISTING PARTNER
NIGHTCLUB • Unique brand extension
Why?
• Can leverage existing partners’ expertise
• Work with MGM Mirage – best relationship
Implementation
• Upfront cost: $1.6mil (50% of total capital)
• Reduce financial and operational risk through
Risk Mitigation
partnership / short term contract
Outcomes • Annual revenue: $2.8 million
Context Programs Partners Places Implementation & Results Conclusion
24. The flagship theatre will be the premier creative vehicle for
Cirque du Soleil
2. BUILD FLAGSHIP THEATRE
FLAGSHIP
• Base for creative freedom
THEATRE Why?
• Significant financial potential
Implementation • Upfront cost: $180million
• Limit financial risk through gradual development
Risk Mitigation timeline
• Launch in new location to limit cannibalization
Outcomes • Annual revenue: $100 million
Context Programs Partners Places Implementation & Results Conclusion
25. Finally, interactive and social media will engage the
consumer and build loyalty
BUILDING BUZZ
OBJECTIVE
Increase exposure to Cirque du Soleil to attract new
THROUGH SOCIAL
customers and continue loyalty among existing customers
MEDIA
• Of the 80% of online American adults who use social
media monthly, 48% use it to review product and
service ratings*
RECOMMENDATIONS
Increase usage of social & interactive media
• Social networking sites (blogs, websites)
EXPECTED OUTCOMES
• Increase connection with potential customers
• More ticket purchases from existing customers
* 2009 Forrester Research
Context Programs Partners Places Implementation & Results Conclusion
26. New programs will enable the consumer to extend the
Cirque du Soleil experience
TOURING RESIDENT
SHOWS SHOWS
NIGHTCLUB
AND
FLAGSHIP
THEATER
BUILDING BUZZ
THROUGH SOCIAL MEDIA
Context Programs Partners Places Implementation & Results Conclusion
27. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and
1. Expand successful Global expansion:
resident shows
partnership models to 1. Dubai
simultaneously
hotels 2. Sydney
2. Launch new nightclub
2. Introduce corporate 3. Berlin
experience
sponsors for touring 4. London
3. Develop flagship
shows
theatre
4. Invest in social media
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
28. Finding the right partners will be integral to enhancing and
growing the Cirque du Soleil experience
Criteria for 1. Respect Creative Freedom
Successful Cirque du Soleil must have complete control over all artistic
Partnerships decisions
2. Brand Compatibility
Resident The mission, values, and market perception of a partner must
Partnerships align with that of Cirque du Soleil
3. Mutual Financial Advantage
Cirque du Soleil presence provides additional revenue
Touring opportunities for partner
Partnerships Amplifies Cirque’s financial returns and awareness
Context Programs Partners Places Implementation & Results Conclusion
29. Cirque should build upon the success of past resident
program partnerships
Respect Mutual
Criteria for Brand
Creative Financial
Successful Compatibility
Freedom Advantage
Partnerships
Casinos
Hotels
Resident
Cities
Partnerships
Restaurants
Venues
Touring
Partnerships
Context Programs Partners Places Implementation & Results Conclusion
30. Resident partnerships should be pursued with casinos and
hotels
Respect Mutual
Criteria for Brand
Creative Financial
Successful Compatibility
Freedom Advantage
Partnerships
Casinos
Hotels
Resident
Cities
Partnerships
Restaurants
Venues
Touring
Partnerships
• Continue resident programs with casinos
• Pilot new programs with compatible hotel resorts
Context Programs Partners Places Implementation & Results Conclusion
31. The Atlantis Palm is the ideal candidate for a pilot hotel
partnership
Criteria for Recommended Target: Atlantis Palm, Dubai
Successful
Partnerships
At a Glance
• Rooms: 1,539
• Restaurants: 17
Resident • Average Rate:
Partnerships $490 - $5,450
Deal Structure
• Atlantis pays $100M The Cirque Effect
Touring construction cost • Hotel-owned restaurants and shopping
Partnerships • $30M production cost will benefit from additional spending by
evenly split Cirque customers
• Profits shared 50/50 • 80% of customers are not staying at
the hotel
• Cirque maintains complete • Average attendee spends approx. $30
creative control on food and drinks
Context Programs Partners Places Implementation & Results Conclusion
32. There is an opportunity to benefit from partnerships with
touring shows
Criteria for Respect Creative Brand Mutual Financial
Successful Freedom Compatibility Advantage
Partnerships
Corporate
Sponsorships
Resident
Partnerships
Touring
Partnerships
Context Programs Partners Places Implementation & Results Conclusion
33. Infiniti provides an example of a lucrative corporate sponsor
Criteria for Respect Creative Brand Mutual Financial
Successful Freedom Compatibility Advantage
Partnerships
Corporate
Sponsorships
Resident
Partnerships Case Example: Infiniti Automotive Partnership
Natural alignment of market perception of
performance and innovation
Touring
Partnerships Infiniti financially supports Cirque du Soleil
shows while Infiniti benefits from brand
association
Cirque du Soleil brand moves from one night
experience to everyday exposure
Context Programs Partners Places Implementation & Results Conclusion
34. New hotel partners and corporate sponsors will support,
enhance and grow the Cirque experience
Resident Partnerships Touring Partnerships
ex. Atlantis Palm Dubai ex. Infiniti Sponsorship
• Drive additional revenue streams
• Facilitate new growth and expansion
• Extend the brand experience to new venues
Context Programs Partners Places Implementation & Results Conclusion
35. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and
1. Expand successful Global expansion:
resident shows
partnership models to 1. Dubai
simultaneously
hotels 2. Sydney
2. Launch new nightclub
2. Introduce corporate 3. Berlin
experience
sponsors for touring 4. London
3. Develop flagship
shows
theatre
4. Invest in social media
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
36. Cirque du Soleil should expand in geographies that share
characteristics with current successes
• Cirque du Soleil has worldwide presence
• Resident shows extremely concentrated in the U.S., particularly Las Vegas
• Cirque du Soleil should look to expand in geographies that share similar
location and population characteristics with current resident shows
Location Criteria
1. High and/or growing population income
2. Tourism & travel-based destination
3. Past experience from touring shows
4. Diversify locations and offerings
Context Programs Partners Places Implementation & Results Conclusion
37. Cirque du Soleil should expand in geographies that share
characteristics with current successes
1. High and/or 2. Tourism & 3. Past experience 4. Diversify
growing travel-based from touring locations and
population income destination shows offerings
6,535,000
Dubai $41,800 Yes Yes
arrivals per year
15,340,000
London $35,400 Yes Yes
arrivals per year
1,869,000
Sydney $38,500 Yes Yes
arrivals per year
2,552,000
Berlin $34,200 Yes Yes
arrivals per year
7,646,000
New York $46,400 Yes No
arrivals per year
Context Programs Partners Places Implementation & Results Conclusion
38. Dubai, London, Sydney and Berlin present the best
opportunities for future Cirque expansion
1. High and/or 2. Tourism & 3. Past experience 4. Diversify
growing travel-based from touring locations and
population income destination shows offerings
6,535,000
Dubai $41,800 Yes Yes
arrivals per year
15,340,000
London $35,400 Yes Yes
arrivals per year
1,869,000
Sydney $38,500 Yes Yes
arrivals per year
2,552,000
Berlin $34,200 Yes Yes
arrivals per year
7,646,000
New York $46,400 Yes No
arrivals per year
Context Programs Partners Places Implementation & Results Conclusion
39. Expanding in Dubai, London, Sydney and Berlin will give
Cirque du Soleil a truly global footprint
Touring
Coverage
Resident
Locations
New Resident
Locations
New Flagship
Locations
A global footprint will extend the Cirque du Soleil experience to
more consumers and diversify its programs and partnerships
Context Programs Partners Places Implementation & Results Conclusion
40. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and
1. Expand successful Global expansion:
resident shows
partnership models to 1. Dubai
simultaneously
hotels 2. Sydney
2. Launch new nightclub
2. Introduce corporate 3. Berlin
experience
sponsors for touring 4. London
3. Develop flagship
shows
theatre
4. Invest in social media
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
41. Given the increased complexity of pursuing additional expansion, a
gradual implementation strategy is most appropriate
Current Programs 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Touring Shows Continue current shows and pursue corporate sponsorships
Continue current shows
New show in Dubai
Resident Shows New show in Sydney
New show in Berlin
New Programs
Build Launch and operate
Nightclub
(Las Vegas) Explore potential expansion
Flagship Theatre
Build Launch Operate
(London)
Context Programs Partners Places Implementation & Results Conclusion
42. This strategy will increase revenues by 25.6% and profits by
33% annually over the next 10 years
Total Revenue Total Profits
$1,797,176 $452,665
$701,500
$137,300
2010 2020 2010 2020
Note: Graphs in 000s
(millions) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue $ 702 $ 738 $ 778 $ 818 $ 858 $ 1,030 $ 1,215 $ 1,552 $ 1,629 $ 1,712 $ 1,797
Total Profits $ 137 $ 144 $ 148 $ 151 $ 87 $ 136 $ 189 $ 391 $ 410 $ 432 $ 453
Context Programs Partners Places Implementation & Results Conclusion
43. New ventures will generate annual profits by 2017 and
contribute nearly $800M over the next 10 years
New Venture Profits
$250,000
$200,000
$150,000
$100,000
• New Ventures included are:
$50,000
1.Dubai Resident Show
$-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2.Sydney Resident Show
-$50,000
3.Berlin Resident Show
-$100,000
4.London Flagship Theatre
Cumulative New Venture Profits 5.Las Vegas Nightclub
$800,000 6.Touring Corporate Sponsorships
$700,000
$600,000
$500,000 • Cirque will sustain losses from 2013-
$400,000 2015 during initial investment phase
$300,000
$200,000
$100,000
$-
-$100,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-$200,000
Context Programs Partners Places Implementation & Results Conclusion
44. Cirque du Soleil should create an extended experience through new
programs, partners and places in order to push the frontiers of
creativity and drive profit
PROGRAMS PARTNERS PLACES
1. Continue touring and
1. Expand successful Global expansion:
resident shows
partnership models to 1. Dubai
simultaneously
hotels 2. Sydney
2. Launch new nightclub
2. Introduce corporate 3. Berlin
experience
sponsors for touring 4. London
3. Develop flagship
shows
theatre
4. Invest in social media
Drive profitability
Extend Cirque du Soleil experience
Push frontiers of creative expression
Context Programs Partners Places Implementation & Results Conclusion
45. QUESTIONS EXTENDING THE EXPERIENCE:
PROGRAMS, PARTNERS, & PLACES
Touring Shows:
Problem Touring v.
Additional Risk Mitigation Places Analysis
Definition Resident
Considerations
Resident Shows: New Venture
Strategy
Nightclub Additional Profits Sensitivity Coverage Map
Statement
Considerations Analysis
Evaluating New Venture
Changing Business
Flagship Theatre Program Shows: Financial Timeline
Model
Opportunities Projections
Nightclub Venture:
Corporate Social Resident Social media Profits &
Financial
Responsibility Partnerships campaigns Revenues
Breakdown
Extending the Touring Infiniti Deal Organizational New Venture
Experience Sponsorships Structure Structure Analysis
46. PROGRAM APPENDIX – Touring Shows: Additional
Considerations (A)
Should Cirque du Soleil pursue arena touring shows in addition
to big-top shows?
TOURING Yes, but limit arena touring shows to older, repeat shows rather
SHOWS than new pilots.
PROS OF ARENA SHOWS CONS OF ARENA SHOWS
Broader reach Danger of brand dilution
Scale and profitability Less intimate experience for
consumers
Should Cirque du Soleil continue to invest in touring shows
despite lower profitability?
• Yes, touring shows are core to CDS’s tradition and brand
• Doing otherwise would compromise broad brand exposure
• Fewer customers exposed -> fewer loyal customers and repeat
purchasers
47. PROGRAM APPENDIX – Resident Shows: Additional
Considerations (B)
Does an excess of resident shows cannibalize financial
impact?
RESIDENT
SHOWS • Must maintain novelty of each show
• Diversity of partners and show offerings reduce
cannibalization within geographic markets
• Example: Las Vegas
48. PROGRAM APPENDIX – Evaluating Program Opportunities
(C)
The nightclub and flagship theater are the most viable opportunities to extend the
Cirque du Soleil experience
Compatibility
Creative Feasibility - Financial
with brand Total
Potential implementation Opportunity
experience
Nightclub 5 5 5 2 17
Hotel 5 3 2 3 13
Spa 3 2 5 1 11
Restaurant 3 2 5 2 12
Multi-use
2 5 2 5 14
theater
Mall 2 1 1 4 8
Amusement Park
4 4 1 4 13
attraction
Virtual
4 3 3 3 13
simulation
49. PROGRAM APPENDIX – Evaluating Program Opportunities
(D)
Metrics used to determine the development feasibility and financial potential of program
opportunities
Size (SF) Zip Code Upfront Costs Potential Avg.
/description (feasibility) Annual Revenue
(opportunity)
Club 15,000 90048 (LA) $3.1 million $1.6 million
Hotel 300,000 90048 (LA) $74.8 million $1.9 million
Spa 23,000 90048 (LA) $2.8 million $60,000
Restaurant 9,000 90048 (LA) $2.2 million $980,000
Theater 500,000 90048 (LA) $180 million $100 million
Mall 2,500,000 90048 (LA) $262 million $62 million
Amusement park Benchmarked to new N/A $200+ million $55.3 million
Harry Potter attraction
attraction
Virtual simulation Benchmarked to Star N/A $50 million $5.5 million
Tours simulation
50. PROGRAM APPENDIX – Social media campaigns (E)
How will Cirque du Soleil utilize social media to create buzz
about its programs?
Existing Interactive Media Platforms New Platform: Exclusive Cirque du Soleil
• Conversations “Supporters” Website
Twitter • Exclusive to show-goers
Performing arts blogs • Incentives for referring friends
Nightlife blogs • Sneak peaks into new shows
Video-sharing (YouTube) • Discussion forum for sharing photos
• Communities • Exclusive interactive features online
Facebook (e.g. games, behind-the-scenes
Other social networking sites videos, interviews with
• Referrals performers, etc.)
Local city websites
Referral / review sites
City tourism websites
51. PARTNERS APPENDIX – Infiniti Deal Structure
Case Example: Infiniti Automotive Partnership
Criteria for
Successful
Partnerships • No infringement on Cirque creative freedom
• Infiniti will receive recognition as sponsor on show
promotional materials and during marketing
Resident • No use of Cirque images or brand in Infiniti advertising
Partnerships
Potential Deal Structure
Touring • Fixed Initial Sponsorship Fee: $1.5M
Partnerships • Occupancy Bonus: $10,000 for every 1% over 80% occupancy
Other
Partnerships
Note: Estimates based on benchmark of comparable sponsorship deals
52. IMPLEMENTATION & OUTCOMES APPENDIX – Risk
Mitigation
Risk Mitigation
1. Brand dilution • Maintain high-end exclusivity through resident shows and
flagship theatre
2. Potential competition between new Cirque du • Cross-promotions and bundling with existing partners to
Soleil programs and existing partner shows drive customers to all shows
3. Upfront cost of expansion • Collaborate with existing partner for night club -> spread
financial and operational risk
• Build flagship theatre gradually to avoid high upfront cost
4. Unprofitable operations • Collaborate with existing partner for night club -> spread
financial and operational risk
• Start with one night club as a “testing ground” for future
initiatives
5. Oversaturation of circus market • Cirque du Soleil’s market is broader than just circus-goers –
the potential extends to all high-end entertainment-seekers
6. Potential for delayed project start • Current operations provide continued revenue streams
7. Potential for partners to infringe upon Cirque du • Prioritize existing partners with proven reputation for
Soleil’s creative freedom respecting Cirque du Soleil’s creative freedom
• Encourage future creative developments through flagship
theatre – Cirque du Soleil has 100% control
53. FINANCIAL APPENDIX - New Venture Profits Sensitivity
Analysis (A)
Good Scenario: Cumulative New
Venture Profits • Breakeven in 2017
$1,200,000.00
$1,000,000.00
• $1 Billion in Profits by 2020
$800,000.00
from New Ventures
$600,000.00
$400,000.00
$200,000.00
• 25% profit margin increase over
$-
normal scenario
-$200,000.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Bad Scenario: Cumulative New
Venture Profits
$150,000
$100,000 • Breakeven in 2020
$50,000
$-
-$50,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • Loses of $250M+ through 2016
-$100,000
-$150,000
-$200,000
-$250,000
-$300,000
55. FINANCIAL APPENDIX - Nightclub Venture: Financial
Breakdown (C)
Customers Per Night 200
Nights Open Per Year 312
• Breakeven in 2018
People Served (Customers/Night
* Nights/Yr) 62,400
• Cirque Profit Margin: 7.5%
Cover Charge/Customer $ 10
Drink Spending/Customer $ 15
Revenue $ 1,560,000 • Based on 50/50 profit
Profit Margin 15% sharing with partner
Profit Margin after Sharing with
Partner 7.5% • 5% annual revenue growth
2012 Profit $ 117,000
Cumulative Nightclub Profits
$1,000,000.00
$500,000.00
$-
-$500,000.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-$1,000,000.00
-$1,500,000.00
-$2,000,000.00
56. OTHER APPENDIX – Organizational Structure (A)
Current Structure
CEO
Show 1 Show 2 Show 3 Show 4
Show directors have complete creative
freedom to develop innovative programs
57. OTHER APPENDIX – Organizational Structure (B)
Proposed Structure
• Increased business staff to manage
CEO expansion and development of
brand extensions
• Modify structure while maintaining
Touring Resident Development “show over business” philosophy
Director Director Director
Show 1 Show 1 New Initiatives
Show 2 Show 2
Maintain “show over business”
philosophy
58. Extending the Cirque du Soleil experience
TRADITIONAL CUSTOMER LIFE CYCLE: Consumer reaches
Engagement maximum engagement with brand through singular
with brand interaction point, with engagement decreasing over time.
Time
Show
59. Extending the Cirque du Soleil experience
NEW CUSTOMER LIFE CYCLE: Consumer experiences
Engagement increasing and sustained engagement with the brand
with brand through multiple interaction points.
Show 1 Club Show 2 Time
60. Parameters for corporate responsibility
Community Environment
• Promote the potential of youth • Reduce impact on climate change by
• Cirque’s creative complex ensuring responsible energy
• Cultural action in Montreal consumption
• Citizenship action in St. Michel • Waste management and hazardous
• TOHU – City of Circus Arts waste disposal
• Citizenship action on tour shows • Air and water quality management
• Resident shows
• Social action
• Cultural action
• Social Circus – artistic intervention
• Cirque du Monde
• Training in Social Circus
Hinweis der Redaktion
Use clip art...
Dragone now at the Wynn with his own showEmergence of niche circuses – provides unique experiences, similar novelty value prop, avant-gardeExamples: CirkusCirkör, Circus Burlesque and Le Cirque Invsible
-capital investment?
opp= corporateCONSUMER EXPERIENCE
Residence in a few cities, limited footprint, growth in usual customer abroadKEY SLIDEBrand awareness rate - %Number of tickets soldHuge gapPlus international opportunities
Lack of diversification both globally and revenue streams
Amplification
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Forrester Research, “The Broad Reach of Social Technologies”
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Not only casionos – they are entertainment/complete package establishments
Top tier hotel that has similar customer segment as Cirque du SoleilLarge capacity similar to previous successes in Las Vegas hotels
Say that cirque dusoleil expressed interest in these 5 citiesNotes: Criteria 1 based on GDP/capita from CIA World Factbook Criteria 2 arrivals data from Euromonitor
High (5), medium (3), low (1)For construction costs, we used RSMeans construction cost calculatorClub:Too trend-driving high risk of failure (according to Hoovers, 8 out of 10 night clubs fail within the first year)However, tourist destinations may be viable locations with 15,000 SF clubs grossing between $100-260K per yearUpfront cost: $3.1 million (high-end club in Hollywood – 90048 zip code)Hotel:Highly complex and volatile business model.High fixed costs to building hotel, and returns are driven by varying occupancy.Spa:Spa revenue driven by personal disposable incomeLow upfront costs, but high need to use spa service in tourist localesRestaurant:Can average $833K per year in revenue for full service restaurantsHigh failure rateMulti-use theater:High up front costs (e.g. The median theater according to exhibit 3 costs $70 million – median)Leverages Cirque du Soleil’s core competency (theater arts)Mall:Extremely high development costs, without complete control over revenue streamsReturns driven by personal incomeOperational complexity, and lack of existing partnerships with mall developers and operatorsAmusement parks:Can leverage amusement park’s expertise in developing attraction while licensing Cirque du Soleil brand
High (5), medium (3), low (1)For construction costs, we used RSMeans construction cost calculatorPotential revenue derived from entrepreneur.comCONVERT TO SQUARE METERSClub:Too trend-driving high risk of failure (according to Hoovers, 8 out of 10 night clubs fail within the first year)However, tourist destinations may be viable locations with 15,000 SF clubs grossing between $100-260K per yearUpfront cost: $3.1 million (high-end club in Hollywood – 90048 zip code)Hotel:Highly complex and volatile business model.High fixed costs to building hotel, and returns are driven by varying occupancy.Spa:Spa revenue driven by personal disposable incomeLow upfront costs, but high need to use spa service in tourist localesRestaurant:Can average $833K per year in revenue for full service restaurantsHigh failure rateMulti-use theater:High up front costs (e.g. The median theater according to exhibit 3 costs $70 million – median)Leverages Cirque du Soleil’s core competency (theater arts)Mall:Extremely high development costs, without complete control over revenue streamsReturns driven by personal incomeOperational complexity, and lack of existing partnerships with mall developers and operatorsUsing Simon Property Group numbers, used $3.77 billion 2009 FY revenue and 152.3 million gross leasable area to derive $24.78/SF in revenue...assume mall is 2.5 million square feet.Amusement parks:Can leverage amusement park’s expertise in developing attraction while licensing Cirque du Soleil brandAssume 14 million individuals go to Disneyland each year and spend $79 per day-pass ticket...also assume that the specific section of the park would garner 5% of revenue.Virtual simulation:Assume 14 million individuals go to Disneyland a year, and spend $79 for a day pass ticket...and assume ride would gather 0.5% revenue.