Cirque du Soleil - The Rise and Fall…And Rise Again
In this day and age of online media, one of the biggest trends is people are tired of staring
at their screens all day and are ditching their laptops and computers for real live entertainment.
It’s a long-term trend that’s been happening for decades now and that’s why experiences like music
concerts and sporting events are able to draw tens of thousands of people at a time. Even age-old
performances like Broadway and circuses have staged a comeback. And there’s no global brand more
renown in the space of showbusiness than 'Cirque du Soleil,' which is French and translates to
‘Circus on the Sun’. If you’ve seen any of their performances, you’ll know that Cirque du Soleil
is no ordinary circus! Attendees walk out of the show awe-struck with praise like “Inspirational”,
“Breath taking” and “Life changing.” What started out as a small group of
street performers grew to over 4,000 people with shows seen by over 180 million spectators in 450
cities in 60 countries all around the world. At one point, Cirque du Soleil was even a Unicorn
with over a $1 billion valuation. But that was before its slow decline, followed by bankruptcy.
And that’s what we’re here to talk about – the Rise and Fall, and hopefully the
rise again, of Cirque du Soleil. In this video, I’ll dive deep into the
magical story of Cirque du Soleil and provide you with the Company Insight on the right and wrong
that happened with this brand. But before we begin, if you guys enjoy videos like this,
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new videos come out. So thanks so so much for doing that and now let’s start the video.
How It All Began… Circuses are nothing new. They’ve been around since
the 1970’s with travelling families and marching bands performing bizarre performances. However, it
was only in the 80’s that slowly the trend started to change that talented people started to show up
in the performances - juggling, dancing, breathing fire and playing music; everything was astonishing
to be seen and circuses started becoming a real form of entertainment for people.
Market Timing: Being in the Right Place at the Right Time
This is where Cirque du Soleil comes in. In the early 1980’s, Gilles Ste-Croix
and Guy Laliberté created a circus show which they performed in the city streets of Quebec, Canada
with great fanfare. In 1984, it just happened that Quebec was celebrating the 450th anniversary of
the discovery of Canada. It was the perfect time for circus feats to hit an all-time high because
the Quebec government was looking to host a show to carry the festivities across the province.
With luck, Gilles and Guy saw this as an opportunity and proposed a show called 'Cirque
du Soleil', which they both become cofounders of. The show got accepted and the rest is history.
Sometimes starting a business is all about market timing and Gilles and Guy were simply
in the right place at the right time with a unique product. Cirque du Soleil strayed
from the conventions of a traditional circus. Rather, they incorporated street performers,
original music, special lighting and extravagant costumes. Soon after the show in Quebec, the
troupe performed in 10 other cities in Canada with wide acclaim. By 1986, they were no longer a small
circus production and in fact they were eyeing for a major global breakthrough across borders.
1984 to 1994 – Scale and Exponential Growth Usually in the first stage of a startup,
there’s an initial period of slow or no growth while the startup tries to figure things out.
The second stage of a startup is when the team figures out how to make something
lots of people want and how to reach those people. That’s when exponential growth happens.
This same thing happened with Cirque du Soleil and the story is simply,
incredible, like something taken out of a fairy tale.
In 1987, Cirque du Soleil went to perform at the Los Angeles Art Festival, coming
to the US for the first time. To everyone’s surprise, the show was an instant sell-out,
and it was a significant achievement for the group in terms of winning over American hearts. No other
circus group from overseas had such a success. In the gap of a few months, Cirque du Soleil became a
famous circus company and all the shows were sold out in America with huge praise by critics.
If you think this success was big enough for an entertainment company like Cirque du Soleil,
then you're mistaken. From 1990 onwards, Cirque's actual growth graph picked up, and it became
even more famous. By 1990, Cirque was all over North America, and people knew who they were. The
company got innovative, imaginary, and impeccable with their live shows. In that same year, people
saw the world premiere of their new show, Nouvelle Experience, in a stadium that seated 2,500 people.
That show broke records for ticket sales and resulted in Fuji Televisions Network financing
a $40 million investment in Cirque du Soleil, which was their first significant funding.
International Expansion with First Mover Advantage
After this huge investment and worldwide exposure, Cirque du Soleil announced their next ventures in
Europe. In 1990, they opened new shows in London and Paris. Soon, they created new additional shows
and all these shows were performed on a global scale. It was an amazing time for Cirque du Soleil
as they barely saw any competition as the first mover globally. By 1992, Cirque du Soleil’s fame,
art, and style had spread across Europe. Once the base in Europe was established,
they headed towards Japan and performed shows in Tokyo and seven other cities in Asia.
Adding a Strength - Predictable Cash Flows Beginning in 1993, the year brought a lot
of expectations to Cirque du Soleil and their vision was to get their shows into the theatre.
In 1992, the Las Vegas show of Nouvelle Experience was performed in the theatre at the new Treasure
Island Hotel and Cirque signed a contract with them thereafter. In that same year,
the company signed a 10-year contract for their new show 'Mystère' with Mirage Resorts. This
new business model of performing in theatres was very beneficial for Cirque du Soleil. Normally,
shows were only performed in a city for a brief period of time before moving onto the next.
Staying in one location with long-term contracts allowed the business to fully capture a market,
increase revenues as well as provide more stable source of revenue – Investors love that.
It was truly revolutionary at the time,
especially for a circus performance where oftentimes business was unpredictable and
seasonal. This also helped Cirque du Soleil establish their brand permanently in the US.
Continued Innovation Propels Cirque du Soleil to the Next Level
From 1994 to 1998, Cirque du Soleil had successfully staged shows all over America,
North Asia, and Europe. In October 1998, another breakthrough came for Cirque du Soleil with a new
performance called 'O'. The concept of ‘O’ was based on the water theme and artists showcased
their incredible talents in water, and this aquarium circus show became iconic in Las Vegas.
Even till today, the show 'O' is still running successfully. After their Las Vegas success,
a permanent contract was signed in 1998. Soon, Cirque was offered another contract for it’s show
La Nouba at Disney World in Orlando, Florida. Slowing Growth and Problems Appear
In the third phase of a startup, eventually, a successful startup will grow into a big company.
And with that, growth will slow. This is partly due to internal limits and also because the
company may be starting to reach the limits of its total addressable market, sometimes referred to as
TAM. All successful startups will eventually reach this stage, as did Cirque du Soleil.
After expanding to multiple countries and doing multiple shows for another decade,
problems started to appear. Feedback and reviews for new shows were getting worse.
Critics started to complain about the quality of the shows becoming diluted and the shows becoming
indistinguishable from one another. People thought that one show was enough to understand all the
themes and stories produced by Cirque. To add to that, most of the senior performers who were there
from the beginning were starting to leave the company. This created a void and quite a different
culture as the original team of 20 some people had grown to over 1,000 employees worldwide.
2010 to 2019 - Major Setbacks for Cirque du Soleil
During this time, newer productions, like Zarkana and Michael Jackson received low reviews.
From there on, the circus company had a string of closures.
Banana Shpeel was closed in Toronto in October 2010 and followed by Zed in 2011
due to low ticket sales. Later, MGM asked Cirque to close and replace Viva Elvis by the end of 2012
due to low-ticket sales. In 2012, two shows, Zaia and Iris were closed due to the low sales
as well and Cirque lost most of its international shows which led to the decrease in revenue. These
struggles carried on for 2013 with another layoff of 400 employees. Unfortunately, things got even
worse that year when one of the acrobats, Sarah Guyard-Guillot, died on stage in Las Vegas.
This shook the company as multiple media houses reported on this tragedy heavily.
In 2015, co-founder Guy Laliberté announced that he had sold the majority of his joint stake in
Cirque du Soleil to investment groups, TPG, Fosun and a Canadian pension fund for $1.5 billion.
With new owners now at the wheel of the ship, what followed was a major
restructuring and a brilliant pivot and transformation of the business.
A Complete Transformation: From a Circus to a World Leader in Live Entertainment
Scaling Digitally While many had doubts,
the new investors have been widely credited for putting in the framework for the new Cirque du
Soleil. First, the Company continued their premiere live shows and worldwide tours but
then they also focused on multimedia productions and collaborations. For example, they were open to
being featured in movies and documentaries. This became clear when they launched their
television series on Netflix in 2016. This was a really really smart strategy for the Company
because it allowed Cirque du Soleil to scale its brand digitally by targeting a larger audience and
also bring in additional revenue with fewer costs by reusing content from previous performances.
Transforming with M&A In addition, and most importantly,
with the new ownership, Cirque du Soleil transformed themselves as a Company. In 2017,
they acquired the US entertainment company, Blue Man Group, known for performances with drummers
wearing blue body paint. As things picked up, the Company made additional acquisitions for
companies like 45 Degrees, VStar Entertainment, and the magic company, the Works Entertainment.
Each of these acquisitions allowed the company to expand to new forms of entertainment
with new brands and complimented its existing shows. These acquisitions helped Cirque du Soleil
transform into a full-fledged entertainment brand. Now Cirque du Soleil was not just a
solo circus company; it had become an established entertainment company with multiple subsidiaries
with live shows and performances that no one in the world could match.
Interrupted by COVID and Bankruptcy Bankruptcy
It seemed things were on the top of the world for Cirque du Soleil as revenues grew in 2019 and
early 2020. However, when the COVID-19 pandemic hit in March, it was a complete disaster for the
Company because they operate in the service and entertainment industry. With border closings and
bans on public and social gatherings, there was no way they could operate their business.
In March 2020, Cirque du Soleil suspended all their active shows
and facing $1 billion in financial debt, they filed for bankruptcy in June 2020.
It was a really tragic time for Cirque du Soleil during COVID as nearly all of
the 3,500 employees were terminated, and all 44 shows were cancelled. Fortunately,
Cirque du Soleil's story doesn't end in bankruptcy and the company believes in a 2021 revival.
In August 2020, the former CEO of MGM Resorts, Jim Murren, and investment company, Catalyst Capital,
bought Cirque du Soleil out of bankruptcy with a $375 million investment. Although
all previous equity shareholders were wiped out in the bankruptcy, the good news is the Company will
continue to operate in the future. And Hopefully the Rise Again
And that brings us to today. Cirque du Soleil has undoubtedly seen some ups and downs in its
journey towards becoming a world leader in live entertainment. As COVID is showing signs of
improvement, they’ve reopened a few shows in Asia and South America. Let me know in the comments if
you’ve been to a Cirque du Soleil show and what you thought. Do you think Cirque du Soleil will
be able to rise again from the COVID pandemic? If you were the CEO at the Company, what would you
do now? I’d love to hear what you have to say. So with that said, thank you so much for watching.
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