Download - MMICC 2010 - WSH
The Acrobatics of Success
Cirque de Soleil
Connor Bogin, Linda Li, Derrick Nation & Beth Richard
Situation Short Term Long Term Recommendations
Implementation Financials
Agenda
Situation Short Term Long Term Recommendations
Implementation Financials
• Extreme uniqueness• Sustainable
competitive advantage– Creative independent
cells
• Strong partnerships• Near perfect record
Background
Situation Short Term Long Term Recommendations
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To globally expand the Cirque du Soleil experience while maintaining a
unique brand to draw loyal guests.
Challenge
Situation Short Term Long Term Recommendations
Implementation Financials
• Global recession– Decreased ticket sales– Decline in luxury
entertainment market
• Specific target market – Business travelers– Sophisticated adults
with disposable income
Barriers to Goals
Situation Short Term Long Term Recommendations
Implementation Financials
Strategy
A Balancing Act
Building Up
StrategyLong-Term Short-Term
Situation Short Term Long Term Recommendations
Implementation Financials
Short Term
A Balancing ActNavigating the Recession
Situation Short Term Long Term Recommendations
Implementation Financials
Short-Term Situation
Situation•Revenues at 15 year low
•Hints of recovery from global recession
•Luke-warm reception of newest show: Banana Schpeel
Criteria•Return to circus nouveau roots
•Maximize current show attendance
•Minimal risk and expense
•Position for long-term growth
Situation Short Term Long Term Recommendations
Implementation Financials
Short-Term OptionsChange
Ticket Prices
•Reduce ticket prices to fill seats
Increase Promotions
•New marketing channels•New target markets
Develop New Shows
•Resident show•Touring show•New show type
Offer Experience in New Places
•Channels of delivery•Expanding locations
Situation Short Term Long Term Recommendations
Implementation Financials
Short-Term Analysis
Return to circus nouveau roots
Minimal risk and expense
Position for long-term growth
Maximize current offering attendance
Reduce ticket prices
Expanding locations
New show type
New channel of show delivery
New touring show
New resident
show
New target
markets
New promotion channels
New promotion channels
New target
markets
New channel of show delivery
Situation Short Term Long Term Recommendations
Implementation Financials
Viral Marketing
Abridged shows at performing arts festivals
Cirque du Soleil in IMAX 3D
Short-Term Recommendations
New promotion channels
New target
markets
New channel of show delivery
Situation Short Term Long Term Recommendations
Implementation Financials
Long Term
Building UpThe Road to Recovery
Situation Short Term Long Term Recommendations
Implementation Financials
Long-Term Situation
?Situation•Increasing recovery of North America
•Uncertain pace of global recovery•Asian and European troubles
•Shift in global travel trends
Criteria•Pursue profitable growth with conservative risk
•Leverage core competencies
•Use lessons from short term strategy
•Concentrate in North America where recovery is more certain
Situation Short Term Long Term Recommendations
Implementation Financials
Long-Term OptionsChange
Ticket Prices
•Reduce ticket prices to fill seats
Increase Promotions
•New marketing channels•New target markets
Develop New Shows
•Resident show•Touring show•New show type
Offer Experience in New Places
•Channels of delivery•Expanding locations
Situation Short Term Long Term Recommendations
Implementation Financials
Long-Term Analysis
Pursue profitable growth with conservative risk
Leverage core competencies
Use lessons from short term strategy
Concentrate in North America
Reduce ticket prices
New channels
of delivery
New promotion channels
Expanding locations
New touring show
New Show Type
New target
markets
New resident shows
Situation Short Term Long Term Recommendations
Implementation Financials
Most profitable model with lowest risk
Long-Term Recommendations
Expanding locations
New Resident
Shows
New resident show in North
America
Criteria• Previous success with touring Cirque du Soleil• High tourist traffic• Probability of cannibalization• Economic stability
Possible Locations
• Chicago• New York• Austin• Honolulu
Situation Short Term Long Term Recommendations
Implementation Financials
Long-Term Recommendations
City Decision Criteria
• Past Cirque du Soleil success• Tourist traffic• Economic stability• Probability of cannibalization
?Massive success of shows at Neil S. Blaisdell CenterExperiencing tourism growth• 2010: 3%• 2011: 3.1%Least hurt by economic downturnInternational and domestic destination
Honolulu
Situation Short Term Long Term Recommendations
Implementation Financials
Recommendations
Short-Term, Balancing•Viral Marketing•Target market expansion•Music festivals•IMAX 3D
Long-Term, Building•New resident location in Hawaii
Situation Short Term Long Term Recommendations
Implementation Financials
Create new hype through: Seemingly impromptu acrobatics in public places (subways, malls, etc)
• Generates extreme viral response– Word of mouth– Online social networks
• Involves traditional media– Pre-event press alerts– Flyer distribution
• Increases awareness and enthusiasm• Low cost and effective
ST – Viral Marketing
Situation Short Term Long Term Recommendations
Implementation Financials
ST – Performing Arts Festivals
Establish relationship with future target market through:
Introduction of Cirque du Soleil experience at large arts festivals
• Leverages brand to expose new audiences to
the experience• Provides a sample of the Cirque• Potential Locations
- Coachella, Los Angeles, California- Lollapalooza, Chicago, Illinois- Jazz Festival, Montreal, Quebec
• Generates revenue and awareness
Situation Short Term Long Term Recommendations
Implementation Financials
Develop a new Cirque du Soleil 3D experience through:
The creation of an IMAX 3D film of a soon-to-retire big top show
• Generates immediate revenue– Outsourced producer pays royalty
• Increases awareness in future target market
• Creates a want to attend Cirque de Soleil in the future
ST – IMAX 3D
Situation Short Term Long Term Recommendations
Implementation Financials
LT – Resident Development
Build a new residentexperience in Honolulu through:
A new partnership
• Apply existing partner framework to determine ideal candidates
• Leverage brand and announce intentions to create a bidding situation
• Minimizes costs by converting retired show to resident version
Situation Short Term Long Term Recommendations
Implementation Financials
2011Launch Resident Honolulu Location
Obtain Global Recession Update
2012Continue Gradual Show Rollout
Respond To Global Economy Shift
2013Continue Gradual Show Rollout
Respond To Global Economy Shift
2014Continue Gradual Show Rollout
Respond To Global Economy Shift
2010Launch Viral Campaign (trials)
Negotiate IMAX ProjectDevelop Arts Festival Performance
Timeline
2010 2011 2012 2013 2014•Viral Campaign •IMAX Project•Arts Festival s
•Resident Honolulu•Global Update
•New Shows•Global Update
•New Shows•Global Update
•New Shows•Global Update
Situation Short Term Long Term Recommendations
Implementation Financials
Sales Projection
Situation Short Term Long Term Recommendations
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Revenue Contributions
Situation Short Term Long Term Recommendations
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NPV
(in CAD$ million) 2010 2011 2012 2013 2014Revenue
tickets 530 580 630 690 710IMAX 3-D creative royalty 5 5 5 0 0merchandising 4 4.4 5 7 8
Total 539 589.4 640 697 718
Costsales/operation cost 431.2 471.52 512 557.6 574.4new shows upfront cost 20 21 22 0 0
Total 451.2 492.52 534 557.6 574.4
EBITDA 88 97 106 139 144
(investment) production 35.12 50 42.4 55.76 57.44
Cash Flow after Tax 42 38 51 67 69
NPV 20% $150.58NPV 10% $196.04NPV 8% $207.66
Situation Short Term Long Term Recommendations
Implementation Financials
Conclusion
Short-Term, Balancing• Viral Marketing• Target market
expansion• Music festivals• IMAX 3D
Long-Term, Building• New resident location in
Hawaii
Questions?
Connor Bogin, Linda Li, Derrick Nation & Beth Richard
Situation Short Term Long Term Recommendations
Implementation Financials
AppendixBackgroundChallengeBarriers to GoalsStrategyShort-Term SituationShort-Term OptionsShort-Term AnalysisShort-Term RecommendationsLong-Term SituationLong-Term OptionsLong-Term AnalysisLong-Term RecommendationsFinal RecommendationsST – Viral MarketingST – Performing Arts FestivalsST – IMAX 3DST – Resident DevelopmentTimeline
Viral Campaign RisksFestival RisksIMAX 3D RisksHonolulu RisksMirage MGM PartnershipDefining SuccessGlobal Expansion ContingWhy Not ChinaGeneration YSelecting PartnersSuccessful MarketingCurrent Target MarketViral Marketing DiagramTarget Market Expansion DiagramPorter`s 5 ForcesSocial Networking
Situation Short Term Long Term Recommendations
Implementation Financials
Internal resistance to new conceptRelative ease of implementation
and option to outsource to an advertising agency
Viewed as “cookie cutter” approach
Implement the campaign in a differentiated way
Viral Campaign Risks
Situation Short Term Long Term Recommendations
Implementation Financials
Festival Risks
Gen Y focus alienates Boomer
generation
Unique offering to market is a “sample”
Option in future to create
a separately targeted show
Situation Short Term Long Term Recommendations
Implementation Financials
IMAX 3D Risks
Brand Dilution
Offer to experience CdS in a new way.
NOT a substitute.
Prestige
Situation Short Term Long Term Recommendations
Implementation Financials
Honolulu Risks
Show is not financially successful
Partner shares in return and downside risk
Option to pursue a phased approach with show beginning
in a Big Top in Honolulu
Unable to find suitable partner
Awareness of CdS will attract many qualified partners
Leverage partnership with MGM
Situation Short Term Long Term Recommendations
Implementation Financials
• At this time, no issue exists with Las Vegas partnership
• Key consideration will be to refrain expanding to point at which CdS becomes a commodity
• Caution in further Vegas expansion to avoid market and creative saturation
Mirage MGM Partnership
Situation Short Term Long Term Recommendations
Implementation Financials
• Observation of immediate climb in revenues as result of seat fill rate improvement
• Return to pre-2007 revenue levels• Positive returns from Honolulu partnership
without negative effects on existing shows• Financial success that empowers continued
creative progress
Defining Success
Situation Short Term Long Term Recommendations
Implementation Financials
• What if other international markets recover at an unexpected rate?– Cross reference gambling destinations, family
resorts, and high GDP cities to determine key locations of resident shows
Global Expansion Contingencies
Situation Short Term Long Term Recommendations
Implementation Financials
• Existing Competition– Popular Chinese cultural performances– Acrobatics/circus style– Low cost
• Economic Uncertainty– Popular expectation of double trough of recessions
impacting entire Asian region
• Price of CdS ticket exceeds average yearly income of Chinese citizen.
• Danger of cannibalization. Currently, wealthy Chinese citizens travel to Macau for entertainment and gambling
Why Not China?
Situation Short Term Long Term Recommendations
Implementation Financials
• The “connected” generation• Aged 18-30• Poised to become most powerful generation
since Baby Boomers• Extremely high purchasing power due to
exit of Boomers from work force• Early interest in luxury entertainment
Generation Y
Situation Short Term Long Term Recommendations
Implementation Financials
• Insufficient data to recommend or select partner pool
• Criteria– Creative challenge– Sustainability of partnership– Profitability– Partner’s adherence to social responsibility
parameters
Selecting Partners
Situation Short Term Long Term Recommendations
Implementation Financials
• Product– Quality service
• Price– Broad price range with IMAX
• Place– New strategic locations
• Promotion– Viral marketing, music festivals & IMAX 3D
Successful Marketing
Situation Short Term Long Term Recommendations
Implementation Financials
• Businessmen & women who like to travel• Stray from the traditional family circus
scene by being more risque, having no animals & with music scheme
Current Target Market
Situation Short Term Long Term Recommendations
Implementation Financials
ST – Viral Marketing
Brand Image Target Market
Cirque De Soleil Attendance
Reputation Growth
StimuliIntensity, Movement
& Surprise
Hedonic & Utilitarian Value
Return
Word of Mouth
Situation Short Term Long Term Recommendations
Implementation Financials
ST- Target Market Expansion
Perceptual Map- Luxury Entertainment
Adventure
Low Quality & Price
Relaxation
Orchestra
Yachting
Opera
Skiing
Theme Park
Zoo
AquariumAmusement Park
Cirque De Soleil
IMAX
Musical Festival
Beach Resort
High Quality & Price
Situation Short Term Long Term Recommendations
Implementation Financials
Porter`s 5 Forces
Situation Short Term Long Term Recommendations
Implementation Financials
Social Networking