cirque de soleil

From Clowns to Class: How Cirque du Soleil Flipped the Circus Business Model

What happens when you ditch the elephants and add elegance? Cirque du Soleil reimagined the circus and built a billion-dollar brand in the process.

Business Model Analysis: Cirque du Soleil

Cirque du Soleil is a unique and exhilarating experience. Even though they are in the entertainment field, like the circus, it is built with an entirely different focus. Guy Laliberte had a vision to develop a new type of circus model. After partnering with other buskers, they performed at the Los Angeles Art Festival in 1987, where it immediately became a hit. Cirque du Soleil is a prime example of what happens when two red oceans are combined to create a new blue ocean (Becker, 2018, p. 39). Their business model has proven to be disruptive and successful. This paper will discuss and compare their business model, the variations, and four canvas elements from the Smart Start Canvas from Full Sail University.

The Business Model

Cirque du Soleil’s business model differs from the classic circus because it has different focuses and offerings. They offer many shows with rotating themes focusing on artist performance and theater entertainment versus a focus on silliness, thrills, animals, travel, and overall family entertainment. This shift in focus and business model allowed Cirque du Soleil to reduce costs, enhance customer value, and charge ticket prices at the Broadway level (Becker, 2018, p. 40). Increasing the brand equity and value helped pack their revenue streams and help keep their cost structure low. Although they are privately held, according to Similarweb, their estimated annual revenue for this year is between 500 million and one billion USD, and they have stayed steady in this revenue range for the past few years (Similarweb, 2024).

In contrast, the circus’s business model generally focused on the ongoing ticket sales, souvenirs, and concessions sold throughout the show. Their cost structure was built around the costly animal maintenance and paying star performers top dollar for retention. In recent years, there has been a growing distaste from the public for the conditions of the circus animals and their perceived cruelty, so much so that Ringling Bros and Barnum and Bailey, also referred to as Ringling, have discontinued their animal shows since 2017 (Becker, 2018, p. 40). Currently, they focus on entertainment through various star performers such as the Freestyle Riders, Gemini Twins, and Black Diamond Trio (Ringling, 2024). Similarweb's annual revenue for this year ranged between five million to 10 million USD (Similarweb, 2024).

Variations

These two businesses have many variations, primarily because Cirque du Soleil features no animals. In contrast, the classic circus uses animals. While Ringling has discontinued animals, there are still others, such as the Carden International Circus, Carson & Barnes Circus, and Franzen Bros. Circus (Peta, 2024). Aside from the animals, the atmosphere is different for the circus; it is very casual thanks to their traveling. Since the circus focuses on families, there is lots of silliness, excitement, fun, and aisle concessions. Despite their recent shift to no animals and only star performers, Ringling continues to travel from city to city to perform. Depending on what that city offers, sometimes it is a large community center or a sports arena. They still claim to be “The Greatest Show on Earth,” riding the line between nostalgia for the parents and silly, exciting fun for the kids (Ringling, 2024). One of the many issues the circus’s business model faces is that many star performers understand their worth and often name their terms, putting a financial strain on the circus business (Kim et al., 2004, p. 77).

Cirque du Soleil broke through the boundary that separated circus and theater, creating a new and profitable blue ocean (Kim et al., 2004, p. 78). Their mission is to “invoke the imagination, provoke the senses, and evoke the emotions of people around the world” (Cirque et al., 2024). They have 11 permanent shows that cover the United States. Most are in Las Vegas, but one is in New York, Orlando, and the Mexican Riviera. In addition to the permanent shows, they also have traveling shows (Beck, 2018, p. 39). While stationary locations are costly, it has allowed the company to create a personalized and upscale environment while cutting some traveling costs and increasing overall value. Attending these events, people wear lovely attire and pay to be entertained by the artistic performers. Cirque du Soleil also offers shows that have created compelling and successful value innovation.

Canvas Elements

The canvas elements in focus for this paper are unique value propositions, customer segments, channels, and revenue streams. Both Cirque du Soleil and the traditional circus have working business models. As discussed, the circus has undergone several changes to adjust and lighten its cost structure. However, Cirque du Soleil is the ideal example of value innovation and creating an excellent business model in a blue ocean.

Cirque du Soleil

Cirque du Soleil’s unique value proposition focuses on artistic performance, such as music and dance. Hillary Becker discusses how they pursued value innovation in her Journal of International Management Studies article. She explains how they reduced and eliminated pain points the circus dealt with—learning from their competition and moving forward into their own Blue Ocean with no worries about animal caretakers, animal cruelty, or big-name stars. Instead, they focused on a unique storyline and stunning theatrics (Becker, 2018, p. 40).

Cirque du Soleil’s environment is refined and established, making the entire show an event that customers will dress up for. This environment matches the increased ticket prices from which their revenue streams come. Their customer segment focuses on theater, and investing extra money in artistic production allows them to attract and retain the best talent for their shows. Cirque du Soleil utilizes multiple channels to reach its target customers. Those channels range from displays to print and digital advertisements on platforms like Facebook or Google. According to Media Radar, they spent under 100 million USD on advertising in digital and print last year (Media Radar, n.d.).

Traditional Circus

The traditional circus’s unique value proposition is its use of various exotic and domestic animals. Since the nature of their business model is to travel, their environment is very casual, helping support their customer segment focus of family-friendly. To help with their cost structure to help maintain their animals and keep star performers, aside from the tickets, the traditional circus also sells aisle concessions and souvenirs like sports games. As discussed, the discontinuation of animal shows for some circuses, like Ringling, the steady decrease in audiences, and the increasing costs have significantly strained the circus. As Mark Schaefer explains in his article, the show was enormously complex. “More than 500 performers and crew, 100 animals to care for and feed; a universe of costumes, props, sounds, and lights” (Schaefer, n.d.).

The circus uses many different advertising channels to reach its audience. Some of those are digital, and some are print. There is an adage that says a circus coming to town is enough of an advertisement. However, Glenn Collins talks about how that is not the case anymore in his article with The New York Times. He says that Ringling spent almost 25 million USD in one year on advertising alone for their 125th anniversary year. Even with their popularity and name recognition, this advertising cost has proven invaluable but necessary (Collins, 1995).

Conclusion

In short, when it comes to entertainment, both Cirque du Soleil and the circus offer many unique experiences. Although similar in some ways, they have different business models, variations, and canvas elements. The difference is enormous when comparing their annual revenues from this year with Similarweb. This proves that when executed right, leaving a red ocean to break into new territory can be incredibly rewarding and lead to success. These businesses can teach us many lessons on business models through the positives and negatives.