Why Lego Isn’t (Just) a Toy Company | WSJ The Economics Of

Summary

This video explores Lego's evolution from a toy company focused on plastic bricks to a global content empire. It highlights how Lego expanded through licensing deals with major franchises like Star Wars and Marvel, as well as original content such as the Bionicle series. The success of 'The Lego Movie' in 2014 bolstered its presence in media, further driving global expansion, including in markets like China. Additionally, Lego engages adult fans with complex kits and partnerships, including a digital experience in the Metaverse, all while maintaining its core product—the iconic plastic brick.

Takeaways

• 🧱 Lego has expanded beyond toys to include video games, movies, and theme parks, reinforcing its core product of Lego sets.
• 🏗️ Lego was founded in 1932 in Denmark and initially made wooden toys before launching the plastic brick in the 1950s.
• 💰 By 2022, Lego became the world's largest toy maker, earning $3.47 billion in revenue in the first half of the year.
• 🏭 Lego is building new factories in the US and Vietnam to meet growing demand.
• 📈 The Bionicle franchise revitalized Lego in the early 2000s, using multi-platform storytelling to engage audiences.
• 🎥 Lego's first licensing deal in 1999 was with 'Star Wars', followed by 'Revenge of the Brick' on Cartoon Network in 2005, which paved the way for future partnerships.
• 🎬 The 2014 'Lego Movie' was a huge success, grossing $450 million globally, and set the template for future content creation.
• 🛒 Lego is expanding in new markets, especially China, where nearly half of its new stores were opened in 2022.
• 👩‍👧‍👦 Licensed content like 'The Avengers' helps Lego reach new and different generations across the world, including adults.
• 🌐 Lego is partnering with Epic Games to create a digital experience in the Metaverse, furthering its expansion into digital spaces.

Q & A

What significant change has Lego undergone over the years?

Lego has transformed from being solely a toy company producing plastic bricks to becoming a major content-driven brand, with video games, movies, theme parks, and various licensing deals reinforcing its core product.

How has Lego maintained its relevance in the toy industry?

Lego has maintained its relevance by diversifying into media and entertainment, expanding its product offerings through licensing deals with popular franchises like Star Wars, Batman, and Marvel, as well as creating original content like The Lego Movie.

When and how did Lego first enter the content space?

Lego’s first major move into content started in the 1990s when the company faced a slump in sales. It ventured into multi-platform storytelling through Bionicle, which helped revitalize the brand.

What was the significance of the Bionicle franchise for Lego?

The Bionicle franchise, launched in the early 2000s, played a crucial role in reviving Lego's brand during a time of declining sales. It introduced buildable action figures and multi-platform content through comics, movies, and games.

How did licensing deals contribute to Lego's growth?

Lego's licensing deals with franchises like Star Wars, Marvel, and Jurassic World helped expand its market reach by creating Lego-themed versions of these popular franchises, which appealed to wider audiences.

What was the impact of The Lego Movie on the brand?

The Lego Movie, released in 2014, grossed over $450 million worldwide and significantly expanded Lego’s brand awareness, proving to be more successful than anticipated. It also paved the way for future content creation.

How has Lego expanded into international markets like China?

Lego has rapidly expanded into China by opening 46 new stores there in the first half of 2022. Since many parents in China were not familiar with Lego, the company used movies, games, and licensed content to build awareness.

How does Lego cater to its adult fanbase?

Lego has been targeting its adult fans by creating more complex and expensive kits designed specifically for grownups. Shows like 'Lego Masters' have also engaged adult audiences by showcasing extreme Lego creations.

What future direction is Lego taking with digital experiences?

Lego is exploring the digital space by partnering with Epic Games to create a digital experience in the Metaverse, showing that the company is moving beyond traditional toys and screen content.

What has been Lego’s strategy for sustained growth over time?

Lego’s strategy for sustained growth includes expanding into media, creating partnerships with popular franchises, targeting new markets like China, and engaging adult fans, all while maintaining the plastic brick as its core product.