Lego Builds an Empire, Brick by Brick

Lego Builds an Empire, Brick by Brick


In this week’s top-grossing children’s movie, not only skyscrapers but actors built of tiny bricks inhabit a rather dystopian world known as “Lego-verse.”

That new realm, in “The Lego Movie,” which earned a near record-breaking $69.1 million when it debuted last weekend, represents the Lego Group’s first foray onto the big screen.

But it also demonstrates the ways in which the company is trying to enlarge its “brick-print” onto all types of screens, as it faces increasing competition from other construction toy lines, especially in the digital spaces.

For example, the movie’s characters, including the heroes Emmet and Wyldstyle, will be the stars of a video game, as well as being sold in traditionalretail stores in toy kits.

That marketing strategy highlights Lego’s decade-long pursuit of an increasingly diversified customer base whose inclination to buy something new keeps speeding up — occurring as quickly as the time it takes to build the latest castle or even reach the winning level on an app or video game.

Next up on Sunday is another new toy line, one that encapsulates Lego’s legacy of setting a child’s imagination free to build upon its designs and embodies the company’s multiplatform marketing by also appearing in digital and other forms. The Mixels, a set of miniature characters, will be presented at the annual Toy Fair trade show in Manhattan.

They are also being featured in a series of animated shorts that began this week in a joint partnership with the Cartoon Network. Members of tribes known as the Infernites, the Cragsters and the Electroids, they have names like Zorch, Teslo and Flain. Aside from their miniature cuteness quotient, this toy line offers another selling point — their “cubits” can be mixed and matched to create more members of the tribal clans.

The company’s Ninjago franchise returned this year as a smartphone app and four one-hour specials on the Cartoon Network, also the home of a TV series for Legends of Chima, which expanded into an online multiplayer game last fall. And plans are also in the works to animate Lego’s City and Friends properties this year.

“The property is finding a multimedia expression,” said Sean McGowan, an analyst at Needham & Company who follows Lego. By working with willing media partners like the Cartoon Network and Warner Bros. Pictures, Lego has gained success through TV, video games and online outlets with little risk to itself, he said.

In addition, Lego has also expanded by pairing with Lucasfilm on the Star Wars franchise for off-screen sales of sets of spaceships and space warriors as well as lucrative TV specials and video games. It followed up by capitalizing on other pop culture brands to develop Lego versions of characters like Harry Potter, Iron Man and Batman, among others.

The company’s move into other platforms wasn’t part of its long-term plan, however. “It was definitely more of a natural evolution,” said Jill Wilfert, vice president for licensing and entertainment at Lego.

Lego tested the waters first, taking a conservative approach to multimedia before diving in. “We really don’t want to force fit it,” Ms. Wilfert said. “So far, we’ve had good results, which is a testament to the quality of the brand.”

Still, the company has been criticized for missing some potentially lucrative opportunities, especially in video games. It partnered with developers like TT Games, a subsidiary of Warner Bros. Interactive Entertainment and Superscape for highly successful video games based on Star Wars, Batman and the Harry Potter properties, but it failed to create a digital version of its branded appeal for unfettered, creative play.

Instead, Minecraft, the Swedish video game, swooped into the space, fulfilling the desires of millions of children for online toy boxes to create anything they could imagine. So far, Minecraft has sold more than 35 million copies.

Analysts and experts still consider Lego a success on many fronts. Profit surged 35 percent to a record 5.61 billion kroner ($993 million) in 2012, thanks in part to growth in its Friends line. (The privately held company, which is based in Billund, Denmark, will report 2013 earnings on Feb. 27).

The Friends line, aimed at girls, is thematically different from other lines, with brick toys employing pink-and-purple color schemes for baking and kitchen sets, as one example. Last month, the Sociological Images blog published a letter from a 7-year-old girl who complained that there were “barely any Lego girls” and all they did was “sit at home, go to the beach and shop.”

Several toy makers and video game developers have come under fire in recent years for the paucity of toys and games that feature girl action figures or heroines who build rather than bake.

In the new movie, Lego seems to be addressing such criticism, by introducing a heroine named Wyldstyle, a free-spirited adventurer who will also be featured in several building kits.

Michael McNally, Lego’s brand relations director, called the movie a “fantastic testament to the way kids play with Lego products.”

“We know that children’s play reality involves mixing and matching characters and backdrops from our classic sets and our licensed properties,” Mr. McNally said. “In that way, they can promote any of our mini figures or mini dolls to the role of hero in their own story.”

The original mini figures, introduced in 1978, sparked an evolutionary concept for Lego toys. “That changed the product from one of construction to one of storytelling,” Mr. McGowan said.

After that, fans began creating their own stop-motion movies with Lego figures and sets, pushing the company in that direction. “If we really trace it back, the move into multimedia started before we even thought about it,” Mr. McNally said. “It started in the fan community.” The directors of “The Lego Movie” used fan movies posted online as a source of inspiration, recreating that stop-motion feel in the film.

Interest among fans exploded after Lego signed its first licensing deal in 1999 with Lucasfilm for the rights to produce Star Wars figures and sets. The new Lego kits were extremely popular, as enthusiasts began recreating and filming their favorite scenes from the Star Wars movies.

The collaboration with Lucasfilm has spawned one of Lego’s most successful toy lines, as well as three video games and several movies and specials made for TV and the Web, including “The Yoda Chronicles,” which was released last fall.

“We at Lucasfilm had an enormous respect for Lego,” Derek Stothard, Lucasfilm’s vice president for licensing, said in an email. “Lucasfilm provides them with creative guidance — everything from brand integrity to continuity within the narrative — but ultimately, we have such a strong shared understanding of what makes Lego Star Wars so popular.”

Over the years, Lego has built a strong stable of brands, including Bionicle, Ninjago, Legends of Chima and Mixels. The company admits to making missteps along the way, including giving its popular Ninjago brand too short a life cycle to make way for its successor, Legends of Chima.

“We were not thinking outside the box that we could have two at the same time,” Mr. McNally said. So Lego decided to bring Ninjago back while juggling the growth of Chima, which was introduced in 2013 with a TV series and three video games.

With the apparent success of its first feature film, Lego is considering a multimedia strategy for other properties, including a new one, Ultra Agents, later this year that will include animated content, online games and a smartphone app.

“Lego has such a halo,” said Gerrick Johnson, an analyst at BMO Capital Markets. “It has such a strong brand name that kids want to see what’s next from Lego.”

That includes Lego as an art form. Last year, the Discovery Times Square exhibited “The Art of the Brick,” a collection of works by Nathan Sawaya, a New York-based artist and founder of the Art Revolution Foundation. The hit show ran for nearly seven months and returned on Friday for a second run. Exhibitions of Mr. Sawaya’s Lego sculptures are touring the United States and Europe.

While Mr. Sawaya works with the physical bricks only, he said he appreciated the exposure generated by Lego’s move into other media. “What they are doing only expands the appeal of the brand,” he said.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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