How LEGO keeps building on its success

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A couple of news stories caught my eye in my Google News 'LEGO' alerts this morning:

- The Independent has an excellent article about the current profitability of the company entitled We just click: How Lego keeps building on its success. You will be familiar with much of what is said, about how the company was losing its way in the mid-2000s and had to refocus to survive, but something that I don't think I have seen written anywhere before is that 'Adults made up nearly 5 per cent of Lego's customers last year, a number that is increasing annually' (here's a link to the easier to read print version)

- The other one that caught my eye is M**a Brands to battle with Lego in construction toy aisle with new products. It seems the Canadian copy-cat company is bringing out a range of construction sets for girls next year, with a Barbie license. Their CEO says "If we have the right content, whether they're interested in Lego or an action figure or a vehicle, we think they're going to choose M**a B***s." Yeah, right...

The last LEGO Inside Tour ended yesterday, so I have reinstated the photo of the set attendees were given, 4000012. Please, no complaints this time!

52 comments on this article

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By in United Kingdom,

I'd be interested to know which "elements" got deleted when they dropped from 15k+ down to under 7k... there's gotta be somebody who's poured over the parts lists of kits from the past 20 odd years and has a pretty good idea, I bet.

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By in United Kingdom,

^ it was mostly from colours that were dropped from their active pallet.

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By in United Kingdom,

Very interesting, thanks huw

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By in United Kingdom,

Maybe, but the pallette's actually larger now than it was a decade ago, so I'd imagine there's a myriad of one-set-shapes gone, too.

Great article, all the same.

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By in United Kingdom,

^ The company is healthy now so has an expanding parts and colour palette.

Back in the early 2000s they made loads of POOPs (Piece [that can or should be made] Out of Other Pieces) (http://isodomos.com/Reference/Lego-Acronyms.html#LetterP) for the likes of Jack Stone etc. so they were the first to go.

Generally speaking, new parts now are either those that fit well with, or fill gaps in, 'the system' or specalised parts that are essential for the model, e.g. the Gungan Sub. canopy.

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By in United Kingdom,

Nice to finally get to see something official stating the size of the AFOL market, thought it was a bit more than this to be honest.

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By in United States,

I'm curious, why did you put a bunch of asterisks over the other brand?

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By in United Kingdom,

@Targellian - there were a load of colours that were dropped from the palette as part of the rationalisation; many of them were pink/purple/violet shades that had proliferated in the late '90s & early '00s ('medium dark pink', 'sand purple', 'light salmon'). At that time there was little coordination between design teams with regards to colour use, and little over-arching governance, & the design teams were able to commission a production run in pretty much any colour that they could source granules from Bayer in. Even after the palette rationalisation it took some time for some of the colours to work through the full end-to-end production process (i.e. parts sitting in the vast storage warehouse for several years after being molded, before being used in sets). Eventually Lego had a clear-out of old elements from the warehouse, and sold it in bulk to AFOLs.

As Huw said, Lego are doing much better financially now, and hence the palette has been growing again; the palette jumped from ~51 colours in 2010 to ~57 colours in 2011, due to the new colours introduced for Friends.

This link ...
http://news.lugnet.com/lego/?n=1791
... gives some of the background, although this post was more about the changes to grey & brown that happened around the same time.

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By in Australia,

Okay, seriously, that airport set is UNBELIEVABLY COOL.

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By in United Kingdom,

^ I know! All those brick bricks!.......

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By in United Kingdom,

@Ronny, we don't use swear words on this site, and I wouldn't want my post to show up in a Google search for the brand.

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By in Ireland,

Interesting quote from the M*** B**** article:
"M*** Brands (TSX:MB) is also adding construction toys based on licences of leading video game Skylanders, online game World of Warcraft, Halo 4, Hot Wheels and an upcoming Spiderman movie."
Spiderman? M***B****? How is that going to work?

(Edited for expletives)

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By in United States,

^^Yes, you've got to keep your language clean if you're going to have children here. ;-)

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By in United Kingdom,

^^^ M***B**** have the license for construction toys based on the new spiderman film (the rights of which are managed by Sony); Lego have the license for construction toys based off spiderman in all other media (comic books, TV cartoon, etc.) (the rights of which are managed by Marvel themselves). Yes, it's a little confusing.

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By in United Kingdom,

^^ Eh? Lego had severe financial difficulties around 2003/2004. They are fine now, so no fear of them going bust anytime soon.

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By in United States,

^^For instance, LEGO couldn't make X-men, which are Fox I believe, but they could make Thor or Iron Man, because those are Marvel Studios.

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By in Canada,

"If we have the right content, whether they're interested in LEGO or an action figure or a vehicle, we think they're going to choose M**a B***s."

Wrong! For me, it's LEGO or nothing.

I thought the AFOL market was much bigger than 5%.

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By in Denmark,

The LEGO licences are through Marvel and DC comic book companies (or Disney & Warner Bros if you prefer) so LEGO can make any and all of their super-heroes - including the X-Men.

A few years ago the best guess on AFOLs was 3 to5% now LEGO are fairly sure it's 5% but as turn over has tripled this means the number of AFOLs has at least tripled in the same time.

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By in United States,

^^I was just about to post the same quote. I had to check to see if that article was written on April 1st, because that comment was truly that absurd.

It should read more like this, "Even if we think we have the right content, chances are, we are putting out a product that is one step behind LEGO's offerings and of a much inferior quality. We hope that just enough people are duped into buying our product so that we can keep producing knock-offs..."

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By in United States,

LONG LIVE LEGO!

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By in United Kingdom,

^^ I think I've heard it said that nobody buys M*** B**** for themselves, it's only bought for others, who on receiving it, wish they'd been given LEGO instead...

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By in Australia,

The MB alternate brand (it's very Harry Potter, isn't it? "The Block That Must Not Be Named") occasionally does different licensed characters than Lego, that's the only reason I go to them. I think they had the TMNT a few years ago, and they do Power Rangers as well (not very well, it should be said. The quality of the pieces is not great, but I buy so as to add the figures to my Lego city, and for display purposes, they're not too bad).

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By in United Kingdom,

Well, if you want one of the Tour sets, signed, you can always enter this coming Monday's ReBrick competition...

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By in United States,

I'd take it as a good sign that Friends are selling well if M***B**** is copying them. At the Lego store the other day, it seemed like EVERYONE was buying Friends.

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By in Germany,

It's curious to see that M*** B***** has all the potentially profitable licences (Hot Wheels, Barbie, WoW, Halo), but still fail to be appealing to kids and adults... :P
@Huw: That applies to me. :P

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By in United States,

@Alemas - Quality goes a long way. I had some generic Legos mixed in with my collection when I was a kid, and I HATED them. They didn't have good clutch, the color was off, and to this day I won't buy anything but Lego. The themes they have are irrelevant to me (and I'm guessing a lot of Lego enthusiasts, kids and adults). Plus...Hot Wheels...Barbie...? I wouldn't consider those to be great licenses. You have a toy, based off another toy. Lego tends to think bigger and broader in their licensing.

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By in United States,

LEGO = Quality

You can't even compare others

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By in United States,

I generally agree with the MB dislike. But as a avid Halo fan I couldn't resist getting a couple of MB. One thing I noticed is that the MB color palette is MUCH darker then Lego. Also I think they've improved their brick in the past years, because I remember when I was little I got a MB jet, and was actually crying through the process because of how hard it was. Now however (Though not close to Lego's standards) it is easier to build their sets. Also the figures I got were pretty cool. But IMO that was only because they were based on Halo, which is the only reason I got them. Which I think brings up a point: MB has to have incredibly popular IP's in order to just compete with Lego. I don't think they even have a non-licensed theme!
EDIT: About their remark on 'They're going to pick us', the sad truth is they actually might. Why? Because they've got Barbie on their boxes.

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By in United States,

Even though adults are only 5% of LEGO's consumer base, I'd be interested to learn what percent of LEGO's profits we create.

What bothers me about the MB article is that it sounds like MB is saying "we're going to do everything we can to hurt LEGO as a company and steal their customers." Does that seem low to anyone? Yes, LEGO has its own goals such as continuing to grow and remain the construction giant, but they're not verbally attacking other brands like this.

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By in United States,

@Huw
"I think I've heard it said that nobody buys M*** B**** for themselves, it's only bought for others, who on receiving it, wish they'd been given LEGO instead..."

urgh, yes, I've had this happen to me several times. It's very annoying. >_>

But yeah, everything in that MB versus Lego article just was bogus. Bogus! I agree with what mysteriouspi said above me, about them practically saying that they just want to hurt Lego as much as possible.

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By in Canada,

On behalf of my fellow Canadians, I sincerely, SINCERELY apologize for M**a B***s and all that they stand for.

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By in Denmark,

People, people, it's a little immature. Can we stop the starring out of M*** B*****/ M***B**** name? Mentioning the name does not mean we like them. We are fans of Lego's products, not cheerleaders for TLG. I believe TLG needs competition to stay sharp and focussed. And the afforementioned M-company is a quality concern compared to the likes of Be*stL*ck and C*bi.

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By in United States,

richselby: I was going to say something along the lines of them not wanting google coming here, but... LOL way to go mods/admins :D

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By in United Kingdom,

A great article, a very facinating read. It such great news that AFOLs and TFOLs are now getting more media attention. We have gone from people thinking were 30 somethings sitting in a dark garage making multi coloured abomantions to realy talented people making masterpieces. Its sad though that there are people who still mock and tease us, my friend had his arm broken after he told his so called "friends" that he was a FOL.

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By in United States,

^Doc,

1. Yes, so true! Really, when people make fun of others for liking LEGOs, it just goes to show how immature they are. (Usually)
2. WHAT? That's sad...

On the article: There's so much good in it... Beckham is an AFOL? Legit!

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By in United States,

@LEGOlas1

LEGO does have the license to make X-Men legos as long as they're based off the comics, just as bluemoose said. Hence, the reason why they were able to make Wolverine's Chopper Showdown, which was indeed an X-Men set.

As for this article, I personally think that LEGO has no competition. Sure, M*** B***** has the Barbie and Halo licenses but the studs on their blocks do not stick together. I was building a Halo set with my nephew and noticed this problem. And it wasn't with just that one set. He has several of the Halo sets and none of the studs stick together. So, I'll remain a LEGO purist because I know that I'm getting the bank for my buck. I am receiving the best of the best. Thank you LEGO.

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By in Germany,

@Ypres: They were at their highest in March 2006, then collapsed in November 2007. Why was that?

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By in Canada,

@Alemas - My best guess would be the drop in market value coinciding with the United States entering its recession during the end months of 2007. From then on, M***'s stocks pretty much flat lined (died).

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By in United Kingdom,

I dont buy MB or any other brick based construction toy other than LEGO. However I would guess getting the barbie license means they make try to make a similar 'friends' range. Perhaps these children will want some of these sets just because they have barbie logo on the box. I wonder which would appeal to a child more. I don't have children so cannot say.

Anyway, I welcome more competition to TLG, I would of never said that a little while ago but with other brands coming onto the market it should keep Lego on their toes. They know their reputation is excellent and competition is weak at present. They can afford to charge more as they know its a 'quality' product but as other brands try to catch up Lego's market share will eventually slip. By how much, we will see!

Also one final thought, what if some of these other brands were to try and appeal to the AFOL market. For me I love modular buildings. If someone else came up with a great model but cheaper and similar quality who knows maybe I might think again!

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By in United States,

@thor_odinson: I was referring to the movies.

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By in Denmark,

Maybe 5% are purchased by AFOLs - but I guess atleast 75% are purchased by adults! :-) :-) :-)

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By in United States,

@Huw, LOL. Good reply!

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By in Germany,

@Ypres: In fact, in times of recession, LEGO do particularly well... Which is odd, as they are pricey. :P

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By in United States,

@Alemas Let's not forget Oil too in the equation. Oil was $147 in mid-2008, then fell to $35 late that year. It was $109 this year, but it's about $85 now. And Legos are made out of oil. (Figures for WTI, add $16 for Brent on the last 2 numbers)

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By in Canada,

@Alemas remember Lego isn't a publicly traded company, it's privately held. So when the stock market takes a huge hit, Lego doesn't get a lot of damage because it's not selling shares of its company. When nobody is buying stocks (ex TSX:MB) then the prices will drop like a rock... as we've seen in the finance link I provided.

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By in Denmark,

The reason for the low stock value of MB was they purchased several smaller toy companies to grow, one of these was Rose Arts. Unfortunately within a few weeks of the purchase one of their products - featuring small magnets - was sued because of two deaths and several serious medical issues with kids eating the magnets. These massive lawsuits made lots of investors panic, and though the low value made them ripe for takeover no one would consider it. LEGO apparently thought about it, but does not believe in buying a company to shut it down.

The magnet problem led to new toy safety rules and the redesign of LEGO's own magnetic train coupling so it's impossible to swallow.

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By in United States,

@Huw

You say "The last LEGO Inside Tour ended yesterday". Do you mean the last inside tour ever or for this year?

Thanks

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By in United Kingdom,

^ For this year.

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By in United Kingdom,

Interesting read, the degree of tolerance in Lego bricks is amazing!

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By in United States,

@Ypres: hahaha! I feel as though LEGO would take the primary reciprocal of those stats too ;)

@Huw: Definitely! I'm sure we'll pay at least three times the current LEGO prices (albeit, in less quantities) before a single M*** B*** will be purchased!

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