How Lego Is Building a Non-brick Empire

legos

 

Lego, the 84-year-old Danish toymaker best known for its interlocking bricks that let kids and adults build their own creations, is now making is strongest move in years to secure a place in the world of online video gaming. It plans to launch Lego Worlds, a new video game, on February 21, 2017. (The game has been in beta since June 2015.)

For a toy company trying to grow its non-brick business, Lego Worlds is one among several forays that include theme parks, movies, indoor playgrounds and experiments with digital technology. Lego would benefit from its outsourced development model for Lego Worlds, and its other ventures in driving sales of its toys, but its movies would prove most lucrative, predicted Wharton practice professor of operations and information management David Robertson, who is co-author of Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry

Learning from past missteps where it took the entire financial risk, Lego this time has outsourced the development for Lego Worlds, while retaining creative control and a share of profits. It has also designed it for single players, avoiding some of the perils associated with online multiplayer games. Its development partner for Lego Worlds is London-based TT Games Publishing, whose cofounder and managing director Tom Stone is a former Lego designer. Warner Bros. bought TT Games in 2007 in order to gain a share in the video gaming industry.

Lego Worlds is the latest among other diversifications in recent years such as the Lego Movie series including Star Wars and Batman franchises, TV shows, theme parks and other merchandise. Those represent a bounce-back from tough days Lego saw in 2003-2004, when it almost went bankrupt under the weight of wrong calls, especially a move to run Lego theme parks.

Stories Power the Bricks

“Lego realized that if all it offered were the bricks, then anybody could make those bricks. The patents had expired in the 1980s,” Robertson said. “It was really [about] the stories that animated those bricks. If you could tell the story and get kids involved with the story, then you make the bricks irresistible.” Robertson analyzed Lego’s business strategy on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

With Lego Worlds, the $5.4 billion Lego Group is converting a potential threat from online games into a business opportunity. It is taking its bricks and the stories that power them to the internet to grow its business, Robertson noted.

http://knowledge.wharton.upenn.edu/article/how-lego-is-building-a-non-brick-empire/

 

 

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