This is a LEGO brick.
LEGOs!
Ultimate fans of LEGO.
They have the best licenses.
LEGO's, new Star Wars Starship kit.
You could step on a nail and it's less painful than stepping on a LEGO in the middle of the night.
It may not look like much, but it's the building block upon which LEGO built its $6.25 billion dollar company.
Today, LEGO's blockbuster portfolio includes collaborations with the Beatles, Star Wars and Harry Potter, a mega hit movie franchise, and
eight LEGOLand theme parks.
The Danish company's fan base has dramatically changed since they hit the market.
A toy that was once thought for little boys is seeing its largest growth coming from girls and adults.
And LEGO has a super fan community of AWOLs or adult fans of LEGO, which include members like David Hall, who's been posting LEGO
content to his YouTube channel for 12 years.
It is my job, but at the same time, it's what I'm passionate about.
It's my hobby. It's kind of my life as well.
Sales continue to climb.
Lego's revenue increased by 14 percent in 2020.
They're actually growing faster than any other toy company in the globe.
But in the early 2000s, the company made several missteps and came extremely close to declaring bankruptcy.
We'd lost our way strategically.
Here's how LEGO reclaimed its status as one of the most successful toy companies in the world.
This is suddenly obsessed.
LEGO was created in 1932 by a Danish master carpenter, Ole Kirk Kristiansen, out of necessity.
As the Great Depression decimated his carpentry work, he needed to create something that would withstand the ups and downs of a turbulent
economy. So he thought that the last thing that people would pull back on in a depression is spending on their kids.
It was a pretty good idea.
Kirk Kristiansen named the company LEGO, which is an abbreviation of two Danish words, meaning play well.
The privately held company is still owned by the Kristiansen family and is sold in over 130 countries with 650 stores worldwide.
But in the early 2000s, LEGO was facing a bleak outlook.
Its analog toys struggled against the oncoming tidal wave of digital entertainment.
Video games were becoming much more popular at the time.
You had a lot more engagement in digital media in the form of things like cable television and so forth.
There was technology that was being incorporated into toys, things like Furby.
Kids didn't seem to have the time or interest for LEGOs.
The company made a drastic shift away from manufacturing its plastic bricksand invested heavy sums in producing its own entertainment
content. The toymaker began releasing LEGO-themed video games and even started its own production company.
But the pivot did little to improve its bottom line.
In fact, it almost took the company under.
Things just only got worse, as you might imagine, after that heavy diversification.
LEGO's, heavy debt load and lackluster sales, forced its leaders to reevaluate.
The company had drifted too far away from what made its customers fall in love with LEGO.
We did a lot of really heavy duty research and what we realized is that the LEGO brick was still incredibly relevant.
Rather than digitalization being a threat to us, we realized that it could actually be an accelerant to our business.
LEGO needed to reposition its products as an extension of digital culture rather than its antithesis.
A really well crafted video game experience could actually inspire kids to build more in 3D because it's a different expression of the brand.
So LEGO put its flashy side ventures on pause to focus on what made it successful in the first place: The LEGO brick.
LEGO knew its core product had value, but it needed to find ways to attach itself to pop culture.
Enter Star Wars.
Star Wars fans may need to use the force to assemble Lego's latest release.
Ultimately, I'd say I'm a bigger LEGO fan than I am a Star Wars fan.
But they really go hand in hand, for me personally.
Star Wars was the first license that we had actually contracted with, and that really helped us understand the power
of reframing our brand to a group of people who have a particular passion around a property or an IP.
Since its debut in 1999, Star Wars themed sets are the company's most popular products in its entire catalog.
This year, LEGO Star Wars is number one across many different metrics.
It's the number one property for LEGO and I can't imagine that they could be any happier with its performance.
A big reason for the collaboration success is that Star Wars and LEGO have one big thing in common: diehard fan
bases. LEGO and Star Wars is like peanut butter and chocolate.
They just go well together.
Evan, the 15-year-old video star behind the popular YouTube channel EvanTubeHD started his channel at just six years old.
Now he has over 6.5 million subscribers.
He says the Star Wars sets are some of his favorites to build, from Baby Yoda to the $800 LEGO UCS Millennium Falcon.
If you're a fan of the franchise, you can kind of see it like get some of the details that they put into them.
These movie themes sets posed a new challenge for LEGO.
Sales were strong when a new movie hit theaters.
But waiting on a film release wasn't a sustainable business model.
The experience of that led to an interesting point around entertainment content in developing entertainment content on our own.
So LEGO tried its hand at content creation for a second time.
But instead of going all in right away, LEGO leaned on a partner with vast experience in the world of entertainment.
We actually went to the to the folks at Lucasfilm with an idea for how we might be able to create LEGO
Star Wars content, some animated content using the Star Wars characters in a LEGO world, in a LEGO universe.
And so they agreed to a pilot, it was a five minute episode that we aired on Cartoon Network.
And that was the first foray that we had into the world of entertainment content.
And it was wildly successful.
With the success of LEGO Star Wars in 2013, LEGO decided to move into creating an original line of characters and narratives.
The following year, The LEGO Movie premiered in theaters, and it's instant success was a big win for the company.
I was already a fan of LEGO before that movie, you know, came out when I was younger.
So I was really excited for that and watched it like we have the one right behind me right there.
The movie grossed $468 million worldwide, won the BAFTA for Best Animated Feature film, and was nominated for a
Golden Globe. As an adult LEGO fan watching that movie, I came away very, very happy because the filmmakers Phil Lord
and Chris Miller really catered to the adults in the background.
Since we've gotten into many of these entertainment initiatives, our business has roughly grown about six fold within, you
could say, the last 15 years.
LEGO's long-term growth no longer centered on battling for children's attention.
It had its eye on another core group of LEGO fans: grown ups and collectors.
Despite LEGO being considered a children's toy, the largest growth for the company in recent years has been with adult consumers.
And we are actually creating products that are really more specifically geared toward adult collectors.
These tend to be higher price point products, products that tap into more adult passion points.
In 2019, LEGO even acquired BrickLink, an online adult community with one point one million members where fans can buy or sell LEGO parts
or chat on the forum.
Adult fans of LEGO are behind some seriously impressive creations, and although they'll splurge on products from the creator
expert series like an Aston Martin from James Bond, or Manchester United Football Stadium or even the Taj Mahal, AFOLs get their
clout from showing off their MOCs or My Own Creations online.
David Hall started his YouTube channel when he was 11 reviewing LEGO products.
Hi.This is a review on LEGO seven, six, seven, five, or as we know it, LEGO
ATTE.
Now at 23, he has 365,000 subscribers and shows off his impressive MOCs.
Hey guys, my name is David Hall.
We're Solid Brix Studios and today I'm going to be taking a full on walk through through my LEGO Mandalor
diorama.
An average MOC my of my caliber will last about anywhere between 30 to 50 weeks,
and that can be covered over about a year or two.
And making these creations certainly isn't cheap.
I'm spending usually between anywhere between five to ten thousand dollars just on LEGO parts to build
these creations. That's excluding the actual LEGO sets that I'll put on them once I'm done.
So and you know, of course, the LEGO mini figures also cost quite a bit as well.
David estimates that he spent around $100,000 on his LEGO creations.
Yes, it's a big upfront cost to build such large creations.
But just because it's LEGO, you can take it apart and use those exact same bricks and all of the different elements to remake whatever you
want in the future. So while it might be a big investment at first, it does kind of pay off as time goes on when you want to make more things.
David earns ad revenue from his YouTube videos, has affiliate links and even sells his own merch.
He's also a recognized member of the LEGO Ambassador Network.
We actually have a whole team of people geared around interfacing with and supporting the adult community.
We have, in fact, in some cases brought some of them into the fold to help with developing products.
In fact, some of their most popular sets have come through LEGO's Ideas Communitylike the Central Perk from the TV show Friends.
LEGO understands the importance of building relationships with its online communities and relies on them for product reviews or MOC videos,
which can generate millions of views.
I have around six million subscribers on YouTube.
At the start it's probably mostly just a bunch of kids that wanted to see what the LEGO would look like before they told their parents to buy
it for them. But now, you know, we have just people just coming in, you know, LEGO collectors just to see how the sets work and stuff.
I'm not just on the sideline of the company, they actually do realize, hey, you have an impact on our product.
We should help you out in some way.
The coronavirus pandemic has forced LEGO to close factories and stores as well as its LEGOLand theme parks.
But it's still been a boom to the company's bottom line.
Are there any jigsaw puzzles left that haven't been...
Have you seen the Legos behind me?
The display grows every single week.
Parents who are looking for products that might be a little bit educational because they felt they were losing a little bit of that home
schooling. They were looking for products that would keep their kids active, things that they could do
with the family or without the family.
And LEGO really hit on all of those aspects.
And as younger generations become interested in LEGO, the company has adjusted to meet what's important for kids these days: gender
inclusivity and sustainability.
LEGO is experimenting with switching their single use plastic bags to paper, as well as making more products that appeal to young girls.
LEGO also this year, year to date through September, grew their girls business 1.6
times more than their boys business.
LEGO managed to grow analog roots in a digital world by turning back to what made it great in the first place, the simple LEGO brick.
And if it continues to listen to its diehard fan base, it will have a more diverse and inclusive community of AFOLs for generations to come.