- [Narrator] This is what Lego products looked like
in the 1980s.
♪ Lego maniac ♪
And this is a Lego product now
♪ Everything is awesome ♪
That's because the company has become more than just blocks.
- They have video games, movies, theme parks,
all these activities which ultimately reinforce the core,
which is the sale of Lego sets.
- [Narrator] All that content helped it become
the world's largest toy maker,
raking in billions of dollars every year.
Here's how the company uses licensing deals in media
to expand its customer base and build its content empire.
This is the Economics of Lego.
- Lego is 90 years old.
It was founded in Denmark in 1932
and initially it was a company that made wooden toys,
but then in the 1950s, it launched its trademark product,
the one we all know now, the plastic Lego brick.
- [Narrator] Since then, Lego has be out Hasbro and Mattel
to become the biggest toy brand worldwide.
In the first six months of 2022,
the company's revenue hit 27 billion Danish Kroner,
or about $3.47 billion, up 17% from 2021.
And it's anticipating growing demand,
so much so that the company's building two new factories
in the US and Vietnam.
Lego has made the bricks the building blocks
of its business.
- Lego is still essentially a toy company.
What they always say
is their core is still to make the plastic bricks for kids,
but, of course, they do now do a lot more than that.
- [Narrator] Some of Lego's first moves into content
started in the 1990s.
- [Lego Character] The island is right behind us!
- [Narrator] When the company's sales slumped.
It was trying everything,
from new toys to electronics to theme parks.
- [Announcer] Can you find the power?
Bionicle!
- Bionicles came along in the early 2000s,
and that was a time
when the Lego brand was actually in danger
of becoming a little bit stale.
- [Narrator] The Bionicle franchise
featured buildable action figures
and multi-platform storytelling.
- [Announcer] Agile, determined, unstoppable.
- [Narrator] The franchise built a content universe
through comics, books, movies, and video games.
The bet proved successful.
In 2003, when the toy maker saw 26% loss in net sales,
Bionicle was its best selling line.
- And it really revitalized the brand
and showed them a way that they could engage audiences
with different types of content,
with cartoons, movies, comics.
- [Narrator] And it wasn't just original stories.
Lego released its first sets based off of license material
in 1999, "Star Wars".
In 2005, it brought that into content
with a five minute short called "Revenge of the Brick"
that aired on Cartoon Network.
- It was a twist, of course, on the "Revenge of the Sith",
which was the "Star Wars" movie, which came out at the time.
That really paved the way for the content partnerships
which we've seen in subsequent years.
- [Narrator] That Lego twist has since been put to use
on all sorts of franchises,
like "Batman", "Marvel", and "Jurassic World".
- Really, we are now used to seeing
not just the basic Lego kits,
but Lego "Star Wars" kits and so on.
That's really an integral part of what Lego does now.
So, really, the content has changed Lego's identity.
We think of it as part of these popular franchises
which we all know, like "Marvel".
- [Narrator] And licensed material was on full display
on the company's smash hit, 2014's "The Lego Movie",
which grossed over $450 million worldwide.
It held the top spot in the US box office
for three weeks after its release.
- [Vitruvius] Superman, Wonder Woman, the Mermaid,
Michelangelo, and the 2002 NBA All Stars.
- The goal of "The Lego Movie" was to market Lego
to a wider audience.
I think it was a lot more successful than anyone imagined.
It was a very successful movie in its own right,
a big hit at the box office.
That laid the template for a lot of the content creation
that Lego has done since then.
- [Narrator] Lego and Warner Brothers released
three more feature films, the latest in 2019.
None earned as much as the first.
- Of course, there is a risk of oversaturation.
Lego doesn't want to do too much,
but I think they're still very much
at the stage of growing in a lot of markets.
- [Narrator] Content has helped the toy maker
break into new places like China,
where Lego is growing its presence.
Of the 66 new stores it opened in the first half of 2022,
46 of those were in China.
Almost 42% of the company's 833 locations are there.
Movies and games assist in raising awareness of the brand.
- The main challenge Lego has faced
in new markets like China
is that the grownups, the parents,
just don't really know about Lego.
They don't have Lego in their own backgrounds
like a lot of grownups in the US and Europe do.
- [Narrator] And using licensed material in that content
also helps reach more audiences.
- Being part of these popular franchises,
like "The Avengers", for example,
is a great way for Lego to reach out
to all kinds of different generations,
people across the world,
people who don't necessarily even know Lego.
- [Narrator] Content is also a way
for it to appeal to its adult fans,
as the brand has been trying to do in recent years.
- [Announcer] Find your Flow.
Build with Lego Bricks.
- [Narrator] Reality TV show "Lego Masters", for example,
features adults building extreme creations
out of the titular plastic bricks.
- The original Lego fans took to Lego as kids
and they're now grown up
and a lot of those people are still very keen on Lego
and I think Lego very smartly realized
that a lot of those people would be willing to buy kits
that are are pretty complex, pretty expensive,
and are designed specifically for grownups.
- [Narrator] The company has its eye set
beyond just the two-dimensional screen.
Last April, Lego and Epic Games announced a partnership
to build a digital experience in the Metaverse.
- All of this content,
certainly in the company's current thinking,
the movies, the games,
that all is there to support the core product,
which is the same as it has been for decades,
the plastic brick.
(playful music)