Lego Rebuilds From Bankruptcy to Bankable

Lego has ‘built’ an empire from its humble beginnings in the Danish countryside, now to its Hollywood ‘block’ buster film release. All puns aside, Lego is now offically the world’s most profitable toy company after breaking away from its original business model while on the brink of bankruptcy in the early 2000s.

With the huge success from its 2014 self titled film grossing an estimated $400 million at the box office, it is easy to forget that just ten years ago the Lego group almost filed for bankruptcy, loosing a reported half a million Euros a day in 2003. It was the Lego groups’ ability to think outside the box, so to speak, that enabled the company to form partnerships and outsource products such as their video game network, earning them much needed dollars from sales and royalties.

Last year Lego overtook their blond-haired, pink-loving rivals at Mattel to become the most profitable toy company in the world. Lego recorded an 11% jump in profits in 2012, which earned the company a cool 25.38 billion kroner (AUD5.4 Billion for all those non Scandinavians.)

President of the Canberra Lego User Group (CLUG) and master builder Neil Swan accredits Lego’s revival to the company’s partnership with other already successful toy and film franchises.

“Lego was about to go broke in the late 90s early 2000s. They were so close to bankruptcy, but they actually tied up with George Lucas and did the Star Wars theme and the Indiana Jones movie theme [Lego sets] and that’s credited with actually saving the company,” Mr Swan said.

However, Lego’s successful movie-themed union was not the company’s first attempt at laying stronger foundations,

“They have tried a couple of times to enter the virtual world. They tried a multimedia type game online, which lasted 12 months and failed on them,” Mr Swan said.

“But with the movie tie-ins and the video games in particular, that’s been highly successful for them because they can actually outsource it to someone else. Let them do the build and take the risk so to speak and just use the Lego brand as their catch.”

The movie-themed Lego sets not only brought in large revenue for the company but it also brought in revenue for toy stores worldwide, with The Lego Movie sets being no exception. Manger of Little Sprout toyshop and Lego fanatic Lisa Boniface said that Lego and specifically the movie themed sets make up a huge part of their market and sales.

“When a movie comes out, four weeks before the movie the Lego is released – it’s always a four week period before hand,” Ms Boniface said. “So we see Lego sales increase four weeks before hand, and then when the movie comes out it increases even more.”

“We have had the mini-figures out since January for The Lego Movie and they have sold really really well, in fact we have actually sold out of them.”

In the last few years Lego has turned to its online community to help design and create new sets.

“Due to their online website, fans can put up their builds and if they get 10,000 votes Lego will actually look at their design and produce that model as a set,” Mr Swan said.

Local Canberran and vice-president of CLUG Dave Boddy experienced first hand the power of the online Lego community, with his stop motion animation ‘Bovonic Tonic’ being a finalist in the Lego Movies ReBrick competition which awarded him with his build featuring in the final scenes of this years The Lego Movie. The competition run by Lego and Warner Brothers relied on fans to vote for the favorite Lego videos with the top ten being given the chance to feature in the film. (It is safe to say Monster Cow is now one of Canberra’s newest celebrities.)

Despite the changes to company over the past 70 years, one of the most important things has managed to stay the same, that being the colourful pieces of plastic itself. Whether you are a free builder or instructions builder, Lego has continued to be the foundation for imagination and the basis for expression for children and adults worldwide.

“Lego has a build-ability about it that is unique. Because you can take them from a set and turn it into anything you can imagine and I think that’s the attraction for a lot of people. You don’t just have to follow the instructions,” Mr Swan said.

Text and Images by Alkira Reinfrank