TLG to Axe 1400 Jobs

[anothergol]

Lego should invest into adults...

...or live with the volatility of the kids market. They sell to kids, but not the same kids as last year, they grow up fast, their either move away from Lego or their attention is caught by other stuff (like, video games, internet), and it's a new batch to attract.

Lego should be happy to be this stable. Pogs are history. Fidget spinners are probably history next year. Lego will still be there.

[AFOLguy1970]

4 hours ago, anothergol said:

Lego should invest into adults...

...or live with the volatility of the kids market. They sell to kids, but not the same kids as last year, they grow up fast, their either move away from Lego or their attention is caught by other stuff (like, video games, internet), and it's a new batch to attract.

Lego should be happy to be this stable. Pogs are history. Fidget spinners are probably history next year. Lego will still be there.

Yeah, I am pretty sure Lego will be the last toy standing, and by that I mean the last tangible physical toy.  Video games and anything else in the virtual universal is a whole different animal.  Yet, I think there will still be a place for fidget spinners.  As long as there are faculty meetings, doctor appointments, and flight delays, they will be needed.  

[knotian]

They might look at VR as an adjunct to the physical toy. Just think of the fun you could have in a "VR-LDD" with an never ending supply of legal bricks and any color possible. Building 3-d Buildings, sculptures, never ending Rail Roads through gigantic mountains, Space ships going ' where no man has ever gone before'. Mind boggling. Minecraft on steroids.

[paul_delahaye]

I agree with what everyone says, however we have to remember, this is decsion they have made, is after there half year results?  This is a little bit of a brash decision, when the second half of the year is when they likely do there greatest turnover (larger sets released, christmas sales, black friday sales, etc.).  It's not like they will re-employee these people if there second half sales pull back their years target!  This is just an excuse to remove some cost from the companies bottom lie.  It's not a conincidence either that they now have a guy sraight from McKinsey running the show, this is exactly the sort of reason someone with his background comes in, to reduce the operating costs.  It's so predictable, we should have placed a bet at the bookmakers on this happening.

However, you do start to wonder how many of the 1400 employees that have been let go, were these employees in some small way partially responsible for the double digit growth Lego have experienced in the past 10 years?

As with many big companies who are going through a bad patch, these companies rarely listen to the logic of the employees on the coal face who see and experience first hand the issues which are pulling the company down, instead they wait and bring in expensive outside consultants to come in, tell them what the employees have been saying for the past 5 years, and then the new management act on the consultants ideas like they have never heard them before.  I think we have nearly all at some point in our working lives experienced this.  

[Giantorange]

On 12/8/2017 at 10:30 PM, knotian said:

They might look at VR as an adjunct to the physical toy. Just think of the fun you could have in a "VR-LDD" with an never ending supply of legal bricks and any color possible. Building 3-d Buildings, sculptures, never ending Rail Roads through gigantic mountains, Space ships going ' where no man has ever gone before'. Mind boggling. Minecraft on steroids.

Both of the LEGO MMOs in recent years have failed fairly quickly...

[knotian]

I was not aware of any MMO that was strictly building. Which one are you referring to? I was not envisioning a game but a tool.

[Giantorange]

16 hours ago, knotian said:

I was not aware of any MMO that was strictly building. Which one are you referring to? I was not envisioning a game but a tool.

Neither.  I had assumed you meant a game with building, rather than Minecraft with LEGO bricks.

 

I still can't get over how LEGO Minecraft is essentially a brick-built version of an online building environment using clone bricks to simulate LEGO building...

 

[ElectroDiva]

On 12/8/2017 at 9:10 PM, AFOLguy1970 said:

Yeah, I am pretty sure Lego will be the last toy standing, and by that I mean the last tangible physical toy.  

I doubt it.

 

As long as human beings exist in the physical realm and haven't sublimed off into a VR existence, there will be a need for tactile objects - including toys. The challenge for Lego is keeping their toys relevant to the growing expectations kids have around interactivity.

 

The mis-stepped with dimensions since that relied on regular high quality game releases to keep kids interested. Why not take a step back to the 80s/90s and introduce souped up versions of the old battery powered interactive elements like light and sound bricks (most sets can be improved with a bit of light and sound :)

 

These can then be expanded further with things like Technic, WeDo 2.0 and MindStorms.   

 

[BrickG]

A Lego MMO will never do that well. Lego building is honestly, too complex. Going into one of those Lego editors and browsing and searching through 10,000 pieces is ridiculous. The amount of depth to it is both good and bad. Right now Minecraft like simple square building things will always win on the creation side in a video game. Lego is too clunky, too bulky and too cumbersome for a video game to do THAT well on when focused on building. That's why you never see online awesome DIGITAL Lego builds being shown to the masses (outside of Lego specific places) unlike Minecraft which gets videos everywhere and to everyone.

Lego is too hardcore for a proper building experience. Little kids can't generally do it and the barrier to learn it is ridiculous.

 

Anyways, the Lego Ninjago movie's subpar earnings couldn't have helped. Heck, almost all of the movies and digital stuff (aside from The Lego Movie and possibly The Lego Batman Movie) under performed. They had LOFTY goals though and Lego has seemed to discount the very real possibility of Lego overload which will happen if they just release 1-2 movies every freakin' year. Lego has always done less good in general, to potentially DANGEROUS extents, to their non-physical toy stuff.

[Aanchir]

On 12/11/2017 at 12:48 PM, BrickG said:

Anyways, the Lego Ninjago movie's subpar earnings couldn't have helped. Heck, almost all of the movies and digital stuff (aside from The Lego Movie and possibly The Lego Batman Movie) under performed. They had LOFTY goals though and Lego has seemed to discount the very real possibility of Lego overload which will happen if they just release 1-2 movies every freakin' year. Lego has always done less good in general, to potentially DANGEROUS extents, to their non-physical toy stuff.

The LEGO Ninjago Movie didn't do great by Hollywood standards, but it WAS profitable, and furthermore, the sets seem to have been selling fairly well regardless (currently on shop.LEGO.com in the US, the Green Ninja Mech Dragon and Garma Mecha Man are on backorder). It also wouldn't have been a factor in these particular layoffs, which were announced prior to the movie's release.

LEGO has also had pretty great success with a lot of their media offerings. The LEGO Ninjago TV series was a major hit, especially during its first two seasons, and the same could be said for many of the LEGO video games like the LEGO Star Wars, LEGO Indiana Jones, and LEGO Batman titles. The first LEGO Bionicle movie, Mask of Light, was also a commercial success, and probably contributed to the Bionicle theme saving LEGO from bankruptcy in 2003 when it was first released. In terms of non screen based media, a lot of LEGO books like The LEGO Book, The LEGO Ideas Book, The LEGO Play Book, LEGO Star Wars Character Encyclopedia, LEGO Star Wars: The Visual Dictionary, LEGO Ninjago Character Encyclopedia, LEGO Harry Potter: Building the Magical World, and several of the early LEGO Ninjago graphic novels have spent weeks on the New York Times best-seller list.

Releasing 1-2 LEGO movies every year is not in the cards at this point by any means. There was one movie in 2014, and the original plan was for The LEGO Ninjago Movie to come out in 2016 — it only arrived the same year as The LEGO Batman Movie because the former got delayed a year. The next movie will be The LEGO Movie Sequel, which has been delayed to 2019 — beyond that point, only one movie (The Billion Brick Race) is known to be in development, and it still hasn't even got a tentative release date.

[ShaydDeGrai]

Setting aside the fact that TLG is a huge and long-lived toy company with a fantastic and beloved flagship product for a moment, at the end of the day they are a privately held company and have the "luxury" of being able to do what they feel is best for the company itself without fear of reprisals from angry stockholders who may value the day-to-day value of their stock certificates themselves over the long term value of the company represented by those stocks.  On the flip side, their decision making process is opaque to nearly all, and there are few external checks in place to raise red flags or challenge questionable choices.

I've known a number of people who have launched successful start-ups over the years.  Some people were just in it to cash-out with a big IPO and walk away; others really wanted to grow and nurture their companies as personal assets that they could pass on to their kids and couldn't imagine "going public", carving up ownership of the company for the sake of quick cash infusion.  Of the latter group, I recall one particularly successful founder told me his secret to running a solid business:  When times are good, remember your core business model, look for growth opportunities and don't over-extend yourself; when things are lean, remember your core business model, look for growth opportunities and don't over-extend yourself.  In other words, just because you had a good year, don't squander the money and don't over-react to bad years, plan for them; they _will_ happen.

Having watched the ups and downs of TLG over the years, I occasionally wish someone had given them similar advice.  When times are good it seems like they expand their workforce, diversify into areas outside the comfort zone of their traditional business model (sometimes with success, sometimes not), and start introducing new parts to the point where you start wondering who's counting the beans back in Billund and do they really have _that_ much cash on hand that they can spend millions in new molds every month for some specialty part that's only available in one kit, etc.?  Then, growth slows; a boom audience demographic enters its dark age; some new gizmo becomes the hot holiday gift this year; that tent-pole film with the billion dollar toy tie-in line utterly flopped at the theatre; the 99% of kids who weren't part of the focus group think the new in-house theme is lame, etc.  TLG waits too long to realize what they are spending on things that aren't generating revenue and they end up taking some corrective action that send shockwaves through the press.

I'm not in a position to know if TLG really _needed_ to axe 1400 jobs, but their track record with boom and bust cycles does make me wonder how many of those jobs were "recently" created as part of a not-well-considered growth plan.  How many of those slots could have been phased out over time via natural attrition, with any short term expenses being covered by cash on hand squirreled away during the boom years.  How do the personnel costs of 1400 low- to mid- ranking employees compare to the production costs of the dozens of new molds and over 800 part recolors introduced in 2017?  How much cash on hand does TLG really have?  Are they trying to fix a short term budget crisis, or was this new management re-baselining to move in a different strategic direction?

Now don't get me wrong, I love new parts and getting familiar parts in new colors as much as the next AFOL and not every downturn in sales is a reflection of a poor product or poor marketing of that product, but sometime it just seems like TLG doesn't know how to cope with success and it comes back to bite them when tides turn. 

[Robianco]

It's funny that somebody should mentioned Lego and 'interactivity'... Lego is in itself one of the most interactive toys I can think of. 

There was a recent programme in the UK where several children were put in a room with lots of the latest toys and the time with each toy was measured. Some very expensive toys got some initial interest but then were left and ignored... Lego was played with the third most... just behind colouring pens and paper and just ahead of the empty cardboard box that some of the toys were in. As complicated and as impressive as some large scale Lego sets can be it's still a basic brick building toy... it's almost primal in it's simplicity. For that reason it will continue to hold the interest of children... and adults alike... and I think that kind of interactivity is far more rewarding than the virtual kind.

I'm not interested in virtual building so I won't pretend to offer any kind of insight into whether I think it should be something Lego should delve into... but then again I'm pretty sure no member of this board has helped steer a company into 'the number one in it's field in the world' with a turnover of billions, so I'm not sure Lego will be scouring the thread for business strategy anytime soon.

The world is about as uncertain a place as I can ever remember currently and a toy company that we happen to like have cut 1400 jobs... after having huge growth and taking on many more than that previously... it's not the end of the world, or even the slightest sign of being the end of the company. In 5 years time when they're still the largest toy company in the world we'll wonder what all the fuss was about.