For how long will the LEGO company exist?

[koalayummies]

43 minutes ago, Mylenium said:

Not really a good comparison, when you think of how e.g. Nokia, Nortel and others went down the drain. :D That's ultimately the point:

Those are terrible comparisons but if you're going to flat out ignore what was said while bringing up examples that are explicitly excluded from the post because they're not relevant to the discussion you're quoting then it's not a discussion. (this type of corporate behavior was directly addressed in my post. And again.).

48 minutes ago, Mylenium said:

One also shouldn't put too much stock in hollow phrases like "privately held". (snip) On a bad day, it could merely take a Thanos' snap or another failed LEGO Movie to make it all go to dust or start an inescapable downward spiral...

Mylenium

Lego doesn't have to worry about bad movies, the studios do. The Ninjago movie (lowest rated for purpose of discussion as you're not clear on which Lego movie you think failed and financially none of them are complete failures) was not favorably reviewed and that's on Warner Brothers (and yet the film still made almost twice its budget in box office), the Ninjago sets that Lego produces however are some of the most raved about ever.

[MAB]

I think LEGO is still on a bit of a high compared to ten years ago. This is mainly due to TLM1 but the peak of the hype has been dying down. 18 months ago they showed they were willing to be very cut-throat in the way they run the business, shedding almost 10% of staff - many of which were relatively new at the time, having been employed on the forecast growth that was based on the success of TLM1.  Then that growth was found not to be sustainable.

It will be interesting to see what effect all the cheap fake minifigures have on LEGO's bottom line over the next five years, as more and more people realise they can get them without buying sets for low prices.

[Mylenium]

12 minutes ago, koalayummies said:

Those are terrible comparisons but if you're going to flat out ignore what was said while bringing up examples that are explicitly excluded from the post because they're not relevant to the discussion you're quoting then it's not a discussion. (this type of corporate behavior was directly addressed in my post. And again.).

I think you're trying to see to much difference where there is none or very little at best. Again: LEGO can't escape the overall mechanics of markets. Companies break down for the weirdest reasons and fraudulent behavior by the people running a corporation is only one of many possible causes. A toy manufacturing/ retail company is in the end not much different from a bank, an insurance, a car manufacturer, a health service conglomerate or whatever special you are trying to see here. At a specific size the inherent and intrinsic requirements are pretty much the same on many levels in terms of overall corporate structures, process organisation and what have you. I honestly can't see how LEGO should be that much different here.

Mylenium

21 minutes ago, koalayummies said:

(and yet the film still made almost twice its budget in box office)

And that's good because...? Accepted "Hollywood economics" states that a film needs to make at least 2.5 times its budget to account for marketing and extra cost, so by that standard your example was barely even profitable. And if you apply that same measure to the current TLM2, it doesn't even work out at all because it made even less (so far). Most people in the film industry would likely call it a B.O. bomb. Sure, it's unlikely that a failed movie will drag LEGO down completely, but the repercussions are there, nonetheless, if only indirectly. It's really as trivial as how many tie-in sets LEGO actually sold vs. how many they could have possibly sold. Ninjago being in itself robust and enjoying good sales sure has helped, but I still think there could have been that much more. Same for TLM2... Well, whatever, we can dance around this all day. In the end it's all open to interpretation, so I'll stop here...

Mylenium

[Vindicare]

On 2/24/2019 at 4:36 PM, koalayummies said:

A lot of the OP's threads are just thinly veiled criticisms of TLG operations (themes they should discontinue, non kid-friendly sets, licensed vs original themes) appearing as a means to find faults where there aren't any or garner agreement on perceived faults so this thread speculating on a hypothetical total demise comes across as a continuation of that trend. All that despite TLG still being the worlds largest toy company by revenue. TLG is clearly doing a lot of things right.

The threads definitely seem more like personal gripes than actual criticism. They do make for good & interesting discussions, from all sides. 

12 hours ago, Mylenium said:

Not really a good comparison, when you think of how e.g. Nokia, Nortel and others went down the drain. :D That's ultimately the point: Even a multi-billion behemoth can implode on itself within only a few years. You can even just look at what happened to Mattel - they were once king of the hill and then nobody bought Barbies anymore. Or look at Hasbro and their perpetual struggles to even turn a profit despite having a ton of products.

Reading this thread I of course went to thinking of Mattel -Barbie & Hot Wheels- and how LEGO now sits shoulder to shoulder with them in brand recognition. Then I see you say that about Barbie, so I looked it up. Last  year they saw a 12% jump in sales in the second quarter, it being their third straight gain. The figure came from a Bloomberg article from last July. I didn’t look at the state of Barbie prior to, but it’s selling now. 

[Mylenium]

2 hours ago, Vindicare said:

but it’s selling now. 

Yes, it is, but only after some fundamental changes in Mattel's strategy. They even thought of culling the Barbie line entirely two years ago because nobody seemed to want it anymore...

Mylenium

[LEGO Historian]

One thing that should be noted is that 87 years after the 1932 founding... LEGO is owned by only 4 people.

Ole Kirk Christiansen had 4 sons... but due to a disagreement in 1960 not to re-establish the wooden toy line after a fire destroyed the wooden  toy factory, 3 of the 4 sons sold out to the 4th... Godtfred Kirk Christiansen.

Godtfred had 3 kids.  Gunhild, Kjeld and Hanne...  but Hanne died in a tragic 1969 car accident, and Gunhild sold her interest to her brother Kjeld for $1 billion around 2007... while the company was recovering from economic problems earlier in the decade.

So now instead of having a 3rd or 4th generation of keeping over 20 family members from not wanting to quarrel or sell-out... we have only Kjeld and his 3 adult children... Sofie, Thomas and Agnete who own 100% of the company.... thus making the privately held company more cohesive... and likely debt free.

No quarrelsome shareholders to deal with.... 

[Lego David]

Ok, people can criticize what I am about to say, but I have the right of saying my opinion right?

I just went a few days ago at my local LEGO Store and asked a employee how well has Overwatch sold so far. And he said it's sold poorly until that moment. I don't know how well it sells in other parts of the world, but it had definitely sold bad in my country so far. If LEGO keeps making all those licenses that don't really sell very well, this will eventually lead to trouble. Prince of Persia was a disaster. Angry Birds was a disaster. And I don't think Overwatch will do very well either. LEGO has to pay to get those licenses, and if they pay for them and they don't sell, they loose money. Also, that two Powerpuff Girls sets sold even worse than Overwatch. I don't know how the situation is going in other places, but it's definitely going this way in my region. And the BrickHeadz... Gosh, they made like 40 of them last year, and they didn't sell either.

So, if they continue their current stage with tons of useless licenses that nobody buys and they need to pay to have them, I give them 5 years from now until they will be in financial trouble... in the best case. You can criticize me, but this is the truth, unfortunately.

Edited February 26, 2019 by Lego David

[MAB]

3 hours ago, LEGO Historian said:

One thing that should be noted is that 87 years after the 1932 founding... LEGO is owned by only 4 people.

Ole Kirk Christiansen had 4 sons... but due to a disagreement in 1960 not to re-establish the wooden toy line after a fire destroyed the wooden  toy factory, 3 of the 4 sons sold out to the 4th... Godtfred Kirk Christiansen.

Godtfred had 3 kids.  Gunhild, Kjeld and Hanne...  but Hanne died in a tragic 1969 car accident, and Gunhild sold her interest to her brother Kjeld for $1 billion around 2007... while the company was recovering from economic problems earlier in the decade.

So now instead of having a 3rd or 4th generation of keeping over 20 family members from not wanting to quarrel or sell-out... we have only Kjeld and his 3 adult children... Sofie, Thomas and Agnete who own 100% of the company.... thus making the privately held company more cohesive... and likely debt free.

No quarrelsome shareholders to deal with.... 

Yes, it will be interesting to see what it is like in two more generations.

2 hours ago, Lego David said:

So, if they continue their current stage with tons of useless licenses that nobody buys and they need to pay to have them, I give them 5 years from now until they will be in financial trouble... in the best case. You can criticize me, but this is the truth, unfortunately.

 

This isn't the truth. The sets from "useless licenses" are bought.

I doubt they will be in financial trouble in five years. And if they are, it won't be due to licenses, but by taking on too many staff. That is where the real costs are. That is the mistake they made after The Lego Movie. Expecting the growth they experienced on release of the movie to continue.

[Lego David]

57 minutes ago, MAB said:

3 hours ago, Lego David said:

 

This isn't the truth. The sets from "useless licenses" are bought

They may be, not enough to make profit from it. Why do you think this licenses are so short lived with only one wave? Because they didn't sell well. At least this was the case with Prince of Persia, the Lone Ranger, and Angry Birds.

[JJ Tong (zfogshooterz)]

2 minutes ago, Lego David said:

They may be, not enough to make profit from it. Why do you think this licenses are so short lived with only one wave? Because they didn't sell well. At least this was the case with Prince of Persia, the Lone Ranger, and Angry Birds.

I don't see how for these (three) themes could be made for more than one wave. I have not seen The Angry Bird Movie but I've seen the other two films and those single waves has covered the parts that was needed to be covered.

Edited February 26, 2019 by JJ Tong (zfogshooterz)

[Mylenium]

1 hour ago, MAB said:

This isn't the truth. The sets from "useless licenses" are bought.

Yes/ No/ Perhaps/ Maybe. Point in case: It varies hugely across regional markets and for at least some themes I'm 100% with the OP when it comes to my own experiences as a customer here in Germany. I've said in many threads already that e.g. Super Heroes sets sell like crap around these parts and sometimes I also feel like the only person buying some Friends sets. I would even concur with the observations on the Overwatch sets - they appear to be glued to store shelves. the rest is neitehr here nor there, as they say. Of course on balnce it will always even out one way or the otehr and LEGO will make its cut. Regardless, the question lingers if LEGO couldn't do some things better and are missing out on opportunities while throwing money out of the window elsewhere...

Mylenium

[Lyichir]

56 minutes ago, Lego David said:

They may be, not enough to make profit from it. Why do you think this licenses are so short lived with only one wave? Because they didn't sell well. At least this was the case with Prince of Persia, the Lone Ranger, and Angry Birds.

 

Just now, Mylenium said:

Yes/ No/ Perhaps/ Maybe. Point in case: It varies hugely across regional markets and for at least some themes I'm 100% with the OP when it comes to my own experiences as a customer here in Germany. I've said in many threads already that e.g. Super Heroes sets sell like crap around these parts and sometimes I also feel like the only person buying some Friends sets. I would even concur with the observations on the Overwatch sets - they appear to be glued to store shelves. the rest is neitehr here nor there, as they say. Of course on balnce it will always even out one way or the otehr and LEGO will make its cut. Regardless, the question lingers if LEGO couldn't do some things better and are missing out on opportunities while throwing money out of the window elsewhere...

Mylenium

Not all licensed themes are equally successful, it's true. At the same time, it's possible to be TOO risk-averse—waiting on proven success from a new-ish property allows more time for competitors to swoop in and make an offer, making it that much easier for Lego to miss out on what could be the next big thing. Lego Minecraft is just one example—if it hadn't been for the then new Ideas program, Lego might have missed out on a hugely popular license due to their generally conservative approach toward video game licenses at the time not recognizing the potential for a multi-year success.

Prince of Persia, the Lone Ranger, and Angry Birds probably looked like smart investments during the development stage. The first two were major Disney movies based on legacy properties with significant acting and directing talent attached to them. The latter had been a hugely popular mobile game phenomenon that the movie presumably could have reinvigorated. But more to the point, pointing to those as examples of bad decision making by Lego ignores the fact that Lego could not have known how they would sell at the time, but once they did have sales results that failed to meet expectations, they didn't hesitate to make the appropriate decision to terminate the themes. This is a factor that critics of the supposed preponderance of licensed themes often don't take into account—licensed themes tend not to be kept around for longer than necessary, and apart from major successful and ongoing franchises like Star Wars and Super Heroes, actually tend to be some of Lego's shorter lived themes, riding the hype wave of a major movie release before being dropped unceremoniously when that hype subsides to make room for new themes.

[Mylenium]

27 minutes ago, Lyichir said:

the fact that Lego could not have known how they would sell at the time

In the given cases the writing was on the wall long before those movies hit theaters. Around that time I was still writing movie reviews for a long dead local info web site and any critic I met during those early morning press screening could have told you they would be total duds. ;-) Of course none of us know what transpired behind the scenes, so LEGO could have been bound contractually, swallow the bitter pill and just cut their losses. I agree, though, that it's not always predictable and inaction can be just as bad as being to eager to cash in. It just seems LEGO aren't particularly smart about their choices or at least not particularly lucky.

Mylenium

[MAB]

Indeed, often there is no reason to keep a license going outside of the cinematic release through to maybe when the DVD is released.  Why have multiple waves of Prince of Persia sets when the lifetime of the movie is typically six months or so. This is not just LEGO - most merchandising for movies doesn't stick around that long once the movie has finished at the cinema.

Also, although these appear to be individual licenses, it may well be that LEGO has an agreement with a company to cross-promote a series of their movies via sets. Just like LEGO often insists stores takes a whole range of their sets, I imagine similar agreements between the companies: that they either partner for a number of movies, or none. Negotiation for one movie is likely to be similar to the amount of negotiation for say three over a year or two. It is not surprising that the same company/ies seem to be partnering with LEGO all the time. For LEGO to say to Warner, for example, that they think their next movie will be a flop and they won't make sets for it is unlikely. It would damage their relationship with them.  Of course, if the movies are flops after flops and sets don't sell well, then the relationship may well be terminated. Although concerning Lone Ranger, the sets sold OK on release in the UK and very well at 30% off - the train and stagecoach in particular are brilliant sets, and the buildings good for parts packs or Western style builds. Even at 30% off, LEGO are going to be making enough money off them to continue doing similar sets.

Then there is regionality. I doubt LEGO care at all how well sets sell in Romania. They care about sales in the US and other major markets. Sets may appear to stagnate in some countries, yet they are probably still profit making. They have no extra design costs for selling a Super Heroes set in, say, Germany since they are going to pay those design costs to have the set available for the US. Having those sets available also keeps fans of those franchises interested in LEGO in general. If they decided to stop sending SH sets to Germany as they sell better elsewhere, overall the market share of LEGO will go down in Germany as they lose those fans to another company producing SH merchandise.

[Lyichir]

9 minutes ago, Mylenium said:

In the given cases the writing was on the wall long before those movies hit theaters. Around that time I was still writing movie reviews for a long dead local info web site and any critic I met during those early morning press screening could have told you they would be total duds. ;-) Of course none of us know what transpired behind the scenes, so LEGO could have been bound contractually, swallow the bitter pill and just cut their losses. I agree, though, that it's not always predictable and inaction can be just as bad as being to eager to cash in. It just seems LEGO aren't particularly smart about their choices or at least not particularly lucky.

Mylenium

By early press screenings, sure, the writing might have been on the wall. The decision to license and create a theme based on a movie takes place much earlier than that, often even in the concept stages. By the time the movie is even finished production, the sets themselves are likely to be in production as well if not already packaged and shipped. And at that point it's a sunk cost—Lego has nothing to gain by cancelling a theme that for all intents and purposes has already been paid for.

I also think "not particularly smart" undersells the choices that do pay off. Lego Star Wars, their very first license, continues to pay dividends to this day. Locking in both the DC and Marvel Super Heroes licenses in one fell swoop was a masterstroke that put two of the biggest cross-media franchises of the modern era under Lego's umbrella. Thanks to Ideas, Lego got in on Minecraft before the Microsoft buyout elevated its cross-platform appeal to new heights. Even Harry Potter continues to defy my expectations for success, experiencing a resurgence long after I would have expected the passion for the books and movies to die down. In general, the poor sellers are in and out before they can have too significant an impact on Lego's bottom line, while the hits, when they happen, can experience the kind of year-on-year success that most themes (licensed or unlicensed) can only hope to achieve.

Edited February 26, 2019 by Lyichir

[Lego David]

49 minutes ago, Lyichir said:

 

Not all licensed themes are equally successful, it's true. At the same time, it's possible to be TOO risk-averse—waiting on proven success from a new-ish property allows more time for competitors to swoop in and make an offer, making it that much easier for Lego to miss out on what could be the next big thing. Lego Minecraft is just one example—if it hadn't been for the then new Ideas program, Lego might have missed out on a hugely popular license due to their generally conservative approach toward video game licenses at the time not recognizing the potential for a multi-year success.

Prince of Persia, the Lone Ranger, and Angry Birds probably looked like smart investments during the development stage. The first two were major Disney movies based on legacy properties with significant acting and directing talent attached to them. The latter had been a hugely popular mobile game phenomenon that the movie presumably could have reinvigorated. But more to the point, pointing to those as examples of bad decision making by Lego ignores the fact that Lego could not have known how they would sell at the time, but once they did have sales results that failed to meet expectations, they didn't hesitate to make the appropriate decision to terminate the themes. This is a factor that critics of the supposed preponderance of licensed themes often don't take into account—licensed themes tend not to be kept around for longer than necessary, and apart from major successful and ongoing franchises like Star Wars and Super Heroes, actually tend to be some of Lego's shorter lived themes, riding the hype wave of a major movie release before being dropped unceremoniously when that hype subsides to make room for new themes.

The thing is that the sets were out long before the movies hit theaters, and sometimes before even the first trailers even drop. At last this was the case with Prince of Persia as far as I am aware. So, probably a reason those licenses tend to fail is because they come out so early, before people even know about the movies. So, if they want those to sell better, at least launch them at the same time as the movie, not like 3 mouths earlier.

[Lyichir]

8 minutes ago, Lego David said:

The thing is that the sets were out long before the movies hit theaters, and sometimes before even the first trailers even drop. At last this was the case with Prince of Persia as far as I am aware. So, probably a reason those licenses tend to fail is because they come out so early, before people even know about the movies. So, if they want those to sell better, at least launch them at the same time as the movie, not like 3 mouths earlier.

With themes like Prince of Persia based on movies that fell short of expectations I doubt it would make much difference to release the sets upon the movie's release. And for the really huge successes, like The Lego Movie, Star Wars, or Avengers, it's advantageous to get the sets out early so that the sets are already in plentiful supply and early demand has been satisfied by the time peak demand hits. There's a reason why almost all licensed products tied in with an upcoming movie release (not just Lego) tend to release well in advance of the actual release window for a movie itself.

[MAB]

8 minutes ago, Lego David said:

The thing is that the sets were out long before the movies hit theaters, and sometimes before even the first trailers even drop. At last this was the case with Prince of Persia as far as I am aware. So, probably a reason those licenses tend to fail is because they come out so early, before people even know about the movies. So, if they want those to sell better, at least launch them at the same time as the movie, not like 3 mouths earlier.

5

Brickset indicates that the PoP sets were available 12/19 April 2010 at S@H in the US and UK. The premiere was 9 May, followed by worldwide release on 19/20 May but a week later in the US to try to coincide with Memorial day (from wikipedia). To me, it seems they were out for one month before the cinema release, which makes sense so that they are already on the shelves at the time of release with no delays. The inventories at BL indicate 1 April, which were probably done from online instructions, that often came out before release for sets like this.

[koalayummies]

6 hours ago, Lego David said:

Ok, people can criticize what I am about to say, but I have the right of saying my opinion right?

Overwatch [snip] licenses [snip] Prince of Persia [snip] Angry Birds [snip] licenses [snip] Powerpuff Girls [snip] BrickHeadz [snip] useless licenses [snip]

Haha and there it is. Just "licensed vs original themes" round 2. Merge topic?

[MAB]

7 hours ago, Lego David said:

So, if they continue their current stage with tons of useless licenses that nobody buys and they need to pay to have them, I give them 5 years from now until they will be in financial trouble... in the best case. You can criticize me, but this is the truth, unfortunately.

 

 

1 hour ago, Lego David said:

The thing is that the sets were out long before the movies hit theaters, and sometimes before even the first trailers even drop. At last this was the case with Prince of Persia as far as I am aware. So, probably a reason those licenses tend to fail is because they come out so early, before people even know about the movies. So, if they want those to sell better, at least launch them at the same time as the movie, not like 3 mouths earlier.

You've given them five years at best. Is this based on being five years from now, or being 14 years from when they did Prince of Persia? If doing sets like the ones based on Prince of Persia, The Lone Ranger and Angry Birds was going to make the company fail financially, then why hasn't it happened already? It's almost ten years since PoP, and they are still using a similar business model of having a wide mixture of in-house non-licensed sets, along with a main licensed theme of SW, a number of smaller licensed themes that come and go (even Harry Potter is back, like 2010), and small waves of current hot properties such as Overwatch that may bomb, or may take off like Minecraft. They are even making the "mistake" (like for PoP) of putting movie sets on the shelves about 1-2 months before release for TLM2. Was it a mistake to put TLM2 sets on the shelves at the end of December or beginning of January for a movie not coming out for about six weeks? They clearly haven't learnt, have they!

 

[ShaydDeGrai]

To bring us back to topic a little bit, when you are talking about the health and long term viability of a company, there's a difference between a bad venture (such as a licensing what turns out to be an unpopular movie IP) versus a bad corporate direction (such as not tracking your expenses versus returns - looking at you monorail, fiber optics and a myriad of half million dollar molds that produced specialty pieces most people didn't need).  Confusing the two is like confusing weather with climate - one is a short term blip that you can recover from once things change slightly; the other is a long term trend and the longer it lasts, the fewer options you have to recover.

TLG does have the advantage of being privately held by a very small number of controlling interests (and this really is an advantage).  It means it takes a lot less for them to reach a consensus on corporate directions and can make long term plans far more easily than publicly traded companies.  The difference here is really accountability and debt management.  Publicly traded companies are essentially operating on borrowed money and stockholders (who are more emotionally attached to their portfolio as a whole than any given company they may happen to hold this month) want to know how their money is being used to bring them a bigger return on investment.  Such companies not only need to watch their balance sheets, they need to make them look good every three months for fear that their stock price will drop and investors will abandon them.  This makes short term losses harder to absorb and long term investments harder to justify.  

With just a handful of private equity holders, TLG has the freedom to manage cashflow, reinvest and reinvent itself with far less external oversight.  It can plan on much longer time horizons and mitigate risks on new ventures.  IF DONE WELL, negative short term consequences are less likely to become long term liabilities.

That said, TLG we know today cannot remain static and expect to remain successful.  It does need to reinvent itself and it products.  Meccano, TinkerToy, Lincoln Log, and K'Nex all learned this lesson the hard way; tastes change, patents expire, material science and manufacturing techniques are constantly evolving.  TLG needs to keep a weather out to avoid becoming stale and to step in where opportunities present themselves.  They've already done this on multiple occasions: going from wooden toys to plastic, expanding from blocks to Technic elements, introducing minifigures over brick-built characters and then turning collecting mini-figures into a hobby in it own right, licensing IP, coupling in-house IP with media outlets (film, tv and comic books), adding programmable logic chips (Mindstorms, Boost), embracing on-line communities and apps, licensing the brand to theme parks and tie in merchandise.  This is not the same Lego that I played with as a child (that stuff was made by Samsonite and I'm not sure it was even ABS).

Things will continue to change.  TLG will research/embrace new materials; they will likely continue their search to find/invent the next Lego Star Wars or Bionicle IP powerhouse (and will likely have a fair share of missteps along the way); they will continue to look for ways to remain relevant as an analog toy in a world gone digital; and, they will no doubt be looking to communities like us to cultivate the next generation of AFOLs and keep brand loyalty alive.  Who knows, maybe eco-friendly obsessed public tastes will change to the point where wooden toys will even make a comeback - my daughter certainly enjoys her (mostly) wooden Brio trains over the all plastic ones.

We all like to play armchair quarterback when it comes to how our favorite toy company should be satisfying our desires (and to make dire predictions over the fate of the company if _I'm_ not spending _my_ $200/month on Lego because they're producing the "wrong" stuff)  but imagine, if you can, what it is like to be one of the handful of heirs to the TLG empire.  You've got a $14 billion dollar asset to manage, a family legacy to maintain and your own financial future tightly coupled to that of the company.  You might not make the perfect decision everyday, but I have to imagine that after nearly losing everything a couple of decades ago, you're going to try to make the best decisions you can to ensure a long and healthy corporate future - that means hiring (and listening to) talented, informed people; making long term plans; being willing to invest/reinvent as tends evolve; taking risks (and knowing when to cut your losses); and, most of all respecting your customer base, however they may change as well.

 

[icm]

As far as I can tell, Lego's brush with bankruptcy in the early 2000s is typically attributed to the following factors, which I list in no particular order:

• Reckless experimentation with product lines well outside their expertise: full-size dolls with clothing (Scala, Belville, parts of Duplo), action figures with detailed sculpts and simple builds (Galidor), and electronic components included in sets at well below their true cost
• Reckless proliferation of very large, specialized parts that required relatively expensive molds and were difficult to reuse outside their original context
• Keeping production of ancillary material (video games, clothing, gear, TV shows) in-house rather than contracting it out
• Introducing too many new colors too fast
• External factors like the dot-com bust and other financial pressures that I don't understand

If they flirt with failure again, say in the early 2020s, they probably won't make the same mistakes again.  Since the early 2000s, they've been pretty disciplined about staying within their core expertise (compare Scala and Friends, for example), experimenting with action figures in a more buildable and sustainable way, and pricing kits with electronic components or other extremely expensive parts at levels that reflect their production costs.  They do seem to introduce an awful lot of small, specialized new molds for minifigures and minifigure accessories, but presumably those molds aren't as expensive as molds for the large parts of the late 1990s and early 2000s.  They seem to have figured out a profitable, sustainable model for licensing and production of video games, TV shows, and clothing, and they are said to introduce new colors responsibly.  Instead, I might expect the following factors, in no particular order, to cause trouble in the future:

• Overly generous customer support.  One of the best things about the company is its customer support, but Aanchir has said that a single customer support call for a kit can wipe out the profits from the sale of that kit.  Look at the Finch Dallow/Resistance Bomber fiasco, and imagine how many copies of that kit became losses for Lego.  I imagine they'll have to cut back on customer support eventually.  Also, are the large (100+ piece) gift-with-purchase sets of the last few years sustainable?
• Licenses.  Yes, I think they've been managed pretty responsibly so far, but there have been a few major duds, and the licensed portion of the portfolio has been growing.  While that diversifies the portfolio, a string of spectacular failures could hit the company just as hard as it did twenty years ago.  In a sense, this is uncharted territory.  Licensing decisions probably weren't a major part of the collapse twenty years ago, but by their sheer ubiquity today they must inevitably be questioned in any future collapse.
• Bad growth forecasts.  We've already seen a contraction in 2016-2018 because of over-expansion; it could happen again.  We hope the company's current success isn't a bubble, but it might be.  Far too many large toy companies (and companies of all sorts) have failed because they didn't recognize they were riding a bubble and neglected to make contingency plans for a sudden drop in demand.
• Entrenched competition in emerging markets (eg clone brands in Asia) and emerging competition in established markets (eg competitors staking out Castle, Pirates, etc for themselves in central and eastern Europe).
• External factors like the global recession which has been teased in the news for several months now.

I'd give the company more than five years, but 2016-2018 have certainly showed that they need to be careful in the short term to avoid over-expansion and financial trouble within those five years.  Hopefully there's another forty years or more - a well-managed company can stay large and profitable for centuries, after all - but I don't know enough about economics to make any specific prediction about how long it'll last.

EDIT - 

Since a major ongoing debate in these forums is about licenses, original themes, and the current potential or lack thereof for classic themes like Space, Castle, and Pirates, and these questions are frequently cited as support for or against the company's future prospects, it may help to get some historical perspective.  As AFOLs, we often complain about one theme or another and say that Lego would do much better if they handled such a theme differently in such a way.  Then we say, no, we're not the target audience, it's all about what kids like, etc., etc.  But what's the past precedent for "seeing the writing on the wall" from an adult perspective?  In hindsight, I date the company's decline to its 2003/2004 nadir to about 1997, when Town became Town Jr, the UFO/Exploriens/Insectoids lines made Space rely even more heavily on extremely large and specialized parts than it had before, and Lego began to invest heavily in video games and gear.  That's about seven years of decline before the turnaround.  I'd like to ask the forum members who have been adult fans of Lego for thirty or forty years to tell us about how they felt, as adults, about the products of the period 1997-2004 compared to the products of their childhoods, and what they thought at the time about the immediate and mid-term future prospects of the company based on their impressions of those products.

Edited February 26, 2019 by icm
Forgot to ask about past perceptions when I first hit "post."

[JJ Tong (zfogshooterz)]

1 hour ago, koalayummies said:

Haha and there it is. Just "licensed vs original themes" round 2. Merge topic?

Gotcha indeed. Others has already mentioned that there are way other factors that have or could hurt the company. And licensed themes is still wholesomely blamed.

And I'm still didn't get my answer on why he said that Star Wars (one of the factors that) saved Lego back in the days was a lie...

Edited February 26, 2019 by JJ Tong (zfogshooterz)

[Lego David]

45 minutes ago, JJ Tong (zfogshooterz) said:

Gotcha indeed. Others has already mentioned that there are way other factors that have or could hurt the company. And licensed themes is still wholesomely blamed.

And I'm still didn't get my answer on why he said that Star Wars (one of the factors that) saved Lego back in the days was a lie...

Want an answer? Here you go:

In the early 2000's period, there were not many movies to accompany the licenses. After 2002, people lost interest in licensed sets because no movies were out for them. Just take the 2003 year of Harry Potter for example, where there were only two sets released, because the next Harry Potter movie that was supposed to come out that year was delayed for 2004. And LEGO still had to pay for the expensive licenses, and that made them lose money, therefore contributing with their financial problems. So, Star Wars may have sold better than Harry Potter, but it didn't help the company recovery.

1 hour ago, icm said:

Licenses.  Yes, I think they've been managed pretty responsibly so far, but there have been a few major duds, and the licensed portion of the portfolio has been growing.  While that diversifies the portfolio, a string of spectacular failures could hit the company just as hard as it did twenty years ago.  In a sense, this is uncharted territory.  Licensing decisions probably weren't a major part of the collapse twenty years ago, but by their sheer ubiquity today they must inevitably be questioned in any future collapse.

THIS.  This is what I was trying to say all the time, yet everybody disagreed with me. Thank you, @icm. 

[Johnny1360]

Wasn't Prince of Persia a hugely popular video game years before the movie ever came out?