For how long will the LEGO company exist?

[Vindicare]

16 hours ago, Mylenium said:

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

Yeah, I heard recently they’re releasing a wheelchair one & one with a prosthetic. Reinventing.

Which LEGO has done recently as well, namely with Friends. So long as the company sticks, and it sells like Friends has, TLG will be around for quite some time. 

[TeriXeri]

43 minutes ago, Johnny1360 said:

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

Yes there were games long before the movie , I played the DOS versions of Prince of Persia 1 (1989), and 2 (1994). They were still popular years after the release during the 90s.

From 2003-2010 there were more games, first one was named Sands of Time , the movie was also named Sands of Time but didn't come out until 7 years later in 2010. 

Edited February 27, 2019 by TeriXeri

[62Bricks]

Any challenge to Lego's existence is probably not going to come from betting on the wrong IP license. It is probably much more fundamental than that - they sell plastic.

Most plastic is made with petroleum, a finite resource with a volatile market heavily entwined in world politics with some shady players - Venezuela, the US, Saudi Arabia, etc.

And yes - Lego says it will one day switch over to plant-based plastic that does not use petroleum, but it will still be plastic. Plastic itself is being recognized as a pollutant, because it breaks down into tiny particles and floats forever in large patches in the oceans. Some places are now banning some plastic items, like grocery sacks and drinking straws. Will we ever ban plastic entirely? Seems unlikely, but it might be taxed heavily, or its production limited or regulated to the point that it becomes very expensive for non-essential products. Like toys.

[Lego David]

4 hours ago, Johnny1360 said:

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

The movie was adapted from the popular video games, but like in the case of most Video Game movies, it was a huge failure with a low box office record and bad ratings. So, this is the problem with the LEGO theme: It was based on a movie that failed, and so did the LEGO theme to by not selling well.

 

3 hours ago, 62Bricks said:

Any challenge to Lego's existence is probably not going to come from betting on the wrong IP license. It is probably much more fundamental than that - they sell plastic.

Most plastic is made with petroleum, a finite resource with a volatile market heavily entwined in world politics with some shady players - Venezuela, the US, Saudi Arabia, etc.

And yes - Lego says it will one day switch over to plant-based plastic that does not use petroleum, but it will still be plastic. Plastic itself is being recognized as a pollutant, because it breaks down into tiny particles and floats forever in large patches in the oceans. Some places are now banning some plastic items, like grocery sacks and drinking straws. Will we ever ban plastic entirely? Seems unlikely, but it might be taxed heavily, or its production limited or regulated to the point that it becomes very expensive for non-essential products. Like toys.

Man, why hasn't anybody brought this to discussion yet? It's an excellent point! This could indeed be an actual problem for LEGO in a few years.

[Johnny1360]

Maybe it could end up being like when they had to quit making toys out of wood and had to start using some sort of newfangled plastic.

I remember when I was much younger plastic stuff was considered cheap,  would break easy and anything plastic was just scoffed at. 

Edited February 27, 2019 by Johnny1360

[JJ Tong (zfogshooterz)]

10 hours ago, Lego David said:

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.

All right that makes sort of sense. While I will agree that while that theme didn't help the company recover as there are totally many factors that really have hurt that company at the time. I still won't jump into some conclusion regarding that theme now as I still don't know the full story yet as I'm still confused with the events of 1999 and 2003.

However, I still wouldn't wholesomely applaud Bionicle as something that literally saved the company either. Based on what I read here ( https://www.businessinsider.com/how-lego-made-a-huge-turnaround-2014-2/?IR=T ) and said by many at this thread too, it seems that there are way many factors that the company needed to solve to stay alive and move on. And like I said, those factors involving major terrible management and decisions that results in many things that aren't needed like Galidor (you even said yourself that nearly killed the company). I'll be seeing it as Bionicle (and possibly Star Wars) more of buying Lego time from doom to get some answers to sort their mess as I'm sure by just relying on Bionicle to survive while not changing any internal practices is never going to work.

Quote

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

Well, your past threads with you saying 2018-19 sets are trash-past sets are better, you personally being heavily against licensed themes while finding more reasons to disapprove them, it's hard to perceive you being objective.

Edited February 27, 2019 by JJ Tong (zfogshooterz)

[Lego David]

Inflation might also Lead to trouble... Am I the only one who notices How expensive the new sets are compared to the older ones? (This applies to both licensed and in-house sets)

Edited February 27, 2019 by Lego David

[anothergol]

47 minutes ago, Lego David said:

Inflation might also Lead to trouble... Am I the only one who notices How expensive the new sets are compared to the older ones? (This applies to both licensed and in-house sets)

they aren't per-part, they only are for the "volume of toys" but sets have become more complex

[MAB]

14 hours 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 is not only true for licenses though. A string of spectacular fails for non-licensed themes could also hit LEGO hard.

8 hours ago, 62Bricks said:

And yes - Lego says it will one day switch over to plant-based plastic that does not use petroleum, but it will still be plastic. Plastic itself is being recognized as a pollutant, because it breaks down into tiny particles and floats forever in large patches in the oceans. Some places are now banning some plastic items, like grocery sacks and drinking straws. Will we ever ban plastic entirely? Seems unlikely, but it might be taxed heavily, or its production limited or regulated to the point that it becomes very expensive for non-essential products. Like toys.

3

The types of plastics being banned in most places are single-use, disposable plastics. LEGO hardly fits that, it is multi-use by definition. Plastics will not disappear, they are the right material for many jobs. They also happen to be a bad material for some jobs, especially for items that are used once then thrown away. The fact that it takes a long time to degrade are what makes it a good material for long-life toys.

1 hour ago, Lego David said:

Inflation might also Lead to trouble... Am I the only one who notices How expensive the new sets are compared to the older ones? (This applies to both licensed and in-house sets)

Yet LEGO are masters of pricing for individual markets. They know how to price items that will still sell at RRP, and what will sell once reduced. It also depends how you measure price / value, as with some measures, they are more affordable and better value today than 30 years ago.

They have a new press release:

https://www.lego.com/en-us/aboutus/news-room/2019/february/annual-results-2018/

2018 sales up 3% compared to 2017. Revenue up 4%. Operating profit up 4%. Market share growth in all major markets.

The top selling themes in 2018 in no particular order were LEGO® City, LEGO® Technic™, LEGO® Star Wars™, LEGO® Friends and LEGO® NINJAGO®. LEGO® Harry Potter™, LEGO® Jurassic World™, LEGO® Classic and LEGO® Creator also performed strongly.

Look at that, a diversified portfolio of licensed and non-licensed themes are top-selling or performing strongly.

 

 

 

Edited February 27, 2019 by MAB

[Blondie-Wan]

Do we even actually have definitive hard data establishing that single-movie, single-wave licenses like Prince of Persia and The Lone Ranger actually performed badly for LEGO, or is it all assumed based on the disappointing box-office of the movies? My perhaps-flawed understanding has been that a license from even a flop movie can provide enough of a strong (if brief) sales boost to justify the theme’s existence, and they do seem to pursue a diverse mix of themes (both licensed and not) of varying durations (from single-wave, one-and-done themes intended that way at the outset, to ongoing, multi-year themes with endless products).

I do notice when some of these go on clearance - I picked up the entire Prince of Persia line that way myself - but lots of sets from lots of themes go on clearance eventually, and It doesn’t necessarily mean that they didn’t have enough initial popularity and sales to warrant being considered successful.

I mean, I certainly wouldn’t exactly be surprised to learn Speed Racer and Angry Birds and so on lost money, but I wouldn’t just assume it as a given.

Edited February 27, 2019 by Blondie-Wan

[ArneNielsen]

LEGO is privately owned, but not by a family, but by two fonds. Its common in Denmark to have large private companies owned by fonds, in order to avoid inheritage taxes.

The family might control the fonds (Kirkbi and Lego Foundation), but there are rules and regulations that prohibit the family to be totally dominant.

The fonds have a massive capital, that could keep TLC running for many years even with large deficits - which is partly how they survived the heavy losses around 2003.

TLC both diversifies and consolidates.

The LEGO Parks were sold off, even if they made profits, as they were not part of the core company. The clothes lines went the same way.

Being a Dane, I find it hard to believe that LEGO will disappear soon - maybe in 50 years, but who can tell how the World looks like in 2070?

 

[Johnny1360]

13 minutes ago, Blondie-Wan said:

Do we even actually have definitive hard data establishing that single-movie, single-wave licenses like Prince of Persia and The Lone Ranger actually performed badly for LEGO, or is it all assumed based on the disappointing box-office of the movies? My perhaps-flawed understanding has been that a license from even a flop movie can provide enough of a strong (if brief) sales boost to justify the theme’s existence, and they do seem to pursue a diverse mix of themes (both licensed and not) of varying durations (from single-wave, one-and-done themes intended that way at the outset, to ongoing, multi-year themes with endless products).

I do notice when some of these go on clearance - I picked up the entire Prince of Persia line that way myself - but lots of sets from lots of themes go on clearance eventually, and It doesn’t necessarily mean that they didn’t have enough initial popularity and sales to warrant being considered successful.

I mean, I certainly wouldn’t exactly be surprised to learn Speed Racer and Angry Birds and so on lost money, but I wouldn’t just assume it as a given.

This is the way I see it too, I would like to see some facts to back up the assumption that these themes were failures and lost money, rather than just not hugely popular. 

Something else to consider, I am pretty damn sure that even at 20 to 30 percent off they are still turning a profit, since all sets regularly receive such discounts and I rarely buy any sets unless they are at least 20% off retail. Actually wouldn't surprise me if they still made money at 50% off, just not as much as they would like. Hardly a failure if it still turns a profit. Still I would like to see some proof they are failures and aren't making any money, other than just personal observation in a specific region. 

[MAB]

There is no theme based evidence - only the evidence of the profits across the whole company every year.

I can barely think of a normal retail (non-exclusive) set that hasn't been discounted in some way. The fact that something is discounted is not an indication of failure, more an indication that the store wants the shelves cleared to get the new product in. It is better to oversupply and discount the remainders when necessary than to undersupply and have shelves bare before the new sets arrive.

[Mylenium]

3 hours ago, Johnny1360 said:

Something else to consider, I am pretty damn sure that even at 20 to 30 percent off they are still turning a profit

Sure they are. Unless you really think the contents of a box sold for 10 Euros are its actual material value, LEGO make a buck or two on every set even at wholesale price. A lot of this stuff merely costs fractions of a cent of actual production cost even if you figure in development, distribution and so on...

Mylenium

[Aanchir]

3 hours ago, Johnny1360 said:

This is the way I see it too, I would like to see some facts to back up the assumption that these themes were failures and lost money, rather than just not hugely popular. 

Something else to consider, I am pretty damn sure that even at 20 to 30 percent off they are still turning a profit, since all sets regularly receive such discounts and I rarely buy any sets unless they are at least 20% off retail. Actually wouldn't surprise me if they still made money at 50% off, just not as much as they would like. Hardly a failure if it still turns a profit. Still I would like to see some proof they are failures and aren't making any money, other than just personal observation in a specific region. 

This is definitely true, particularly considering that consumer products are typically sold to retailers at a wholesale price of around 50% of their retail price. So if a retailer marks a set down 30%, they're still seeing around a 40% return on what THEY paid, minus whatever their overhead costs happen to be. Considering that most of these licensed themes speculated to be massive failures did not include a lot of sets, it's hard to imagine them hurting overall retail sales enough for those retailers to lose faith in the LEGO brand as a whole — not when they're dwarfed by the reliability of huge, long-lived themes like City, Friends, and Ninjago. And of course, LEGO's own share of the revenue and profits were made on the wholesale price that the retailers already paid.

Also, for what it's worth, LEGO is not the only company making toys based on a wide range of licensed IPs, good and bad alike. Mattel, Hasbro, and a whole host of other companies are much, much more reliant on licensing partners than LEGO. But what all of these companies have in common is that they seek to diversify their risks and never put themselves in a position where a risky or unproven IP will make or break their financial results for that year.

What's more, some of these supposed flops are perhaps being a little mischaracterized. Prince of Persia: The Sands of Time and The Angry Birds Movie each made over $330 million in the global box office. For comparison's sake, that's considerably more than The LEGO Batman Movie. To the studios, whether this is a success or failure depends on the movie's budget and the studio's expectation. But it that still means there are to a LOT of people watching these movies, and to toy companies that means a lot of potential customers.

As for what critics think — what of it? Plenty of movies loved by kids and general audiences, and with a massive merchandising presence, have been panned by critics. Just look at how many more Transformers movies were made after the negative critical reaction to the second. That would not have gone on nearly as long if Hasbro weren't making money on merchandise sales.

As far as clearance items on shelves go, I can't tell you how many times an AFOL has thought that the City, Friends, or Ninjago themes were failing because they saw stuff on clearance. It's not at all a good indicator of how much the theme has helped or hurt the company on a larger scale. Sometimes even a licensed theme bought by a relatively small segment of buyers can still be beneficial if those buyers weren't previously LEGO fans, particularly if any positive play experiences from those sets pique their interest in other themes.

[dr_spock]

Theoretically "LEGO" can live on forever.  Even if LEGO goes bankrupt, somebody can buy the name and reuse for other purposes. Think Kodak and Polaroid brand names.  All assets can be for sale to pay off creditors.

 

[Lego David]

4 hours ago, dr_spock said:

Theoretically "LEGO" can live on forever.  Even if LEGO goes bankrupt, somebody can buy the name and reuse for other purposes. Think Kodak and Polaroid brand names.  All assets can be for sale to pay off creditors

I agree with this. Even if LEGO will end sooner or later the LEGO community fan base will still exist. If the company will end, we could just buy the old sets that were made up to that point on Bricklink or eBay. This is pretty much what happened to Bionicle. The theme ended in 2010, but the Fan Base continues to live up to today, with great Channels such as the TTV. So, even if LEGO does end, the LEGO Community will probably not.

[MAB]

4 hours ago, Lego David said:

I agree with this. Even if LEGO will end sooner or later the LEGO community fan base will still exist. If the company will end, we could just buy the old sets that were made up to that point on Bricklink or eBay. This is pretty much what happened to Bionicle. The theme ended in 2010, but the Fan Base continues to live up to today, with great Channels such as the TTV. So, even if LEGO does end, the LEGO Community will probably not.

 

You can currently do that for all non-licensed themes produced up to today. So using that logic, presumably LEGO can stop doing non-licensed sets and the non-licensed LEGO community can continue and there is no need to complain about licensed sets.

If you stop producing something, then it slowly dies. If kids are not exposed to it, then new fans don't emerge and the community shrinks as AFOLs die off.

[Lego David]

33 minutes ago, MAB said:

there is no need to complain about licensed sets.

 

34 minutes ago, MAB said:

If you stop producing something, then it slowly dies. If kids are not exposed to it, then new fans don't emerge and the community shrinks as AFOLs die off.

That is the reason I want more in-house sets.

[MAB]

1 hour ago, Lego David said:

 

That is the reason I want more in-house sets.

And it is also the reason people want more licensed sets.

 

[Lego David]

20 minutes ago, MAB said:

And it is also the reason people want more licensed sets.

 

People obviously want both of them, but when one is a lot more than the other, not everyone is satisfied.

[MAB]

43 minutes ago, Lego David said:

People obviously want both of them, but when one is a lot more than the other, not everyone is satisfied.

So what are you saying? Less in-house sets as they currently dominate the product line.

[JJ Tong (zfogshooterz)]

1 hour ago, Lego David said:

People obviously want both of them, but when one is a lot more than the other, not everyone is satisfied.

But that's the reality isn't it? There's no way everyone going to be satisfied. Take you and me for example. We both love Original themes. However, I consider The Lego Movie 2 an Original theme (as that's something WB and LEGO cooked up not taken from any licensed) while you didn't find TLM2 interesting at all. Also you loved the Throwbacks sets that TLM gives while I hardly cared about those and also find them to be the least interesting.

I know it would be amazing to be at a point where everyone could be satisfied, but we have so many different opinions that there's no way that'll happen.

Edited February 28, 2019 by JJ Tong (zfogshooterz)

[Lego David]

Just now, JJ Tong (zfogshooterz) said:

But that's the reality isn't it? There's no way everyone going to be satisfied. Take you and me for example. We both love Original themes. However, I consider The L

You consider The L... what?

 

[Blondie-Wan]

On 2/26/2019 at 9:12 AM, 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.

Aside from the point I brought up earlier about our not really knowing exactly how well those themes sold or whether they were profitable, I don’t think the fact they each had one wave means anything. LEGO does single-wave themes all the time, both licensed and unlicensed, and for unproven new movie properties, it’s pretty much their standard operating procedure.

Presumably if any of those themes had done unusually well, vastly surpassing expectations, they might have done additional waves for the second year, but I don’t think there’s any evidence any of them were planned to have second waves.