How Lego built itself into a nearly inflation-proof toy company
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- Lego has built itself into an organization that is almost inflation-proof.
- While other toy makers have slumped, Lego enjoyed double-digit growth in the first half of 2024.
- The company appeals to a wide audience and has ventured into film and video games.
Lego's many ventures have helped build a nearly inflation-proof company — one toy block at a time.
While inflation has struck other industries, including most toy manufacturers, Lego has created a buffer with its extensive portfolio of products and associated entertainment.
The company reported that its revenue increased by 13% in the first half of 2024 to $4.6 billion. Lego noted that its double-digit growth was "significantly outperforming the toy industry." According to the Toy Association, industry sales as a whole declined 1% in the first half of 2024 compared to the same period in 2023.
Here are some of the strategic moves the company has made to yield such positive results.
Appealing to a broad audience
Lego is a rare toy that appeals to an audience beyond just children.
The company attracts adult consumers, or "kidults," with product lines such as Lego Icons, which are Lego sets that include "impressive landmarks, modular buildings, classic vehicles, pop culture favorites and beautiful home décor sets," the company says. Adults can drop $850 on a Star Wars Millennium Falcon or $680 on a replica of the Titanic.
The Danish family-owned company's investment in a broader audience has paid off. While the toy market has slumped in the last 15 years, Lego has outpaced competitors such as Mattel, which makes Barbie, and Hasbro, the maker of GI Joe. Lego has doubled its revenue in the last decade.
Strategic partnerships and entertainment ventures
"Everything is awesome! Everything is cool when you're part of a team! Everything is awesome when we're living our dream!"
Everything is awesome, indeed — especially when a company has its hand in many pots, including lucrative film and entertainment ventures. Multiple movies dove into the Lego universe, and it paid off.
"The Lego Movie," with its catchy "everything is awesome" refrain and which included some humorous tropes about adulthood to target a wide audience, enjoyed massive success for an animated movie when it hit theaters in 2014. It grossed over $468 million worldwide.
In 2017, "The Lego Batman Movie" and "The Lego Ninjago Movie" grossed $312 million and $123 million worldwide, respectively. "The Lego Movie 2, released in 2019, grossed $192 million worldwide.
Just as the Lego franchise saw a range of success when it branched out into film, it has done the same with partnerships with other popular brands, like Adidas and Ikea, among others. Customers can purchase Adidas shoes that feature Lego pieces or Ikea storage bins with Lego studs and accompanying Lego bricks.
Plastic toys in a digital world
Lego also took its plastic blocks into a new frontier: the digital world.
Lego Fortnite, which is rated for players 10 years old and older, attracted millions of players when it launched in December. Players can build villages and "live it up" with friends.
Lego announced this month that it had reached a stunning 83 million players to the game. The company is scouting additional digital partnerships to replicate Lego Fortnite's success, Bloomberg reported.
"We will continue to develop in the digital world," Lego CEO Niels B. Christiansen told Bloomberg. "It's not new for the Lego Group to do partnerships and license agreements, and it's clearly our ambition that we will do more."