In today’s world, children spend more time interacting with tablets, smartphones, and video game consoles, than playing with traditional toys such as Barbie dolls or LEGOs. That being said, traditional toy manufacturers must figure out a way to modernize its toys for a digital era in order to stay relevant in the minds of consumers.
The LEGO Group is best known for the manufacturing of LEGO toys, mostly consisting of plastic bricks. Founded more than 80 years ago, LEGO toys have often been the archetype of toys, appealing to children all around the world. However, LEGOS’ trajectory hasn’t always been smooth. After a period of rapid expansion from 1970 to 1991, LEGO saw a decline in revenue, and by 2004, the company was on the brink of bankruptcy. At that tipping point, LEGO began to restructure the company to pivot towards having a digital strategy.
Since then, LEGO has made many changes by launching new digital-based businesses, all connected to their core brick systems. It was the company’s hopes that these movies, mobile games, and mobile applications would be more appealing to today’s digitally savvy consumer groups.
Some of the components of LEGO’s digital strategy are below:
- Social network app:
LEGO created LEGO Life, a social network community, where users are encouraged to share their physical play experiences. This move gives LEGO the power to play in the mobile and online space.
- Crowdsourcing design:
Through LEGO Ideas, the company is able to crowdsource product design ideas from its users. The platform enables fans to create and vote on designs and gives LEGO a strong online presence, as well as a stronger user base who continue push innovation for the company.
- Bridging the gap between the physical and digital worlds:
LEGO combined its physical bricks with a digital gaming application, which interacted with the constructed models. Through this combination, LEGO became a toys-to-life manufacturer by creating games and challenges for the user, who would be tested on their building skills along the way.
- Incorporating coding:
LEGO launched LEGO Boost, which teaches children how to bring their creations to life. The kit comes with a combination of sensors, motors, and a companion app that teaches its users to code so that they can program their creations.
- Entering video game industry:
LEGO Dimensions is a LEGO-themed action/adventure video game that brings LEGO into the lucrative video game market. For this component, LEGO partnered with Warner Bros. and the games were compatible with the Playstation, Wii, and Xbox consoles.
After implementing the above digital strategy, LEGO began to thrive, earning the name “Apple of Toys” – clearly a winner in the toy market.
But recent happenings have begun to show that it just wasn’t enough. In September 2017, the company announced declining revenues and its plans to lay off 1,400 of its employees (roughly 8% of its work force) in hopes to trim operating costs in the short-term.
It’s too early to tell if LEGO will be able to survive this time around, but it’s clear that the company needs to find more opportunities engage with children by blending physical building and digital experiences. And with crucial retail players, such as Toys “R” Us, recently filing for Chapter 11 bankruptcy protection, who knows how the toy market and LEGO’s market positioning will evolve?