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  • This is a LEGO brick.

  • LEGOs!

  • Ultimate fans of LEGO.

  • They have the best licenses.

  • LEGO's, new Star Wars Starship kit.

  • You could step on a nail and it's less painful than stepping on a LEGO in the middle of the night.

  • It may not look like much, but it's the building block upon which LEGO built its $6.25 billion dollar company.

  • Today, LEGO's blockbuster portfolio includes collaborations with the Beatles, Star Wars and Harry Potter, a mega hit movie franchise, and

  • eight LEGOLand theme parks.

  • The Danish company's fan base has dramatically changed since they hit the market.

  • A toy that was once thought for little boys is seeing its largest growth coming from girls and adults.

  • And LEGO has a super fan community of AWOLs or adult fans of LEGO, which include members like David Hall, who's been posting LEGO

  • content to his YouTube channel for 12 years.

  • It is my job, but at the same time, it's what I'm passionate about.

  • It's my hobby. It's kind of my life as well.

  • Sales continue to climb.

  • Lego's revenue increased by 14 percent in 2020.

  • They're actually growing faster than any other toy company in the globe.

  • But in the early 2000s, the company made several missteps and came extremely close to declaring bankruptcy.

  • We'd lost our way strategically.

  • Here's how LEGO reclaimed its status as one of the most successful toy companies in the world.

  • This is suddenly obsessed.

  • LEGO was created in 1932 by a Danish master carpenter, Ole Kirk Kristiansen, out of necessity.

  • As the Great Depression decimated his carpentry work, he needed to create something that would withstand the ups and downs of a turbulent

  • economy. So he thought that the last thing that people would pull back on in a depression is spending on their kids.

  • It was a pretty good idea.

  • Kirk Kristiansen named the company LEGO, which is an abbreviation of two Danish words, meaning play well.

  • The privately held company is still owned by the Kristiansen family and is sold in over 130 countries with 650 stores worldwide.

  • But in the early 2000s, LEGO was facing a bleak outlook.

  • Its analog toys struggled against the oncoming tidal wave of digital entertainment.

  • Video games were becoming much more popular at the time.

  • You had a lot more engagement in digital media in the form of things like cable television and so forth.

  • There was technology that was being incorporated into toys, things like Furby.

  • Kids didn't seem to have the time or interest for LEGOs.

  • The company made a drastic shift away from manufacturing its plastic bricksand invested heavy sums in producing its own entertainment

  • content. The toymaker began releasing LEGO-themed video games and even started its own production company.

  • But the pivot did little to improve its bottom line.

  • In fact, it almost took the company under.

  • Things just only got worse, as you might imagine, after that heavy diversification.

  • LEGO's, heavy debt load and lackluster sales, forced its leaders to reevaluate.

  • The company had drifted too far away from what made its customers fall in love with LEGO.

  • We did a lot of really heavy duty research and what we realized is that the LEGO brick was still incredibly relevant.

  • Rather than digitalization being a threat to us, we realized that it could actually be an accelerant to our business.

  • LEGO needed to reposition its products as an extension of digital culture rather than its antithesis.

  • A really well crafted video game experience could actually inspire kids to build more in 3D because it's a different expression of the brand.

  • So LEGO put its flashy side ventures on pause to focus on what made it successful in the first place: The LEGO brick.

  • LEGO knew its core product had value, but it needed to find ways to attach itself to pop culture.

  • Enter Star Wars.

  • Star Wars fans may need to use the force to assemble Lego's latest release.

  • Ultimately, I'd say I'm a bigger LEGO fan than I am a Star Wars fan.

  • But they really go hand in hand, for me personally.

  • Star Wars was the first license that we had actually contracted with, and that really helped us understand the power

  • of reframing our brand to a group of people who have a particular passion around a property or an IP.

  • Since its debut in 1999, Star Wars themed sets are the company's most popular products in its entire catalog.

  • This year, LEGO Star Wars is number one across many different metrics.

  • It's the number one property for LEGO and I can't imagine that they could be any happier with its performance.

  • A big reason for the collaboration success is that Star Wars and LEGO have one big thing in common: diehard fan

  • bases. LEGO and Star Wars is like peanut butter and chocolate.

  • They just go well together.

  • Evan, the 15-year-old video star behind the popular YouTube channel EvanTubeHD started his channel at just six years old.

  • Now he has over 6.5 million subscribers.

  • He says the Star Wars sets are some of his favorites to build, from Baby Yoda to the $800 LEGO UCS Millennium Falcon.

  • If you're a fan of the franchise, you can kind of see it like get some of the details that they put into them.

  • These movie themes sets posed a new challenge for LEGO.

  • Sales were strong when a new movie hit theaters.

  • But waiting on a film release wasn't a sustainable business model.

  • The experience of that led to an interesting point around entertainment content in developing entertainment content on our own.

  • So LEGO tried its hand at content creation for a second time.

  • But instead of going all in right away, LEGO leaned on a partner with vast experience in the world of entertainment.

  • We actually went to the to the folks at Lucasfilm with an idea for how we might be able to create LEGO

  • Star Wars content, some animated content using the Star Wars characters in a LEGO world, in a LEGO universe.

  • And so they agreed to a pilot, it was a five minute episode that we aired on Cartoon Network.

  • And that was the first foray that we had into the world of entertainment content.

  • And it was wildly successful.

  • With the success of LEGO Star Wars in 2013, LEGO decided to move into creating an original line of characters and narratives.

  • The following year, The LEGO Movie premiered in theaters, and it's instant success was a big win for the company.

  • I was already a fan of LEGO before that movie, you know, came out when I was younger.

  • So I was really excited for that and watched it like we have the one right behind me right there.

  • The movie grossed $468 million worldwide, won the BAFTA for Best Animated Feature film, and was nominated for a

  • Golden Globe. As an adult LEGO fan watching that movie, I came away very, very happy because the filmmakers Phil Lord

  • and Chris Miller really catered to the adults in the background.

  • Since we've gotten into many of these entertainment initiatives, our business has roughly grown about six fold within, you

  • could say, the last 15 years.

  • LEGO's long-term growth no longer centered on battling for children's attention.

  • It had its eye on another core group of LEGO fans: grown ups and collectors.

  • Despite LEGO being considered a children's toy, the largest growth for the company in recent years has been with adult consumers.

  • And we are actually creating products that are really more specifically geared toward adult collectors.

  • These tend to be higher price point products, products that tap into more adult passion points.

  • In 2019, LEGO even acquired BrickLink, an online adult community with one point one million members where fans can buy or sell LEGO parts

  • or chat on the forum.

  • Adult fans of LEGO are behind some seriously impressive creations, and although they'll splurge on products from the creator

  • expert series like an Aston Martin from James Bond, or Manchester United Football Stadium or even the Taj Mahal, AFOLs get their

  • clout from showing off their MOCs or My Own Creations online.

  • David Hall started his YouTube channel when he was 11 reviewing LEGO products.

  • Hi.This is a review on LEGO seven, six, seven, five, or as we know it, LEGO

  • ATTE.

  • Now at 23, he has 365,000 subscribers and shows off his impressive MOCs.

  • Hey guys, my name is David Hall.

  • We're Solid Brix Studios and today I'm going to be taking a full on walk through through my LEGO Mandalor

  • diorama.

  • An average MOC my of my caliber will last about anywhere between 30 to 50 weeks,

  • and that can be covered over about a year or two.

  • And making these creations certainly isn't cheap.

  • I'm spending usually between anywhere between five to ten thousand dollars just on LEGO parts to build

  • these creations. That's excluding the actual LEGO sets that I'll put on them once I'm done.

  • So and you know, of course, the LEGO mini figures also cost quite a bit as well.

  • David estimates that he spent around $100,000 on his LEGO creations.

  • Yes, it's a big upfront cost to build such large creations.

  • But just because it's LEGO, you can take it apart and use those exact same bricks and all of the different elements to remake whatever you

  • want in the future. So while it might be a big investment at first, it does kind of pay off as time goes on when you want to make more things.

  • David earns ad revenue from his YouTube videos, has affiliate links and even sells his own merch.

  • He's also a recognized member of the LEGO Ambassador Network.

  • We actually have a whole team of people geared around interfacing with and supporting the adult community.

  • We have, in fact, in some cases brought some of them into the fold to help with developing products.

  • In fact, some of their most popular sets have come through LEGO's Ideas Communitylike the Central Perk from the TV show Friends.

  • LEGO understands the importance of building relationships with its online communities and relies on them for product reviews or MOC videos,

  • which can generate millions of views.

  • I have around six million subscribers on YouTube.

  • At the start it's probably mostly just a bunch of kids that wanted to see what the LEGO would look like before they told their parents to buy

  • it for them. But now, you know, we have just people just coming in, you know, LEGO collectors just to see how the sets work and stuff.

  • I'm not just on the sideline of the company, they actually do realize, hey, you have an impact on our product.

  • We should help you out in some way.

  • The coronavirus pandemic has forced LEGO to close factories and stores as well as its LEGOLand theme parks.

  • But it's still been a boom to the company's bottom line.

  • Are there any jigsaw puzzles left that haven't been...

  • Have you seen the Legos behind me?

  • The display grows every single week.

  • Parents who are looking for products that might be a little bit educational because they felt they were losing a little bit of that home

  • schooling. They were looking for products that would keep their kids active, things that they could do

  • with the family or without the family.

  • And LEGO really hit on all of those aspects.

  • And as younger generations become interested in LEGO, the company has adjusted to meet what's important for kids these days: gender

  • inclusivity and sustainability.

  • LEGO is experimenting with switching their single use plastic bags to paper, as well as making more products that appeal to young girls.

  • LEGO also this year, year to date through September, grew their girls business 1.6

  • times more than their boys business.

  • LEGO managed to grow analog roots in a digital world by turning back to what made it great in the first place, the simple LEGO brick.

  • And if it continues to listen to its diehard fan base, it will have a more diverse and inclusive community of AFOLs for generations to come.

This is a LEGO brick.

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