“LEGO” comes from the Danish phrase leg godt, which means “play well”. The company got its start when Ole Kirk Christiansen, a carpenter, lost his business and began making toys out of his surplus lumber. The business took off and eventually evolved into the giant Lego empire. Originally called “Automatic Binding Bricks,” LEGO wasn’t the first to market the toy. Kiddicraft holds that distinction, and LEGO just improved on the design. In 2002, LEGO sued the Chinese makers of “Coko bricks,” a building block closely resembling LEGO bricks. Coko had to cease production and issue a formal apology. Early LEGO figurines had no facial features, gender, arms, or moveable legs. The figures on the left are early versions of what LEGO produces today. 560 billion LEGO parts had been produced as of 2013. That’s 80 LEGO pieces for every human being on the planet. LEGO is the world’s largest producer of rubber wheels—more than Bridgestone, more than Goodyear, more than anyone.
They produce more than 306 million tiny rubber tires a year. The world’s tallest LEGO tower was 94 feet high a utilized 465,000 bricks. In 2009 a life size house was built using 3.3 million LEGO bricks. 1,000 volunteers helped to assemble it. There have been fifty LEGO video games. The factory process is so streamlined that only 18 out of every million LEGO pieces fail to meet company standard. Every second, seven LEGO sets are sold. In the time it takes to read this sentence, dozens of sets are sold worldwide. There 915 million different ways to combine just six individual LEGO bricks. According to National Geographic’s special MegaFactories: LEGO, the possibilities are nearly endless. The largest commercial LEGO set is that of the Taj Mahal, with 5,922 individual pieces. There are no LEGO sets with a direct military theme. Ole Kirk Christiansen didn’t want to make war seem appealing to children. As part of the 2011 “LEGO Bricks in Space” program, astronauts brought 13 Lego kits to the International Space Station to see how they react in microgravity.
Speaking of space, there are enough LEGO bricks to stack from the earth to the moon…ten times. Legoland, LEGO’s theme park chain, has a whopping seven locations worldwide. Billund, California, Florida, Malaysia, Windsor, Günzburg, and the Discovery Center in Manchester. LEGO is more than just a toy, it’s an art form. Nathan Sawaya is the world’s foremost LEGO artist and he’s shown in museums around the nation. In 2000, The British Association of Toy Retailers named LEGO the “Toy of the Century”, over the teddy bear and Barbie doll.Lego Says 2015 Was Its ‘Best Year Ever,’ With Huge Sales JumpLego Group reported astounding revenue growth for 2015, up 25% from the prior year as it estimated the company's popular construction sets and toys reached an estimated 100 million children.The strong performance built upon years of success as the Danish-based toy maker has cultivated a very loyal following by selling a mix of traditional Lego sets and licensed properties linked to Star Wars, The Avengers, Batman and other popular franchises.
Lego's results also extended a strong sales jump in 2014, when toy sales were up 13% as results were greatly boosted by the company's first major motion picture film, "The Lego Movie.""This has been the best year ever for the Lego Group," Lego Chief Executive Jørgen Vig Knudstorp told analysts during a video presentation. Vig Knudstorp was so enthusiastic about the results that he leaped into the air in front of the press, saying "If I could sing and dance, I should be singing and dancing because it is a fantastic number of results."Lego's growth has been astonishing. It reported annual sales of about $2.3 billion in 2010 and just five years later, reported revenue of about $5.2 billion (those figures were converted from the Danish krone).What's fueling the growth? Parents are putting greater emphasis on toys that inspire learning, especially under the umbrella of STEM (Science, Technology, Engineering, and Mathematics). Lego has also benefited from blockbuster films like the latest Star Wars, as well as a greater push to address the girls' market.
But also notably, Lego can't yet claim the title of world's largest toy maker. Barbie and Hot Wheels maker Mattel (mat) is still larger, with $5.7 billion in revenue for 2015. Mattel's sales have faced challenges however, dropping 5% last year. Transformers and My Little Pony owner Hasbro (has) ranks third in the toy aisle, with $4.45 billion in revenue.The toy industry is in a period of strength as it benefits from big sales from two hot Walt Disney (dis) properties: "Frozen," a princess-themed movie that drove demand in 2014 and "Star Wars: The Force Awakens," which lifted sales late in 2015 and should be a strong tailwind for this year as well.In 1998 the Lego Group entered into a licensing agreement with Lucasfilm, the company founded by "Star Wars" creator George Lucas. It allowed Lego to manufacture sets based on the movies, with instructions showing builders how to turn 2,000 tiny plastic bricks into the Death Star. Fourteen years later the Walt Disney Company bought Lucasfilm for $4 billion, with the licensing deal still very much in place.
Countless Lego products tied in with the franchise followed, and the Lego Group went on to manufacture sets based on other popular movie franchises, such as "Harry Potter" and "The Avengers." Licensing is part of an overall strategy that's made the Lego Group wildly successful. According to its 2015 annual report, Lego Group made $1.4 billion in net profit, more than double what it made just four years earlier. But while this is good news for Lego, it's created a tough situation for some consumers. The Lego Group still creates sets priced well within the modest reach of a child's allowance, but parents who have taken their kids to the toy store know perfectly well that there is no appetite for a 30-piece set that can be built in five minutes. Kids want one of the high-end sets with thousands of pieces, and those can retail for hundreds of dollars. If that were a one-time expense, parents might be willing to make an exception, but it rarely is. Often, the child will just want another set seconds after finishing the last one and putting it on the shelf to be forever ignored.
If the parent relents and buys another such set in the same month, the expense can become equal to that of a car lease payment. Luckily, parents of Lego-obsessed youngsters can breathe a sigh of relief. Netbricks, a company based in Elk Grove Village, Illinois, offers the opportunity to rent Lego sets for a monthly fee. There are several tiers, such as the Master plan, which allows 60-day rentals of $400 worth of Lego sets for $49 a month. At the end of the 60-day period, the sets are shipped back free of charge and new sets are shipped to the subscriber. Company president Rick Weil founded it after experiencing the same thing that so many other parents do. In other words, he was hemorrhaging money on Legos for his kids and wondered if there was a way to slow the bleeding. "It seemed like a problem that a lot of people had," he said. "I figured if there's a big enough problem, then there's probably a market there. Licensing adds a fair amount to the price of a set, and the expense of the product lent itself to the rental business."
Netbricks started selling to the public in 2015 and at launch a Groupon promotion led to an initial enroll of 5,000 people, far outpacing expectations. He said that requests for the now-discontinued Death Star set accounted for fully 12 percent of his initial customer requests, with the $240 Tower Bridge set taking second place. "These are people who buy at a lower price point," he said. "Something like the Death Star is a once-a-year purchase for these families." (Pictured: The world-famous Tower Bridge features iconic towers, working drawbridge and a red double-decker bus. It also includes 4,295 pieces and costs $240.) Netbricks currently employs eight people, including Weil. Each employee has a dedicated job, right down to the person who does the all-important cleaning of the returned sets, using a medical-grade technique that's absolutely necessary for anyone who considers the term "used Legos." Weil said that parents are actually far less concerned about cooties than they are about penalty fees for lost pieces.
Netbricks assesses no charge for those. "Part of our service is no charge for normal piece loss," Weil said, citing a range of 15 to 20 lost pieces for regular sets or 20 to 30 for larger ones. He added that the company's real concern is the malicious actor who "harvests" Lego sets with the intention of selling rare pieces to desperate builders who need that special brick to finish their creation. Weil would not disclose his company's financial information, but he said that it's profitable on a gross margin basis, and he expects it to be cash-flow positive in six months' time. He added that he's in no rush to see the company get ahead of itself by expanding too quickly. "We made a decision early on that although there's more demand out there that we can get, we didn't want to take on a huge volume of customers until operations are ready to scale," he said. "If you don't have customer service and structure where you can field all calls, that's not a great way to grow a business."
Netbricks currently boasts 215 "fully active" members, which it defines as members who have rented and returned sets for more than one cycle. The current total is well below the 5,000 customers who signed up at launch, but Weil said that was to be expected because of the one-time impact of the Groupon promotion. The lower number of repeat customers is a more accurate reflection of Lego diehards. And Weil said that Netbricks has been successful in retaining repeat customers, so they must be doing something right. , because Lego is trying to discourage resellers. Netbricks buys its entire inventory from retailers (Walmart, Target, Toys-R-Us, etc.). "Lego is aware of what we're doing and we've had a handful of communications with them," Weil said. "It was nothing atypical of how a top five worldwide brand would work to protect their brand and trademark. Anytime anybody pops up and is using the word 'Lego' in a commercial sense, the Lego company sends out information and notification as to how they would like you to use their trademarks, and that's been the extent of our business to business communication with Lego."