Lego joins the online transformation of the toy industry

When Lego was founded in 1932, its name was derived from a shortened version of the Danish words “leg godt” or “play well”.

Now, 90 years later, the giant privately-owned toy company is embarking on an unprecedented investment that will transform the notion of “good play” to include more electronic versions of fun, where kids of all ages can play, buy and share their brick-and-mortar escapades in the physical and digital worlds.

The company will “intensify its digital investments in all areas of its business, from gaming to shopping and technology infrastructure,” according to an announcement from the company, which outlined its plans to triple its digital workforce over the course of over the next three years via a worldwide hiring wave of engineers, product managers, UX/UI designers, technical program managers, digital security specialists and data scientists who will swell its IT team to 1,800 people.

“The LEGO brick will always be at the heart of our business, but we are seeing great success in making LEGO a digitally-enabled brand,” Chief Digital and Technology Officer Atul Bhardwaj said in the statement, calling the digital transformation a the company’s largest investment in a generation.

“We have been blending physical and digital experiences for many years and have been excited about our progress. But we have big ambitions, so we are accelerating our investments and expanding our digital team,” added Bhardwaj.

transform toys

Certainly, the Danish blockmaker is not alone in dealing with the shifting digital realities that permeate every aspect of the connected economy, from how we work and eat, to where we shop and play.

As Lego enjoys the clout of being the world’s largest toymaker as it pursues its ubiquitous future – which also includes plans to expand its physical retail store footprint this year by adding 150 new locations to a current roster of around 800 – he’s not alone in this mission.

Last week, 3rd-ranked Mattel announced that it sold more than $1 billion worth of Barbies, Hot Wheels and Fisher-Price toys in the first quarter, amid new reports that it was in talks on the possibility of privatizing the $8.5 billion company. As a result, Mattel’s stock has bucked the market’s downtrend this year and is up more than 13% so far in 2022 at a time when the S&P 500 has fallen 10%.

“These results are consistent with our strategy to grow Mattel’s IP-based toy business,” Mattel Chairman and CEO Ynon Kreiz said in the company’s press release. “After completing our turnaround in 2021, we are firmly in growth mode and operating as a successful, IP-based toy company.”

The comments and findings came on the heels of similar reorganization plans outlined by Hasbro’s new CEO, as the $13 billion Rhode Island-based toy and game maker outlined its own way forward in a changing digital economy, through a comprehensive review of its strategy and operations.

“A major theme of this effort is focus and scale; focusing on fewer more important opportunities and [then] evolving them with reinvestment to drive profitable growth and improve shareholder returns,” Hasbro CEO Chris Cocks told analysts and investors during the company’s earnings call in early April.

Minecraft 2.0

The renewed digital focus at Lego is being equated by some industry insiders with an effort to develop the next iteration of the hit video game Minecraft, the block-building fantasy world game title now owned by Microsoft.

“During this digital journey, we’re really increasing and increasing our capabilities, and internalizing capabilities that were previously done by consultants,” Lego CEO Niels Christiansen told the Financial Times, adding that Lego’s approach the company’s hybrid game uniting physical and digital play. came together, and easier than ever to link into a single experience.

“Today, [digital] is our biggest investment,” he added.

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