Monday, September 7, 2009

Lego Company Feeling Good and Taking Risks

An article in the New York Times tells all about how the Lego company is suddenly a financial tsunami while the biggest toy companies in the world are doing nose dives.

Well, good for them!

Interestingly enough, rather than invest that new found wealth by providing more specialized parts that collectors and fans have been asking for, Lego has decided to repeat the past. The article is full of interesting information. Here are a few choice words found within:

“But five years ago, we were in the midst of a crisis, and now we’re in a growth phase. We are definitely taking bigger risks than we previously did.”

The number of different bricks or elements that go into Lego toys has shrunk to less than 7,000 from roughly 13,000, and designers are encouraged to reuse parts.

There is also some mention about how Lego has not lost any of its quality throughout its restructuring from near bankruptcy a few years ago.

I've written about the short-term memories of the Lego fan community before. The sickness also extends to the Lego company itself. There may have been a number of internal issues that helped to lead the company into financial duress, but a runaway thirst for licenses was certainly part of the problem also. Licenses are awarded based on how much a company promises to give the owner. To make up for this fee, Lego must increase the cost of the product or take a loss on it. Lego fans have often noted the higher-than-average cost of Lego Starwars sets and the even higher costs of the Lego Starwars Clone Wars line (where Lucas and Cartoon Network both likely take a cut).

So, here we are again, seeing Lego take on a multitude of licenses as soon as the money starts rolling in again. Maybe we don't need 13,000 parts again, but we sure could use more than we are getting.

I hope these risks pay off though. I also hope that Lego is very careful about how much they can actually handle. They are also branching off into other product lines once again, another nail that almost sealed their financial coffin not so long ago.

All in all, it's just business as usual, I suppose.

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