LEGO was ranked the world’s 91st most valuable brand by Forbes in 2017, and the world’s most valuable toy brand, according to Brand Finance Toys 25 2018 report, ahead of My Little Pony, Monsters High, Nerf and Fisher-Price. Despite this brand success, the company reported an 8% decline in sales and a 17% decline in profits for 2017, according to The Guardian.
The brand has expanded from bricks to movies, video games, LEGOLAND theme parks, a YouTube channel with over five million subscribers and more. Fans are encouraged to generate content and make it their own. For example, the most popular activity in the LEGO Life online community is for users to upload photos of what they’ve built. And, in a world of digital content, LEGO has innovated to compete for a broad definition of play time. In a recent CBNC article, LEGO’s Peter Kim, Vice President of Digital Consumer Engagement explains how the brand thinks about winning with Gen Z and Alpha Gen Consumers:
“The nature of play has also evolved with the rise of digital. Competition comes in many forms, not just products but how kids decide to spend their time and how lifestyles have changed. Maybe it’s a matter of competing for attention with YouTube influencers as much as [wondering] ‘Is there time to build a [LEGO] set?’ So the trick is, how do we get within that stream and really create collaborations to make play part of life.”
An example of this is LEGO’s new augmented reality offering that was just shared at the Apple Worldwide Developer’s Conference in San Jose. LEGO AR-Studio is a free app that lets LEGO builders create virtual worlds stemming from physical LEGO creations. Open-ended play encourages creativity and story-telling. Children play out their own adventures and record video while uncovering fun animations and audiovisual effects. LEGO AR-Studio expands the playability of physical LEGO sets.
As only a few selections of LEGO City and Ninjago sets are currently compatible with the app, it’s too early to gauge the commercial impact. However, anecdotal comments from consumers suggest interest:
"I think this is a great idea. With just one set, you could have a whole LEGO world in half the time that it would take to make one physically. This is revolutionary! It expands LEGOs to so much more than they already were.” – Carson, age 12 (US)
“It looks pretty cool. I like that you can create a LEGO object and create structures and objects around them. I’ve done a lot of LEGO projects, but nothing like this.” -Michael, age 11 (US)
However, a comment from Christopher, age 23, highlights that LEGO AR-Studio isn’t universally praised:
"While I can see kids enjoying this, I'm concerned that it gives them more reasons to use tablets instead of their hands to engage with the world. I love LEGO, and for me this kind of takes all the imagination out of it."
To be sure, augmented reality can be clunky and so it will remain to be seen if the LEGO AR-Studio initiative can enjoy the success of Pokemon Go (recognizing that some argue that Pokemon Go is mixed reality or location-based entertainment, rather than augmented reality).
Augmented Reality isn’t the Only Reality
LEGO could consider expanding their brand to adult gaming events like Strategicon. I attended Strategicon for the first time in LA on May 26th, and enjoyed the opportunity to try new interactive party games, role playing games, board games, cos play, video games and more. The event was a smorgasbord of gaming, with participants ranging from ages seven to seventy. There were quite a few families, along with adult gamers. Thinking expansively, a take on LEGO AR-Studio could be a natural appeal for multi-generational gamers or adult gamers.
With AR-Studio, LEGO is making strides towards competing more directly against online experiences that appeal to its customers. For instance, a child who enjoys building LEGO sets is also likely to play Minecraft. Conceptually, it makes sense that children would enjoy the interactive augmented reality of LEGO AR-Studio just as much. It is also plausible that parents would be more receptive to tablet play that has a hands-on creative component. Perhaps the brand will expand its equity to gaming conferences like Strategicon or outdoor adventures like Pokemon Go and continue to move in new directions. Regardless, moving the LEGO brand forward into more new adventures with different dimensions of play, entertainment and gaming will continue to be critical for LEGO to thrive, grow and capture consumer loyalty and purchases.