The Decision That Saved Lego From Going Out Of Business

When I was a kid in the late 1970s and early 1980s, I witnessed the dawn of a new age; the rise of the action figure and merchandise toyline to accompany blockbuster movies and later, television shows. Of course no one needs to be reminded about how much impact Kenner’s Star Wars figures had on the world of toys, but not many know how a bad business decision by the CEO of Mattel spurred on a billion dollar industry.

Licensed Action Figures

In 1976, before the movie had been released, Mattel’s CEO turned down the offer to be the official manufacturer of the licensed Star Wars figures. As this turned out to be a big mistake, he turned to his lead designer working for Mattel’s Preliminary Design Department who developed what would go on to be the Masters of the Universe toyline, released in 1982. Kenner, who had taken on the job of producing the Star Wars toyline, didn’t expect the movie to be as big as it was and they weren’t ready in 1977 to produce enough Star Wars figures to meet the demands. As a result, it was in 1978 that the Star Wars figures hit the market proper and the rest, as they say, is history.

Original Kenner Star Wars Figures Photo: starwars.com
Original Kenner Star Wars Figures
Photo: starwars.com

1978 was a big year for the toy market. It was in that year that Lego took their “arms fused to their sides” and faceless minifigure and produced what we are now familiar with; the modern day Lego minifigure. Lego continued to compete along side the licensed toylines, specifically those aimed at boys, producing their own themes of space, towns, castles and late in the 1980s, pirates. Lego competed without the movies, without the video games and without the television shows (cartoons) that were produced as 22 minute long advertisements for the accompanying toyline.

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Mattel’s original Masters of the Universe

Masters of the Universe was the first of the “create a cartoon to sell the toy” toylines that also included G.I. Joe, Jem and the Holagrams (which prompted Mattel to create Barbie and the Rockers), the Teenage Mutant Ninja Turtles, Transformers, M.A.S.K., Voltron and the Masters of the Universe spin-off, She-Ra: Princess of Power. Although they weren’t exactly action figures in the true sense, you can add Rainbow Brite and Popples which were also cartoons that were created merely to act as 22 minute commercial to shift a toyline. Throughout the 1980s television cartoons were dominated by those produced by the toy manufacturers, mainly Hasbro and Mattel.

Playmates Toys joined in later in the 1980s with them being the manufacturer of the Teenage Mutant Ninja Turtle toyline. While Kenner, who would be bought and wound up by Hasbro in 2000 continued much of their success based on the on-going demand for Star Wars figures well beyond the 1983 release of Return of the Jedi, they also played a part in the “cartoon aimed at selling a toyline” with The Real Ghostbusters action figures and play-sets.

The Decline and Rebuilding of Lego

Lego remained totally independent and away from this movie/television show merchandise crossover until they started to fall out of favour with the toy buying market in the late 1990s. Children were not only switching to video games but were still watching television and the want for toys that were associated with those. The most famous example one could use is Pokémon which was released in 1996.

And so it was, with the release of the first of the prequel Star Wars trilogy, Lego had ventured into the world of a licensed theme. While the first release of Star Wars (1999) themed Lego was to support the new movie, The Phantom Menace, Lego also released sets of the vehicles, scenes and characters from the original Star Wars trilogy. While this theme started to rescue Lego from its financial crisis it experienced throughout much of the 1990s, the licensing fee it paid to Lucasfilms meant that it needed a royalty free storyline based theme of its own. Enter Bionicle (2000).

Enter The Knock-Off Rivals – Mega Bloks

At the same time, the first of the major threats to Lego’s build it yourself brick toy market came in the form of Mega Bloks who was one of the smaller companies making “knock-offs” of Lego. In the early 2000s, Mega Bloks manufactured its first licensed set in the form of a Winnie the Pooh boat (2002). A year later they produced another licensed theme in the form of Power Rangers (2003) followed by the Marvel Super Heroes and Teenage Mutant Ninja Turtles (2004) the year after. In 2005, Mega Bloks added a Disney Princess (2005) set as well as three The Chronicles of Narnia (2005) sets to their licensed range while still releasing sets in the licensed themes that they had previously produced.

Formerly licensed to Lego, SpongeBob SquarePants is now part of the Mega Bloks toyline
Formerly licensed to Lego, SpongeBob SquarePants is now part of the Mega Bloks toyline Photo courtesy: http://www.megabloks.com

Mega Bloks continued with more licensed themes including Pirates of the Caribbean (2006), Disney’s Cars (2007) and Spiderman 3 (2007), Dora the Explorer (2008), Thomas and Friends (2010), Chuggington (2011), Dinosaur Train (2011), Halo (2011), Iron Man 2 (2011), Need For Speed (2011) Smurfs (2011), Barbie (2012), CAT (2012), John Deere (2012), Skylanders (2012), World of Warcraft (2012), Call of Duty (2013), Hot Wheels (2013), Assassins Creed (2014), Hot Wheels (2014), Jeep (2014), SpongeBob SquarePants (2014) and Despicable Me (2015).

Enter The Knock-Off Rivals – Hasbro’s Kre-O

In 2011, Hasbro entered into the brick market with their own toyline called Kre-O. Their first sets were a licensed theme; Transformers (2011). As Transformers was already owned by Hasbro, they were in a position that Lego could never find itself in until their own production, The Lego Movie was released giving them royalty free licensing. Although The Lego Group tried to sue Hasbro as they had tried earlier with Mega Bloks claiming that copyright had been infringed, Lego was unsuccessful in all attempts to block (no pun intended) their rivals from making brick toys.

Hasbro's Kre-O Transformers Optimus Prime Photo courtesy: http://www.hasbro.com/kre-o
Hasbro’s Kre-O Transformers Optimus Prime
Photo courtesy: http://www.hasbro.com/kre-o

Hasbro’s Kre-O continued releasing sets, all of them licensed with Battleship (2012) based on the 2012 movie which in turn was based on the board game they acquired the rights to when Hasbro bought Milton Bradley, G.I Joe (2013) based on their own toyline and cartoon, Star Trek (2013) based on the 2009 reboot movie, CityVille Invasion (2014) based on the computer game and Dungeons & Dragons (2014) based on the role-playing game that once again they own the rights to after acquiring the company that owned and produced that game.

The Further Rise of Lego

Lego was already signing up to produce more licensed themes back in 2001. They released the Harry Potter (2001) range to coincide with the release of the first movie, Harry Potter and the Philosopher’s Stone. But, it wasn’t until 2006 that they started to take the licensed part of the brick market seriously with the release of SpongeBob SquarePants (2006), Avatar: The Last Airbender (2006), and Batman (2006). This would continue throughout the first decade of the new millennium with Indiana Jones (2008), Speed Racer (2008), Prince of Persia (2010), Ben 10: Alien Force (2010) and Toy Story (2010). Lego finished up the decade by releasing what would go on to be a very popular theme; the Collectable Minifigures (2010). Although this theme now contains the licensed sub-themes of their own licensed merchandise for The Lego Movie (2014) as well as The Simpsons (2014), the collectable series became very popular based on the resurgence of the Lego brand.

Off the back of Lego’s resurgence they were in a position to build their own themes and produce their own cartoon series to sell the theme. Enter Ninjago (2011). With elements of the popular Pokémon and Dragon Ball Z game-play and backed by the cartoon which was syndicated on television, the Ninjago theme proved popular winning children over, the world over. Off the back of this, Lego produced the equally successful Legends of Chima (2013) which was designed to replaced Ninjago, but due to the popularity of its predecessor, Ninjago was rebooted in 2014 with an aptly titled series they called, wait for it, Ninjago Rebooted.

Even though their rival Mega Bloks had the licensing rights to it back in 2006, in 2011 Lego successfully took over the rights to Pirates of the Caribbean (2011).  This continued with Lego taking over the rights to the Marvel characters in their Super Heroes Marvel (2011) theme which matched their licensing of Marvel’s rival in their Super Heroes DC Universe (2011) theme. Mega Bloks had the rights to Marvel back in 2004. The other cartoon/comic book range that Mega Bloks had the license for in 2004 which Lego took over was the Teenage Mutant Ninja Turtles (2013). Although Lego would go on to win the rights to the complete Marvel characters, they felt the pain of losing a license to a rival when Mega Bloks won the licensing of Spiderman 3 (2007) after Lego held the license to produce the merchandise of the first two movies, Spiderman (2002) and Spiderman 2 (2004). Lego also lost the rights to SpongeBob SquarePants which is had in 2006 which was picked up by Mega Bloks in 2014.

You Win Some, You Lose Some… And Then Win Again

Along the way, Lego also picked up the license to the very successful movie franchise for The Lord of the Rings (2012) and the equally successful The Hobbit (2012) movie. But every silver lining has a dark cloud and even though Lego picked up the license for the movie, The Lone Ranger (2013), both the movie and its theme were not very successful.

Lego secured the The Simpsons (2014) license which it released at first under its Collectable Minifigures as a sub-theme before releasing the Simpsons’ house as a play set. (Ed: A very expensive play set one might suggest). In what became a reciprocal relationship between The Lego Group and the producers of The Simpsons, Gracie Films and 20th Century Fox Television, the vice president of The Lego Group gave his full backing for this episode to be made with both companies helping each other to produce The Simpsons episode “Brick Like Me” whereby the universe “Our Famous Family” lives in morphed cleverly into a universe made of bricks. And of course, this wasn’t going to hamper sales of The Simpsons themes Lego products which in turn would create revenue for the producers of The Simpsons.

Lego Simpsons House Photo courtesy: shop.lego.com
Lego Simpsons House
Photo courtesy: shop.lego.com

And then came its most successful merchandise theme as far as bringing in the money with not only a royalty free theme, but one that they could reap the benefits from financially at many levels including licensing out the merchandising rights to clothing manufacturers, computer game producers and fast food companies such as McDonald’s. The LEGO Movie (2014) proved to be a box office success with a cleverly written movie and a equally successful toyline to match. Incorporating minifigures from many of their previous licensed themes secured their stranglehold on being the brick company to go to when your movie or television show isn’t already based on a toyline that Hasbro or Mattel already owns.

Mattel Enters the Brick Market

In February 2014, Mattel, Inc. acquired Mega Brands  which was a major coup for the world’s second largest toy brand who has been struggling in the market. Even though Mattel still has a greater turnover than it’s main rival Hasbro, Hasbro’s share price sky-rocketed above Mattel’s in 2014. And to make things worse, in the beginning of 2014 it was reported by many of the major financial media outlets that the Lego Group became the world’s largest toy company by market value, surpassing Mattel. But now it has it’s own brick toyline which can produce licensed themes that are already under the Mattel umbrella… royalty free.

So maybe in 2015 we will see Mega Bloks produce Barbie, Cabbage Patch Kids, Hot Wheels, Matchbox, Monster High, Polly Pocket, Rainbow Brite, and the theme that many Lego aficionados would love to see; Masters of the Universe.

Fan made Lego Masters of the Universe is all over the Internet Photo courtesy: http://www.broadsheet.ie/2013/04/06/lego-by-the-power-of-greyskull/
Fan made Lego Masters of the Universe is all over the Internet
Photo courtesy: http://www.broadsheet.ie/2013/04/06/lego-by-the-power-of-greyskull/

I first planned this last week when my Facebook news feed was inundated with everyone sharing the news that Lego was releasing a Doctor Who theme. This was merely days after the news that the were also panning to release the Scooby Doo theme as well.  They always say things happen in threes, and when I found out that Lego was also releasing the Jurassic World theme I thought the story was complete. But it wasn’t.

The first of the Minecraft theme was released in 2012 as just one set, with the bulk of the theme being released in 2014. The original Minecraft (2012) set was release under another theme that Lego has created; that of Lego Ideas. Lego Ideas, formerly known as Lego Cuusoo is a joint venture between The Lego Group and Cuusoo, a website that allows fans of toylines to bring their ideas to the manufacturers. Some of the ideas suggested by fans have been turned into sets that have been released including the Ecto-1 vehicle from Ghostbusters and the DeLorean Time Machine from Back to the Future. As I am not a major fan of  Doctor Who I didn’t click on any of the stories so I was unaware before conducting my research for this post that it too was part of a fan produced Lego Ideas theme. And what I’ve discovered since is that the Big Bang Theory and Wall-E Lego ideas that have been shared around social media are both slated for release by Lego in the near future.

The Future of Licensed Toys and Merchandise

While the likes of Hasbro, Mattel and Playmates Toys will continue to produce the official licensed action figures and dolls for the future movies and television shows, the war will be won by which of the brick makers will acquire the rights to the licensed product. With Hasbro and Mattel owning the rights to their own toylines that often get turned into the next blockbuster movie and in turn they produce more licensed toys to capture the merchandise market, Lego will have to capture those which are not already aligned with a toy brand.

Originally it was only licensed from 1999 until 2008, but the Lego Group extended the license with Lucasfilms multiple times; first to 2011 and then again until 2016. In 2012 another 10 year agreement was signed between the two companies which means with the first of the films in the new trilogy set for release in December 2015, the next in 2017 and the last in 2019, Lego has one of the biggest merchandise markets wrapped up. And since the prequel trilogy, they have been producing sets for the Clone Wars as well as licensing their intellectual property of the Star Wars minifigures to computer games developers bringing in more revenue.

Lego Star Wars X-Wing Photo courtesy: http://www.lego.com/en-us/starwars/products/episodes-i-to-vi
Lego Star Wars X-Wing
Photo courtesy: http://www.lego.com/en-us/starwars/products/episodes-i-to-vi

As a fan of Lego since 1979 and a fan of Masters of the Universe since 1982, I have been wondering why Lego hadn’t tried to release a Masters of the Universe theme. The Internet is rife with fan made Lego replicas of the original Mattel toyline, and many more CGI designs bringing to life those characters that can’t be produced without moulding your own custom parts.

But in doing this research, finding out about the behinds the scenes in the world of licensed toylines, and the rivalry not only between Mattel and Hasbro, but their collective rivalry with who is now the biggest toy brand company in the world, The Lego Group, I know that it would take a major miracle, or The Lego Group to take over Mattel or the other way around for it to happen. But if Lego continues to grow as it has, and with Hasbro’s toylines being touted by many to be more likeable by modern day children than those of Mattel’s, it may be possible that to rescue the brand, licensing the Masters of the Universe brand to the more successful brick maker Lego is a way for them to go.

But maybe that’s why Mattel bought Mega Bloks in 2014. Maybe the brick world of Eternia (He-Man’s home planet) has already been planned and is already on its way.

So what do you think, will the toy wars be fought by the brick makers and their ability to win the rights to license merchandised toylines? Are you loyal to the Lego brand or do you purchase Mega Bloks and Kre-O sets? What toyline line from your childhood would you love Lego to make for your kids? What idea would you propose to Lego Ideas for them to make? Characters and the set from you favourite television shows or movie?

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