Lego bricks hit a wall: Iconic toymaker goes digital as spin-off builds profit
Toy titan Lego’s move away from the small plastic bricks that made it famous is gaining pace, as its digital spin-off made a profit in its first year of operation.
Lego Digital Play, which aims to reach a new generation of children who play on their iPads rather than with their hands, turned a £1.4m pre-tax profit in the year to December, according to its first-ever accounts.
The brick business announced in February last year that it would set up Lego Digital Play to create “meaningful, creative, and joyful digital entertainment experiences for future generations”.
Kirkbi, the Danish investment firm which owns Lego, appointed Aaron Loeb as president – a video game adviser who had previously worked on games for the Marvel, Simpsons and Alien franchises.
A new frontier for Lego?
“More children are playing online, and gaming offers opportunities to reach more kids with innovative play experiences,” Niels Christiansen, chief executive of Lego Holding, said when announcing the new firm.
Lego Digital Play’s first ever accounts show the firm notched a turnover of £12.4m in its first year of operations, and holds £8.6m in shareholder funds.
This is despite it being unclear whether the new company has yet released any products.
The company appears to still be in its early stages, with job ads open for 20 roles at its London offices.
Lego Holding, Kirkbi and Lego Digital Play would not elaborate on what the new firm has produced so far.
‘Physical brick will always win’
Kirkbi said all existing digital Lego products would remain under the management of Lego Holding.
But Lego’s previous digital releases include video game Lego Party, a mini-game within the popular survival game Fortnite and an augmented reality app for its Lego Technic range.
Henry White, a 20-year old geography student whose Lego TikToks have amassed millions of views under the handle Henrz Brickz, told City PM he was cautious of the toymaker’s push into the digital world.
He said: “Of course they have to move with the times and keep up with digital media and popularity but the whole point of Lego is an escape from the screens.
“I think for the average consumer of Lego going digital doesn’t really work. The physical brick will always win and Lego as a company should recognise this.”
Lego has expanded rapidly in recent years, rolling out its “smart brick” which produces sound effects and flashing lights and expanding into Formula 1 in a bid to break the US market.