How to License the Universe, and then Rule Us All!    Send article as PDF   
How licensing deals helped LEGO become the most profitable toymaker in the world:
  • LEGO, pre-millennium: stackable bricks, generic yellow-headed characters, revenue sputtering.
  • LEGO today: Crushing the toy industry under its interlocking feet, having overtaken Mattel and Hasbro as the most profitable toymaker in the world.

That’s partially due to licensing deals, which, starting in 1999, and added icons like Darth Vader and Batman to the mix. Many other properties followed—and The LEGO Movie, out from February, features many of our favorite modular heroes meeting for the first time.

Here are some of the Licensed Character Lines that helped make it all happen:-


The Billund, Denmark-based maker of small plastic bricks recently became the world’s most valuable toy company at $15 billion, surpassing Mattel, which makes Barbie dolls, among other toys. LEGO’s annual report put 2012 revenue at $4.09 billion, profits at $981 million. LEGO is closely held by the family of founder Ole Kirk Christiansen; his grandson Kjeld Kirk Kristiansen is chairman of Kirkbi, which owns 75 percent of LEGO Group. Kristiansen happens to be the richest man in Denmark. (In March, Forbes estimated his net worth at $7.3 billion.)

LEGO got into the intellectual-property game late. The company has emphasized tradition and consistency over brand expansion and resisted creating licensed toys until 1999, at which point the game of slapping Batman on something to earn a cheap buck had become so common that there was a coffee-table book devoted to it. As Lucasfilm geared up for the release of The Phantom Menace, LEGO began manufacturing toys based on the Star Wars franchise, which complemented its own spaceships and rockets. It also licensed a Winnie the Pooh line for its younger-targeted Duplo brand.

LEGO built its library of licensed toys a few at a time, but that library is now composed solely of major names, many of them direct competitors known for negotiating hard over exclusivity. The company makes toys based on characters from both DC and Marvel comics, for example (which demand loyalty from Mattel and Hasbro, respectively), Nickelodeon and Disney, all under the same roof.

Essentially, brands have to prove to LEGO that they’re worth the time and effort the toy maker must commit, laying out not just a product’s appeal to kids but also its appeal across borders. “It has to have global clout, which is very different from other partners in the industry,” explains Manuel Torres, svp of global toys for Nickelodeon. “[Others] will have a strategy for what they do domestically and another for what they do overseas. For LEGO, you have to show that you have interest in Europe, that you have interest in the Americas—and then they’ll pursue a partnership.”

Toy partnerships tend to span years and demand breathtaking sums for licensor’s. Hasbro’s most recent agreement with Marvel, for example, goes across eight years, until 2017. It pays Marvel a base of $100 million, with a potential for $140 million more in royalties.

LEGO owes some of its partners far less, according to a source with knowledge of LEGO’s business dealings who declined to comment on the record. For one of LEGO’s licensed lines, a recent two-year agreement guaranteed a base of less than $1.5 million, with royalties halved if a product is sold at one of LEGO’s own retail stores. Across all its lines, licensing and royalty expenses came to about $263 million in 2012. Hasbro and Mattel each topped $400 million—though to be fair, their toy offerings encompass a much wider range. With the exception of a few line extensions like watches and flashlights, LEGO stays close to home.

Previous Post

LEGO Technic Planetary Geared, Drive Assembly

Introduction to Planetary Gearsets & Gear Ratios: Any planetary gearset has three main components: The sun gear The planet gears and the planet gears' carrier The ring gear Each of ... Read more

Next Post
cakeboard breadboard

CakeBoard Breadboard Lets You Combine Circuits & LEGO

Japanese shop Breadboard Maniac has come up with a custom breadboard that you can use for work and play. The CakeBoard is a solderless breadboard that you can stack and ... Read more

Short URL:

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Do NOT follow this link or you will be banned from the site!