With licensing agreements with Hollywood’s biggest franchises, a wildly successful film series of its own, and original product lines that have spawned television and Internet tie-ins, Lego is experiencing a boom that makes its brush with bankruptcy over a decade ago seem like an alternate reality. Plus, it still lacks any real competition in the interlocking-building-toy field. The company does what it does, and it does it really well. That’s why, unlike the rest of the toy industry–or the world, for that matter–Lego isn’t tripping over itself trying to integrate accelerometers or Bluetooth or Internet of things functionality into all of its product lines to get kids’ attention.
There’s a lot of that at the 2015 New York Toy Fair. Sheltered from the February rain in the atrial Javits Center, toy exhibitors display their latest creations—perennially successful dolls and cars infused with smartphone cameras and voice recognition chips—as buyers prowl the floor looking for the next hit to put on their shelves. Even Barbie is talking to us.
“You put the toy industry under one roof and you hear, ‘This is what kids want,’” says senior director of brand relations for Lego Michael McNally, referring to the tech-saturated toys. “Lego very resolutely stands in opposition to that.”
The company has been cautious about jumping on the tech bandwagon ever since focusing too much energy on non-toy gambles in the late ’90s–the Lego video games and theme parks–that almost undid the company. Lego executives vowed from then on to put kids first: Any new features must only add to the fun.
But the company hasn’t turned its back on digital. Far from it. As Fast Company recently reported, Lego has a whole division, called The Future Lab, in charge of charting the company’s tech-related future; last summer it quietly test-launched in North America the Fusion line of hybrid physical and in-app Lego building, which has been an educational success for the company. Its techier, programmable Mindstorms line continues to thrive. The new app-compatible Ultra Agents line was just released as a possible pilot for other sets to emulate. Unlike other brands on the Toy Fair floor, Lego doesn’t see technology as a looming wave to ride at all costs: As this generation of children loses the distinction between physical and digital play, Lego has learned that preserving the spirit of building will keep their toys in kids’ hands.
Lego featured electric motors in certain sets of its Technic line in the 1970s, but the company’s experiments fusing their bricks with digital tech started with the 1989 release of the 4.5V Technic Control Center and the much more widely released 1990 9V Technic Control Center, which featured a control panel that could be programmed with extremely basic commands to control three motors. Smaller regional releases, quirky, proto-programmable Lego sets like the education-focused Dacta Control Lab and Cybermaster, followed in the ’90s.
It was the 1998 release of the first Lego Mindstorms set that gave the company its first digital tech mass-market success. It was built around the RCX, a hefty palm-sized control unit with buttons, an LCD screen, and a whopping 32K of RAM to store the device’s firmware and user-created programs. Users plugged the RCX into their computer, wrote programs, and built robots brick by brick around the RCX control unit. Three Mindstorms iterations followed, with NXT in 2006, NXT 2.0 in 2009, and the current EV3 edition released in late 2013; the RCX, which was initially paired with only light and touch sensors, gradually accommodated sound, ultrasonic, and color sensors along with a cavalcade of others available for purchase by external company HiTechnic.
The latest generation, Mindstorms EV3, connects to mobile devices via Wi-Fi and Bluetooth and is controllable via a mobile app, which Microsoft demonstrated by zipping a Mindstorms-built bot around via Surface tablet while promoting a July 2013 Microsoft-Lego educational partnership.
Mindstorms is geared toward kids 10 and older. For digitally minded younger ones, there are video games. Lego’s 1990’s foray into the field may have been a risky diversion for the company, but it helped lay the foundation for its multimedia future.
Imagine a time before photorealistic shooter death matches and massively multiplayer online games—a time before the Internet as we know it. Imagine a world where games had just surpassed side-scrolling Mario. Now imagine the first Lego experience to hit video games, a free-roaming 3-D wonderland that squeezed all the imagination of endless building possibilities to let players…deliver pizza.
It was magical.
Lego Island, launched in 1997, was an iconic title that codified the whimsy and humor that would follow in much of Lego’s multimedia. The games that followed were hardly failures, but they diverted time and money from other projects. Licensing and partnering with external game studios for development proved to be a far more efficient–and successful–option. The company’s first licensed game was Lego Creator: Harry Potter in 2001–a release that opened the floodgates for a bunch of licensed adventure games reinterpreting prominent properties like Star Wars, Batman, Lord of the Rings, and Marvel super heroes with signature Lego goofy charm. They were hits. The four Lego Star Wars games alone sold over 15 million copies.
But delving into video games was a daunting decision for a toy company that had yet to take its brand anywhere digital. Naturally, Lego leadership was terrified that kids would transition into games and leave the plastic toys far behind.
“We were a little bit afraid that, with a $40-$50 game, that money would come straight out of our toy revenue–but the opposite happened,” says Søren Torp Laursen, president of Lego North America.
Plus, game reviewers have celebrated how licensed games are an extension of the Lego building experience. Defeated enemies break into pieces, and many games feature some sort of crafting mechanic to let players build something within the licensed universe. In short, there’s a tangibility to this digital realm.
Which was another revelation to Laursen and his fellow executives: Building in-game tickled the same urge to build in person, and doing one often led to doing the other.
“Kids see no difference between the digital and physical world,” says McNally. “It could be content on YouTube that inspires them to go back and play. Our goal is to surround kids with experiences that drive them back to building.”
The permeable barrier kids see between physical and digital led Lego to release Fusion last July, a playset-and-app combo that harnessed a tablet’s camera to scan Lego structures in the real world and transfer them into the game.
Fusion was named E-Connected Toy of the Year by the Toy Industry Association, but it’s had bumpy start. Like the rest of the world, Lego had to learn the hard way that it’s never so simple as making an app and calling it a day. Lego playsets only need to be compatible with hands, but Lego apps had to be compatible with various older mobile operating systems.
“We were embarrassed because people would buy the app and couldn’t use it. We take full responsibility for that,” says Laursen. The company has worked with the partner studio that made the Fusion app to fix the issue, but Laursen’s just thankful that they didn’t release Fusion to the world all at once in a wide release.
With Fusion, users can’t scan in just any building: Due to the limits of tablet cameras, structures can only be built one brick deep, like a stage set piece. It took kids some time to adapt to building this way, but once the building is scanned in, kids can interact with it more fully in-game. Someday, Laursen says, mobile camera and software tech will catch up to Lego’s ambitions and be able to scan any structure built out of Legos.
This year, Lego is releasing another experimental set with a digital aspect that’s less ambitious–but perfectly within Lego’s digital play mission. It’s a superspy-themed line, called Ultra Agents, with sets built just like any other—but each set includes special 1×1 blocks that can snap together with any other Lego block. These 1×1 blocks interact with touchscreens. When kids download the Ultra Agents mobile tablet app, they’re prompted to build “tools” out of the special blocks that interact with the tablet—letting them play on the tablet via blocks.
Developing a special block to interact with a smartphone app isn’t as technically innovative as Mindstorms was, but that’s never been the point: Ultra Agents is about keeping the Lego building spirit alive. Inside Lego’s walled-off section on the New York Toy Fair floor, the Ultra Agents sets—featuring vehicles and spies and villains–are perched on wall shelves. They look like any other of Lego’s sets, which is kind of the point. They too might one day get the interactive app treatment. It depends how the children react, says Laursen.
Lego’s bright yellow Toy Fair fortress sits a few hundred feet from the northern edge of the fair’s main floor, where most of the tech-forward companies are gathered in Tech Toys alley. There, smartphone app-controlled drones outfitted with cameras flit between booths. Lego knows, and even hopes, that these devices keep kids pushing the traditional toy company toward the future. It’s doing all it can to be ready—but to meet the future the Lego way.
“If there is a concern, it’s with the pace of change,” says Laursen. “We are a company that likes to perfect things. We’re trying to learn a different way of what perfection means.” Working in the digital space, he says is “a much more dynamic experience.”