TO Graphic Design Year 3 University Centre

TO WHAT EXTENT MAY LEGO SURVIVE THE DIGITAL ERA?

 

Hannah Moore

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BA Hons Graphic Design

Year 3

 

University Centre Doncaster

January 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

1.     
Introduction

2.     
Review of Literature

3.     
Methodology

4.     
Background history and current status

5.     
The popularity and how LEGO can be used to aid
child development

6.     
How LEGO wins over digital technology

7.     
How does LEGO Loose over digital technology

8.     
The LEGO Group’s current and possible transition
into the digital market

9.     
Case studies

10.  
LEGO: The future?

11.  
Conclusion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

The aim of this dissertation is to establish whether The
LEGO Group can survive the digital era and if so, to what extent?

The LEGO Group has been the forerunner in the production of
polymer bricks and have made up for a huge margin of the toy industry since the
brick’s creation in 1949 (Amie Tsang, 2016). The company has also had its fair
share of difficult periods, losing their US patent and having a sudden influx
of cheaper alternatives as direct competition (Ian Austen, 2005). With every downfall,
The LEGO Group has seen the company also seems to make a success of it.

However, the advances in modern technology poses an
ever-increasing challenge to the toy giant, leading to the announcement that
the company is to cut to 1,400 plus job in 2017 (Angela Monaghan, 2017).

There has been a lot of historical interest regarding LEGO
and a lot of studies have come from this. However, little information relates
The LEGO Group surviving the digital era. This naturally raises many questions.
Will there be a need for LEGO in the future? If so, is being a
three-dimensional building block enough? Or will the company need to seek ways
as to how they can transition into the digital market?

In an attempt to answer such questions, it is also hoped the
reader will gain a significantly better understanding of how the digital market
is seemingly taking over and what “traditional” toys are doing to compensate.

A detailed look of literature that surrounds the subject
matter will help to gain key knowledge and will hopefully help provide a better
understanding. This is helped by the vast array of research available and a
huge part of the topic happening right now it is hoped that this dissertation
will come to a definite conclusion.

REVIEW OF LITERATURE

The inspiration for this dissertation comes from the recent
news that The LEGO Group is struggling and the desire to know more about the
company and how the toy giant can potentially transition into the ever-growing
digital market. This subject seems to be a more unusual topic covered from the prospective
of graphic design and appears to be a rare subject among writers.

However, the book “Brick by Brick: How LEGO Rewrote the Rules of Innovation and
Conquered the Global Toy Industry” By David Robertson with Bill Breen offered a
great insight into the company and how their business strategies have impacted
their output.

The book is a case study spanning from
1999-2009 and has some interesting historical sections distribution throughout
the book. It is centred more around the managers creating a plan to encourage
innovation and how the founding Christiansen family wasn’t particularly
diligent in their oversight of the company, making this book a useful resource
throughout the course of research.

Other books which were used to get an overview of The LEGO Group, these
are as follows.

“The LEGO Book” by renowned author Daniel
Lipkowitz, was used as this book provides crucial information into the history
of the company, the development of the first
plastic brick, The LEGO Group’s current position as an international brand as
well as providing fascinating facts on every significant products line,
LEGOLAND theme parks, video games, collectibles and much more.

Another book used was “The
Cult of LEGO” by
blogger John Baichtal and Joe Meno, founder of BrickJournal. The book has interesting stories about people who still enjoy
playing with these colourful bricks even when we’re in our 40’s and beyond. (Julie Strietelmeier, 2011). This book showcases people from all
works of life. From professional
LEGO artist Nathan Sawaya to Angus MacLane, a Pixar animator. ­­

To
explore different avenues of this dissertation, many journals and articles were
used to help understand other topics surrounding the dissertation topic.

One
journal used was “LEGO Therapy and the Social Use of Language Programme: An
Evaluation of Two Social Skills Interventions for Children with High
Functioning Autism and Asperger Syndrome” By Gina Owens, Yael Granader, Ayla
Humphrey and Simon Baron-Cohen on behalf of the University of Cambridge, UK.

This journal explores how a
programme was used
as social skills interventions for 6–11 year olds with high functioning autism
and Asperger Syndrome. Results showed that the group using LEGO bricks as
therapy improved more than the other groups without.

This
knowledge will then be used when investigating the potential future of The LEGO
Group and hopefully effectively answer the questions raised.

METHODOLOGY

Methodology
can be defined as the process used to collect information and data for a study
(Alan Burton, 2008). The aim of this dissertation is to gather and provide
in-depth knowledge and reasoning around the topic of The LEGO Group and their
future. This text demonstrate how information can be used to form and accurate
conclusion. To achieve this, I will be using primary and secondary research in
addition to literature reviews, document analysis and case studies.

PRIMARY
RESEARCH

Primary
research will involve approaching industry experts and visiting The LEGOLAND
Windsor Resort as well as discussing with those who have an interest in the
subject, whether for themselves or for their children. With this combined, it
will hopefully offer a better understanding into The LEGO Group and the
company’s potential future.

SECONDARY
RESEARCH

For this
Dissertation, a series of different media outlets were chosen to aid with
research and used to gather a more in-depth knowledge into the issues
surrounding the future of The LEGO Group. The media outlets used included books
detailing the history of The LEGO Group and television documentaries. The
internet will also prove to be a priceless asset when conducting my
investigation as it will allow access to relevant journals, reports and documentaries.
All these will hopefully provide the much-needed information needed to examine
how effectively LEGO can possibly transition into the digital era.

Areas of investigation will be focused towards the origin of
the humble brick, the company’s near miss with bankruptcy and the ever-growing
digital market. 

The information gathered will then applied when analysing
the growing digital era and the negative impact on The LEGO Group, while
outlining their possible transition into the digital market.

 

BACKGROUND HISTORY

Children have played with toys for hundreds of years, in
fact marbles were found in a child’s grave in Nagada, Egypt and date from 4000
BC. Medieval toys were made of wood and included yo-yos, cup and ball toys and
tops. (Andrew Howard, 2012).

The history of The LEGO Group is evidentially shorter in
comparison to toys in general. The history of The LEGO group spans over 80
years, since the company was founded in 1932. The company was created by Danish
Carpenter, Ole Kirk Kristiansen, a Danish carpenter (See Appendix 1) who purchased a small woodworking shop in 1916
before a tragic workshop fire combined with the Great Depression saw his
company make smaller, more affordable items such as wooden toys.

By 1934, Ole Kirk Kristiansen asked his staff to come up
with a good name for his growing toy company. the name LEGO, was eventually
chosen and was penned Ole Kirk Kristiansen himself and is a combination of two
Danish words “LEg GOdt” (“play well”). Later, it is
realised that in Latin the word means “I put together” (Daven Hiskey,
2010).

The forerunner for the LEGO bricks we know today was introduced in
1949, these were called Automatic Binding Bricks (See Figure 1), these bricks even fit with the LEGO bricks produced
today.

Figure 1

However, research has found that a company called “Kiddicraft”
created the first interlocking bricks in the 1940s, calling them “Kiddicraft
Self-Locking Building Bricks” (See
Figure 2 & 3). These were patented by Hilary “Harry” Fisher Page (See Appendix 2). It is understood that
Kirk Kristiansen came across these bricks in a demonstration he was shown of an
injection moulding machine when in London. It can be argued that he then copied
and modified these bricks before selling them under his own brand two years
later. However, to this day it isn’t clear whether Kirk Kristiansen knew these
bricks were patented or simply saw the potential of the plastic brick. Fortunately
for Kirk Kristiansen, Page died without ever finding out LEGO had copied his
product illegally. (Jim Hughes & Chas Saunter 2008).

Figure 2                                                                           Figure
3

The success of the Automatic Binding Bricks, made way for
the company dropping the unmemorable name and rebranded them as LEGO Bricks in
1953 and the name was printed inside all the bricks. In 1958, the LEGO brick
finally came into its own as the current LEGO stud-and-tube coupling system is
patented (See Figure 4). The new
coupling principle makes models much more stable. However, the founder never
lived to see his company’s heyday as Ole Kirk Kristiansen passes away and his
son Godtfred Kirk Christiansen becomes head of the company. (Ransom Riggs,
2009).

Figure 4

This new stud-and-tube coupling system would prove to be the
most successful innovation in the history of the company. Godtfred Kirk
Christiansen sure the value of the new design and mindful of the “Kiddicraft
Self-Locking Building Bricks” situation, he immediately set out to protect the
new design. The company presented the application to Danish Patent and
Trademark Office in 1958. (Christopher Mahoney, 2013).

With this patent granted, the company had twenty successful
years, with more than 600 employees in Billund, Denmark. In 1964 a major
revolutionary development happened as for the first time, consumers could buy
LEGO sets, which included all the parts and instructions to build a model (Jennifer
Rosenberg, 2017). Soon to follow was the opening of the first LEGOLAND in 1968
and the launch of LEGO DUPLO in 1969. (See
Appendix 3)

However, twenty years after the initial patent was granted
it expired in 1978 in the United States. This opened the doors for a flood of
competitors, which LEGO was concerned about. In 1984, the first major competitor
surfaced in the US market, this company was called Tyco Super Blocks. (Tom
McFarlane, 2016).

In the mid-late 1980s, the Tyco Super Blocks started to make a number
very derogatory adverts (See Figure 5) aimed
directly at The LEGO Group. All having the similar message which was that Tyco
and LEGO were vertically the same so way spend more for LEGO Bricks.

 

 

 

 

 

 

 

 

 

 

 

Figure 5

The LEGO Group tried to retaliate, they did this by seeking
legal action and filed a law suit again Tyco Super Blocks, this would become an
ongoing series of proceedings. The LEGO Group’s argued that they owned the
copyright and/or trademark of the generic plastic building brick, and nobody
should be able to make one that looked sufficiently like theirs. When The LEGO
Group patented its stud-and-tube system the company was aware that there are
many different variations on how to temporarily affix two blocks together, to
try to avoid that possibility, the company also patented several other designs.
Unfortunately, The LEGO Group couldn’t cover everything. Several other
companies had other competing products that used slightly different mechanisms.

(See Figures 6 & 7)

 

 

 

 

 

Figure 6                                                                           Figure
7

POPULARITY AND
CURRENT STATUS

POPULARITY

The LEGO Group has always been popular amongst children and
adults since year the company being founded in 1932 and the company never
posted a loss until 1998. However, by 2003 the company was in big trouble.
Sales were down 30% year-on-year and it was 800 million dollars in debt. This
was attributed to one factor; LEGO hadn’t changed since the 1950s whereas other
competitors such as Fisher-Price, Barbie, Hot Wheels and Matchbox toys greatly
expanded their product lines (Johnny Davis, 2017).

This was arguably ill sort advice as expending their portfolio
almost lead to The LEGO Group going bust. The group introduced jewellery for
girls as well as clothing ranges. Launching a long list of disastrous products lines;
Lego Technic Fiber Optic Multi Set, Znap (See
Figure 8), LEGO Primo to name but a few (See Appendix 4). The company also opened LEGOLAND theme parks that
cost £125m to build and lost £25m in their first year. Perhaps seeing the popularity
of digital technology, The LEGO Group even set up their own video games company
from scratch, despite having no experience in this field (Richard Feloni, 2014).

 

 

 

 

 

 

 

Figure 8

However, traditional LEGO sets still sold, but this was largely due
to lucrative license deals with Warner Brothers and Lucas Films (See Appendix 5). This enabled the
company to create Harry Potter and
arguably the most successful license deal, Star Wars. (See Figures 9 & 10) (John Kell, 2017).

                                                                
Figure 9                                                             Figure 10                       

Development of digital technology and the failure of The
LEGO Group giving consumers what they wanted sure the popularity decline
massively. However, the “terrible period” between 1999 and 2003 and near brink
with bankruptcy became a thing of the past when Jorgen Vig Knudstorp, the first
non-family member, was appointed as CEO in 2004. (Anna Anardzo, 2015).

The initial task of Jorgen Vig Knudstorp was to holt the
lossmaking and over-extended product line. Vig Knudstorp adopted a strict focus
on cash, selling off less popular ventures such as theme parks and video games,
and cutting the number of parts LEGO made. He made the home of LEGO, Billund
the heart of the group again. (Richard Milne, 2016).

With the core factors in mind, the company could rebuild their
business. This time realising innovation was not the option. The initial step
was to embrace their loyal and creative fan base. The company hired “adult fans
of LEGO” (AFOL) to join their design team and began to look closer to home for
new ideas (Evan Shellshear, 2016). This crowdsourcing venture proved successful
and The LEGO Group transformed this into a full blown open operation, which
resulted in the LEGO Ideas portal. Through user input and integrating with the
ever-growing digital marker, this online platform creates hundreds of new
product suggestions each year. This platform has grown in popularity as it allows
users to vote on their favourite sets in the hope LEGO will manufacture the set.

In 2015, the increase of popularity in LEGO lead to sales
raising 25% on the previous year. This was largely accredited to the popularity
of The LEGO Movie (See Figure 10),
which was released in cinemas worldwide in 2014 (Rhiannon Curry, 2017).

Figure 10

In 2016, The LEGO Group reported its highest revenues in
their 85-year history as profits returned to a more “sustainable” level after
years of double-digit growth, but sales were slowing and only a 6% raise was
documented that year.

CURRENT STATUS

However, with the overall popularity of LEGO declining, the
company took the decision to cut 1,400 jobs in 2017. These job cuts represent
roughly 8% of its 18,200-global workforce (Angela Monaghan, 2017).

 

 

 

HOW LEGO IS USED IN
CHILD DEVELOPMENT

LEGO has been unknowingly used for Child Development since
the creation of the first bricks. The LEGO Group established their Educational
Products Department in 1980, this was later renamed LEGO Dacta in 1989 (See Figure 11). This range extended
the then CEO Kjeld Kirk Kristiansen’s (See
Appendix 6) development-through- play philosophy more deeply into the
company’s core mission (Joan Baxter, 2005).

 

 

 

 

 

 

 

 

Figure 11

This change allowed for The LEGO Group to reposition itself
in the toy market, it was then seen as not only a toy but also a tool for
education (Maaike Lauwaert, 2008). However, this success was short lived as by
the end of the 1990s, a declining interest in construction play made for kids
from ever earlier ages turn away from traditional toys, and technological
developments that made LEGO sets look boring and old fashioned. (Ivar Ekman
July 2007).

However, despite the loss of interest in LEGO, the bricks
are still used to aid child development today. There are many reasons why LEGO
can aid Child development such as; a sense of accomplishment, persistence,
puzzle solving and engineering. However, the three more important reasons as to
why LEGO can aid child development (Dr. Maryhan Baker, 2015).

LEGO bricks can be used to promote Fine Motor Skills, as the
bricks come in a vast array of shapes and sizes, which children can use to
learn how to assemble and take apart.

Psychologist, Dr. Maryhan Baker claims:

“These small twists and turns of their hands, fingers, and arms promote
coordination and skills which children need for handwriting, crafts, and
independent dressing…”

The nature of the LEGO bricks allows for children to learn
about applying differential pressure and using different techniques to get the
bricks to join. This will hopefully transition when learning about applying the
right amount of pencil pressure as children learn to write (Katie Wilson, 2016).

Another area of which LEGO bricks play a role in child
development is “Creativity Play”.

In a journal published in 2013, Danielle Buckley states:

If to be given a box of assorted LEGO pieces, children will almost
instinctively begin to create structures which are essential to ignite their
imagination and develop their creativity. Through imaginative play children
lose themselves in their fantasies. With evidence that an anxious child could
lose all inhibitions when preoccupied within their own imaginations…”

The final major factor of why LEGO can aid Child Development
is that the bricks provide an opportunity to try new skills without fear of
failure. When children play they are always learning new skills, these skills
can be used in other areas of life as playing with LEGO bricks provides an
understanding of spatial awareness, promotes a sense of creativity, and teaches
basic knowledge of symmetry, mathematics. It can be argued that children learn
much more through LEGO play because there is no fear of failure. (Dayna
Abraham).

With the use of LEGO being used to aid child development

 

 

 

as with so many electronic and battery powered gadgetry on
the market it can be hard to find toys which children find engaging yet
stimulate creativity that also promote intellectual and physical development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX

Appendix 1: Ole Kirk Kristiansen

Ole Kirk Kristiansen was a Danish carpenter, in 1916 he purchased
a woodworking shop in Billund, Denmark which had been in business since 1895. The
shop mostly built houses and furniture. Unfortunately, in 1924 a fire in the
workshop started when some wood shavings caught alight, leading to the workshop
to be burned. This resulted in Ole Kirk constructed a larger workshop, and
worked towards expanding his business. When the Great Depression hit, Ole Kirk
had fewer customers and had to focus on smaller projects. He began producing
miniature versions of his products as design aids. It was these miniature
models of stepladders and ironing boards that inspired him to begin producing
toys.

www.lego.com/en-gb/aboutus/lego-group/the_lego_history/1930

Appendix 2: Hilary
“Harry” Fisher Page and Kiddicraft

Hilary Fisher Page (also known as Harry) was born in 1904 in
Surrey, UK. As a child, he showed an interest in making toys and inventing his
own games. Throughout the early and mid-1930s he experimented with molding
plastic toys, mostly using the thermoplastic urea-formaldehyde. He created the
Self-Locking Building Bricks in 1947 and these were aimed at the older children.
The LEGO Founder, Ole Kirk Kristiansen, was shown these bricks in a
demonstration for an injection moulding machine. He modified the Kiddicraft
brick and marketed his own version, The Automatic Binding Brick, in 1949.

www.hilarypagetoys.com/Home/History

Appendix 3: LEGO
DUPLO Series

DUPLO is a theme and a subline which of the traditional LEGO
Bricks. The Duplo series is intended for children aged 1-5 years old, these
oversized bricks were first introduced in 1969 however, by 1975 they were
introduced as an independent theme.

The LEGO DUPLO bricks are about twice the length, width, and
height of the standard LEGO brick making them more suitable for developing the
motor skills of children.

www.lego.wikia.com/wiki/DUPLO

Appendix 4: Unsuccessful
Product lines (1999 – 2004)

 

Appendix 5: LucasFilm

 

 

 

 

 

 

BIBLIOGRAPHY

 

 

 

 

Encyclopedia of Play in Today’s Society

 

The Unofficial Guide to Learning with Lego(r):
100+ Inspiring Ideas (Lego Ideas)

https://www.oneeducation.co.uk/one-editorial/educational-psychology/lego-based-therapy-a-group-intervention/