GO
Loading...

Lego sees digital offering 'critical' for future

Thursday, 19 Dec 2013 | 1:53 AM ET
'Digitalization' something we need to respond to: Lego CFO
Thursday, 19 Dec 2013 | 1:30 AM ET
John Goodwin, CFO at the Lego Group, says the company is looking to complement its physical products with digital offerings.

Classic brick-building toymaker Lego, which has undergone somewhat of a renaissance in recent years, has told CNBC that its online offering will form an essential part of its future.

The Danish toy maker - which began making the iconic interlocking bricks in 1949 - increased its share of the global toy market to approximately 8.8 percent, according to its latest financial results, up from 8.6 percent in the previous year and making in the world's second biggest toy maker behind Mattel.

A "back to basics" approach has been seen by many as the reason for the turnaround at the firm, as detailed in David Robertson's book Brick by Brick: How Lego Rewrote the Rules of Innovation and Conquered the Global Toy Industry. John Goodwin, chief financial officer at Lego told CNBC that while innovation will continue with its core "physical play" offering, digital content was now "critical" to its strategy.

(Read More: Toymaker Lego looks to build on success in China)

"We see the digitization, as we call it, to be an important thing that we need to respond to. But we don't see it as a complete substitute. What we're looking to do is complement our physical play offerings with online content, online gaming, such that children can switch very freely between physical play and digital play," he told, CNBC Thursday.

"We believe that's the best way in which we can keep the children engaged and also add new dimensions to our product offering. So that's a key part of that innovation story....we that as an absolute critical part of our innovation program."

(Read more: Top 3 fantasy toys for the super-rich)

Worldwide tablet shipments are expected to reach 221 million units in 2013, up 54 percent on the year, according to forecasts by research firm IDC. A report by the International Telecommunication Union (ITU) has previously stated that about six billion of the 7 billion global population owns a mobile phone. Whilst children may be be too young for the Apple iPad or Samsung "phablets", there are alternatives that are aimed at the younger generation. Lego, it seems, is responding to this sea change.

As well as an online digital designer - software which allows you to build using virtual lego block - Lego has released a series of video games. Newer releases are being targeted at Apple iOS and Android platforms. Its first video game release was back in the late 1990s for the Microsoft Xbox and the Sony PlayStation 2. This venture into the digital space, however, coincided with a slump in the company's fortunes.

Lego was accused of trying to innovate in too many different areas during this period to 2003. Lego kits were deemed too simple and the company was seen as too reliant on big name tie-ins, with Star Wars and Harry Potter movies released at the time.

From 2003 onwards Lego began to focus on the classic-style kits of the 1970s and 1980s and began to reap the benefits. In the U.K., the Royal Mail published a survey on December 2011 identifying the presents children really wanted for Christmas this year. Top of the list was Lego, outgunning One Direction merchandise and the Microsoft Xbox One console.

(Read more: 125 shopping days left: Retailers start Xmas deals)

"We're excited about the products that we've got out there. We're very encouraged by some of the feedback we're getting from our consumers," Goodwin told CNBC.

"(We have) 200 designers to ensure we have the coolest possible designs that are keeping up with the high interest form our children consumers....we've got some great products, we feel that's going to keep our momentum in the business."

The firm is also expanding globally with new facilities in Hungary and China due next year and Goodwin said it had "strong plans" in order to continue expansions and increase its global footprint.

CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81

  Price   Change %Change
MAT
---
AAPL
---
MSFT
---

Featured

CNBC Global CFO Council

Video