On the Money

Going Hollywood: How Lego stays relevant in a digital age

From innovation and new toys to theatrical releases, the more than 80-year-old toy company Lego is fun, profitable and continues to be relevant in an ever increasing digital age.

Lego — which comes from an abbreviation of the Danish words "leg godt", meaning "play well" — has a mission to help kids build development through play.

"We're fortunate that our brand, and the construction play pattern that the Lego brick is most famous for, is so timeless and gives us the opportunity to do so many different things," Skip Kodak, senior vice president for Lego Americas, told CNBC's "On the Money."

Lego innovation

The brand is one of the world's largest toymakers, second only to Mattel. It dominates the construction toy category, holding nearly two thirds of the global market share, according to market research firm EuroMonitor.

The company has been growing its revenue at a rapid rate. In 2010, Lego reported annual sales of $2.3 billion. Five years later, that number increased to $5.2 billion.

While Mattel had $5.7 billion in revenue in 2015, the Barbie maker has been on a downward trend, falling 5 percent from the previous year.

Lego goes Hollywood

Part of fueling that growth is Lego's venture into Hollywood.

The toy-maker came out with its first theatrical release "The Lego Movie" in 2014. This year audiences have the opportunity to see two new movies: "The Lego Batman Movie," which is out now, and "The Lego Ninjago Movie," which will be released in September. A sequel to "The Lego Movie" is slated to come out in 2018.

A close-up view of the Lego Star Wars death star at Hamleys Christmas toy photocall.
Bethany Clarke | Getty Images

"The movies are bringing in the appeal from the story line and giving kids an immersive universe to play in," Kodak said .

He's hoping to bring in a whole new audience to the toy line.

"Maybe those kids didn't always love Lego and then they get attracted in." he said. "And then in the other themes," such as toy lines like Duplo and Creator 3 -in-1, "we're able to help them find their potential and find their inner joy of creating."

Tech Check

In addition to classic building sets and sets based on movies and licensing deals, Lego will continue to develop toy lines that incorporate technology, Kodak said.

"We're nearly 20 years into technology toys in the Lego context," he said. "It started with Mindstorms back in 1998, and we've been progressively updating the technology in that product to keep up with the times and remain relevant with that."

The Mindstorms line is recommended for children 10 and older. With kids becoming more digitally savvy at a younger age, Kodak said the company sees a big opportunity to create tech infused toys for children as young as 7.

Their first effort in this space is called Lego Boost, and will be available later this year.

Kodak said Lego hopes this line will help young kids "not only with building and connecting with the physical experience, but then using technology as a way to animate the creation where [the child] is in charge of how it animates, how it comes to life, giving it a personality, giving it sounds. It's a really interesting way forward in terms of enhancing the physical play and the digital play."

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