For more than half a century, Lego's colourful plastic bricks have been used to create buildings, cars and planes and other imaginary worlds in playrooms across the world. Pirates, princesses and space themes were later blended into the mix, following tie-ins and toy series based on blockbuster movies including Star Wars, Pirates of the Caribbean and Harry Potter. Meanwhile, clone products that look very much like the original have appeared from rival firms and the Danish family-owned business has also had to contend with a boom in online gaming. Lego's account books are no longer ticking along as they once were. It all began almost 60 years ago on January 28, 1958.
Former Lego managing director Godtfred Kirk Christiansen filed a patent for a small plastic block with two rows of four studs on the top and three tubes on the bottom and the iconic Lego brick was born. The hidden tubes were the secret as to why his bricks held together and were more stable than many others. The technical patent expired after 20 years. These days, any company can copy Lego bricks and quite a few do, too. Sluban, a company that has its European headquarters in the Netherlands but produces its toy bricks in China, makes products that fit with Lego bricks, but which are much cheaper.
Similar strategies drive other firms such as Lepin and Lele. They even offer Lego-like theme worlds. The difference is that they don't shy away from soldiers and tanks in the playroom, taboo designs for the Danes on ethical grounds. Lego "can't do anything" against the copies, Danish patent lawyer Thorbjorn Swanstrom explains. "The brick looks the way it does because it has function."
For years, Lego has gone to court against imitators, often in vain, and Swanstrom says the Lego brick can no longer be protected. "We all know: none of us like competition. It is brilliant to have a monopoly," Swanstrom adds. The clone designs are creeping into Lego's main markets. At first, competitor products were only sold in Asia, then in Greece and Turkey. "Now they are coming to Northern Europe," said Swanstrom. Even in Lego's home country, Denmark, a large toy chain recently offered clone Lego blocks in its range, shortly before Christmas. In Germany, Lego continues to be the undisputed market leader.
According to the country's trade association for toys (BVS), the Danish firm is the manufacturer with the highest turnover in the German toy market - far ahead of Ravensburger, Playmobil and Simba. Lego copies have not appeared in the German statistics yet, says"Willy Fischel, who heads the association. But, in Germany, Lego's turnover fell by 2 percent from January to October according to BVS. It's part of a more general negative trend for Lego.
During the first half of 2017, the firm's sales and profits decreased by 3 to 5 percent compared to the same period last year. Even 2016 had its challenges, especially in the important markets of Europe and the US, where sales are slipping. Recently, Lego said it would cut around 1,400 jobs worldwide, about 8 percent of its workforce. Despite the threat of intense competition, the Danish company is trying to stay calm, it seems. "Fair competition is in our best interest. It keeps us sharp," company spokesman Roar Rude Trangbaek says, adding that the toymaker doesn't consider Lego clone products its greatest threat.
"We are competing for the children's time. They can either play with toys or with digital devices," Trangbaek says. Lego has seen how the toy market is changing and is now investing in an online platform where children can download construction designs and share photos of their Lego models with others. It's all about giving the product a "digital layer." "We want to be part of everything children spend their time on," Trangbaek says. "It is all centred on the Lego block.
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