Danish toy giant Lego is tapping into its metaverse by partnering with game enabler Epic Games to target digital markets.
The Lego Group is collaborating with game engine company Epic Games to launch a metaverse-powered initiative targeting digital markets. The popular Danish toy company is reportedly looking to diversify its portfolio of entertainment offerings with this joint venture. The Lego-Epic metaverse project involves a sprawling virtual world powered by the resources of the American software and video game developer.
According to the financial times, Lego is preparing to present details of its metaverse initiative with Epic Games. The interlocking toy brick company’s strategy to continue increasing its market share and growth streak is to establish a presence in virtual worlds. The Denmark-based toy line could foster brand recognition online by offering Lego products to customers in such markets.
Lego CEO Niels Christiansen weighed in on the development of the metaverse, saying:
“We are doing a lot of things on the digital side. That is where we are increasing investment. We know very well how to immerse consumers in the Lego universe in stores. We are working very hard to create that feeling of entering the universe of the Lego brand digitally as well.”
This development isn’t Lego’s first venture into building a digital space for its fan base. Last April, the Danish toy giant also partnered with Sony through a $2 billion investment in Epic Games. The agenda was to build a metaverse platform to further engage the toy brand with children in a safe and secure format. At the time, Lego described the digital space as specifically designed for younger users and “family-friendly.”
Lego-Epic Metaverse development comes amid toy company’s sustained profitable streak
Lego’s sales and net profit have risen by two-thirds in the last three years, sparked by the blessing of Covid. During the pandemic, the growing interest of children and adults for its easily recognizable plastic bricks spurred the incredible growth of Lego. The Danish toy company also saw significant growth in 2022, with revenue up 17% compared to 2021. Last year, Lego had revenue of $9.3 billion, with net profit also up 4% year-over-year. $2 billion despite macroeconomic hurdles.
Lego’s incredible growth trajectory over the past three years also sees the toy brand leapfrog US rivals Mattel (Nasdaq: MAT) and Hasbro (NASDAQ: HAS). Last year, Mattel had revenue of $5.4 billion along with net profit of $400 million. Meanwhile, Hasbro posted sales of $5.9 billion against a relatively tame net profit of $200 million.
The increase in Lego sales was mainly driven by strong numbers from Western Europe and the Americas, with consumer sales growing by 12% in 2022. However, the prominent Danish toymaker projects a “normalization” of growth in 2023 characterized by single-digit gains. Nonetheless, Lego still expects to grow faster than the toy industry. Expounding on this development, Christiansen said:
“We expected growth to normalize this year and it has. We will continue to invest behind our momentum. Historically, the toy industry has not been overly cyclical.”
Lego is preparing to open factories in Vietnam and the US next year and by 2025. This goal seeks to fuel growth beyond the privately owned toy company’s home region of Europe.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
