Lego is going to make its videogames in-house from now on, says it would 'almost rather overinvest'
The world's largest toymaker, Lego, has told the Financial Times that it intends to build its own videogames in-house from now on. The company has heavily invested in digital infrastructure in recent years, tripling the number of software engineers it employs since 2022, and aims to move away from outsourcing the brand to third party studios.
Lego chief executive Niels Christiansen, a happy man after a strong period of growth that's seen revenues hit $10 billion, says that doing digital stuff alongside the core physical toy business is a no-brainer.
"We can definitely say as long as we’re under the Lego brand we can cover experiences for kids of all ages, digital or physical. [Games development in-house] is something we’re building up."
Lego has most notably seen success with the various titles developed by Travellers' Tales, the most recent being The Skywalker Saga, though other games such as Lego Dimensions failed to make much of an impact. It's also seen success with major videogame tie-ins to its core business of Lego bricks, including the Super Mario and Sonic the Hedgehog sets.
The brand remains undeniably box office, however, and has enjoyed successful collaborations with the likes of Fortnite, while of course always looking enviously in the direction of Minecraft: The game that Lego believes it should have made (or acquired before Microsoft did).
Lego continues to outpace traditional rivals Mattel and Hasbro in both revenues and profitability, and is a bright light in the toy industry which, generally speaking, sees itself in an existential battle with videogames for kids' playtime. Its most recent financials were released on Tuesday and show revenue up 13% to DKr74bn ($10.1bn) and operating profit up 10% to DKr18.7bn ($2.7bn).
Christiansen also told the FT Lego would not "overreact" to President Donald Trump's tariffs, with the company shipping most of its US inventory from Mexico, adding that the company had got through the Covid pandemic "by not overreacting, and it’s the same approach here."
When it comes to digital, however, Christiansen is going all-in. "We have made quite a few investments in the future—I’d almost rather overinvest. That’s the benefit of being family-owned and long term."
Longtime Lego-watchers may have some slight concern at this: The Danish toymaker veered worryingly close to bankruptcy two decades ago, which was widely seen as a result of over-investing in peripheral interests and ignoring the core business of little plastic bricks that really hurt when you step on them. But Christiansen believes the company's current size, and the lessons learned from that period, mean this time it will be different. The real test, however, will be whether it can build a fun game.