Will Lego be the Next Blockbuster?

Billund, Denmark. It was autumn 2010 when the head of innovation at Lego stepped into Jørgen Vig Knudstorp’s office, CEO at Lego Group. He discovered an emerging Swedish studio, Mojang, that was basically making a virtual construction platform (note the term platform vs. game). The first platform of the kind was released more than 15 years ago (with the Doom WADs), so this was nothing new. Even Lego had produced their own “sandbox” in 1998, the Lego Creator. But this new game had something else, a community of contributors, almost unlimited user generated content, some secret rules for object crafting that were not directly exposed by the studio in any tutorial, and the ability of playing online within the same world between users. Oh, yes, and some skeletons, monsters, spiders and zombies wandering around.

Mr. Knudstorp scratched his beard. “We’re already well positioned in video games, with all the different franchises (Star Wars, Harry Potter, Lord of the Rings…), and have a strong fan community, we don’t need a game that might, directly, undermine our main source of business… selling plastic blocks. If we take our young consumers to digital environments for creating whatever they want without the limits of a given purchased box, in the mid term we will be cannibalizing our plastic block business (a multi-billion dollar business, by the way), and we will have to cut hundreds of jobs”.

This story might well be real (although is invented), the fact is Microsoft purchased Mojang last September for $2.5 billion, not bad taking into account that Lego’s market value itself is estimated around $15 billion.

Minecraft is as simple as Lego, with these features that make it so appealing (Community, Limitless, Social), and might very well be the Lego of Generation Z. When I was a kid I was a fan of Lego, and I always wanted more boxes, not only for creating whatever was designed in the box, but to be able to mix the blocks and create something new. Sometimes I invited my neighbors over so we created bigger things together. The limit was our imagination, and, of course, the number of boxes my parents and grandparents could afford.

My 10 years old kid had Minecraft for Christmas, at a very competitive price of 19,90€ (very few games are at this price range). In a weekend we created incredible things together. I felt the same than 30 years ago, just without the limitation of needing to buy more boxes. We invited over (online) one of my kid’s friends to join the world we created, and they both together discovered every single corner of it. Endless creativity, endless entertainment.

But this post is not about Minecraft, I wrote it after I walked through a toy store this weekend, where I found Lego using the Minecraft franchise to create…a plastic blocks box.

No doubt Mojang was interested in licensing the product to Lego, as they probably don’t consider it a competitor. I wonder when Lego realized they needed to get closer to the Minecraft phenomenon and if somebody made the question of why Lego didn’t try to do something about it much earlier (beyond making a plastic block series of it). Are they recognizing they missed it, or do they think Minecraft is just another game, such as Angry Birds, with a limited lifespan?.

If you still think it’s just a kids game, you might want to take a look to what Microsoft is doing with it. In the Launch of HoloLens, Minecraft was one of the use cases shown. You will be able to build anything, out of the traditional screen, and that is another huge shift (this time not coming from Mojang, but from Microsoft, showing the acquisition has been a great idea)

After seeing this, does anybody think selling plastic blocks will have any future? In the mid term, I doubt it. But many corporations faced similar critical junctures in their histories, some of them changed and successfully adapted (such as Sega abandoning their console business and focusing on video games), some others didn’t (such as Blockbuster). Maybe blockbuster had the chance to create a Netflix, or they could buy it before it was too late, but they thought renting DVDs online for home delivery was the good way to maintain their business, since developing a streaming service would make them close hundreds of stores nationwide, cutting thousands of jobs. Well, that happened anyway…

Let’s go back to Billund, Denmark. When you believe you have your business under control, gracefully shifting from brick (literally) and mortar to digital channels, creating community, video games, movies, and a great brand such as Lego, you don’t think you need to invest in something that could be killing your main business in 10 years time. And when that happens, it’ll maybe too late.

I wonder if Lego ever had the chance to buy Mojang. It would have been a bold move, owning the space that could kill them. And what if in 10 years time Lego was not producing plastic blocks anymore? Well, that wouldn’t be a problem if they had Mojang. But now the story is different. For now, they are just licensing the Minecraft franchise. Like Blockbuster renting DVDs online.

Just take a look of what can be done in Minecraft, and then, as always, feel free to like this post, share it and follow me.