The Lego Group built itself into one of the largest toy companies in the world brick-by-brick. Now, two major U.S. toy companies are launching new brands of bricks in hopes of capturing some of Lego’s lucrative market share in the construction toy category.
While Lego’s place at the pinnacle of the construction category is quite secure, even a small slice of its market share could be a big boost a toymaker’s bottom line. Lego reported 2024 revenue of over $10 billion, and its consumer sales were up 12%, while overall sales across the toy industry were down slightly.
At New York Toy Fair two weeks ago, Lego showcased its largest-ever product portfolio, including the new Lego Bluey licensed partnership, and wowed fair attendees by creating a garden setting for its exhibit, with large floral displays from its Botanicals Collection.
Room In Bricks Category For New Players
While toymakers previously have tried, mostly without success, to steal share from Lego, Lego’s strong growth in a tough year for toys has signaled there may be room in the category for new players.
“Of course they’re not taking on Lego – that would be a fool’s errand. But what Lego has demonstrated has been the appetite for construction toys in the collector and kidult market,” Chris Byrne, an independent toy consultant known as The Toy Guy, and author of “Toy Time”, a history of hit toys, said in an interview.
“They’re going to continue to be the dominant player in that category, but that doesn’t mean there’s not opportunities,” Byrne said.
In January, U.S. toy manufacturers, Mattel and Jazwares shared the news that they are launching brick-based construction sets.
Mattel’s new brand, Mattel Brick Shop, was announced at the Nuremberg International Toy Fair, but no other details are being made public until the first product in the new line is released in May. At the New York Toy Fair at the beginning of this month, Mattel had a case filled with plastic bricks bearing the logo Mattel Brick Shop at its exhibit, but no examples of products. The buzz from insiders at the show, however, was that new new brick products will be “brilliant.”
Jazwares creates a signature “SquishBrik”
Jazwares, the company known for the blockbuster toy hit of the past decade, the Squishmallows plush toys, began rolling out its new construction toy brand, BLDR, in January. Jazwares has come up with creative ways to create construction sets featuring toy properties including Hello Kitty and Friends, figures from popular online anime series Crunchyroll, and playsets inspired by its Squishmallows plush, which include a special “SquishBrik”.
Both companies said they decided to launch their new construction brands because they saw an opportunity in the market to capture a niche and meet a demand by consumers.
Not only is the construction category “one of the highest dollar volume supercategories of toys globally,” it is ”dominated by an industry giant, and subject to opportunistic, savvy, innovative new participants with phenomenal licensing relationships,” Jeremy Padawer, Chief Brand Officer at Jazwares, said via email.
“Jazwares’ decision to enter the construction category was born out of this insight, that we could serve the unmet needs of builders with a fresh, innovative new approach,” Padawer said.
In developing BLDR, he said, “we put the license and IP at the center of the building experience and developed concepts around the unique DNA of each.”
For the Squishmallows sets, they wanted to incorporate something “squishy” and created figures with a SquishBrik that gives the character a soft, rounded, and squishable belly.
Tiltable Heads For Hello Kitty Figures
With the Hello Kitty and Friends figures, “we leveraged the cute and iconic elements” of that property, Padawer said. “For instance, our minifugures have a special balljoint feature that allows them to tilt their heads – making them even cuter and more articulate,” he said.
For the Crunchyroll anime property, they created buildable 9-inch action figures using their QuikBrik design, which allows for a stronger build that also is easy to customize.
The first batch of BLDR sets were available at Target and Amazon starting in January, with wider retail distribution this spring. Prices of playsets and action figures range from $9.99 to $29.99, with minifigure sets starting at $2.99.
Mattel Seeks to Disrupt Bricks Status Quo
Mattel, when it announced the Mattel Brick Shop brand, said it is “designed to disrupt the status quo, bending the rules of building with innovative features, materials and techniques that inspire builders to try something new.”
The press release about the launch emphasized that Mattel is aiming to offer a quality building experience at an affordable price, implying that it is targeting those consumers who covet the elaborate building sets Lego is known for, but want that experience at a lower price.
Mattel says it will be offering “a quality brick fit, easy to follow playbooks,” and “more post-build opportunities like customization and more piece count, all at a competitive price.”
Mattel CEO Ynon Kreiz, during the company’s earnings call in February, called Mattel Brick Shop an opportunity for Mattel to “leverage our capabilities between design, very strong supply chain, and a global commercial platform.”
“We are leaning on the Mattel brand and leveraging the trust and relationship that fans have with Mattel,” Kreiz said.
Building On Mega Foundation
Mattel has solid experience in the construction category. It acquired the Mega Brands company in 2014, and has built that brand, with its Mega Bloks, Mega Construx, and Mega Collector lines, into the second largest brand behind Lego.
“Mattel’s Brick Shop is a reinvention of Mega Construx atop a foundation (Mattel’s) been building for years,” James Zahn, Editor-in-Chief of The Toy Book and Senior Editor at The Toy Insider, said via email. “I think we’ll see a compelling offering that checks all the boxes when those first sets debut in May,” he said.
With its BLDR line, Zahn said, Jazwares has “wisely leaned into their own IP, like Squishmallows, and they’re getting sets into specialty retailers like Hot Topic. ”If you look at their anime offerings, like the Chainsaw man set, its construction and an articulated action figure at an affordable price,” he said.
Zahn noted that this isn’t the first time that toymakers have tried to grab some of Lego’s magic and market share.
In the 1980s, he said, the Tyco toy company “famously placed a full-page ad in The Toy Book with bold , black text in all caps: TYCO DECLARES WAR ON LEGO. It didn’t end well for them,” Zahn said.
Hasbro also made two attempts to innovate in the construction space before deciding to concentrate on licensing its IP to Lego and Mattel for their brick sets, Zahn noted.
“There is a lot of appeal for toymakers to get into the building and construction category because they see a whitespace for a challenger in an aisle traditionally dominated by two companies over the past 40 years – Lego and Mega,” Zahn said.
“A competitive advantage that the Lego Group has always maintained is extreme precision,” Zahn said. “Challengers couldn’t nail a Lego brick’s perfect fit no matter how hard they tried. Now, they’re getting close, but it’s up to the consumer to decide, – and all brands have fans,” he said.
“The biggest opportunity in this space,” Zahn said, “is to offer excellent products at a great value. Lego sets can be very expensive, which puts them out of reach for many kids and families who would love the opportunity to build them,” he said, noting that the high price has led to an uptick in knockoffs and bootlegs. “I’m curious if the opening of the new Lego factory in Virginia will impact pricing in the U.S.,” he said.
Read the full article here