How did LEGO become one of the world's largest toymakers?

LEGO began as a small carpenter's workshop and, over roughly 90 years, became one of the world's largest toy manufacturers. It remains owned by the Kirk Kristiansen family across generations. Its rise rested on a single standardized product, a crisis in the early 2000s that pushed it back toward that product, and later growth from licensing, films, games and adult fans. [1]

According to Forbes, the modern LEGO brick came into being under Godtfred Kirk Kristiansen, the second generation of the family to run the firm. He saw the brick as a sturdy, simple product and a system offering endless creative possibilities. He drew up a list of product characteristics, including long hours of play and quality in every detail, and circulated it to everyone in the company. He also applied his knowledge of material science and production technology to manufacturing. Because of those precise specifications, bricks made under his watch are interchangeable with those sold today. [2]

National Geographic reports that LEGO posted its first-ever loss in 1998 and reported a $238 million loss in 2003, when the company was looking seriously at bankruptcy. It had moved into clothing, amusement parks, video games and jewelry, on the thinking that people valued the brand more than the product. Its sets had also been simplified so heavily that customers could skip the build experience, and one retailer reported shoppers asking for the LEGO aisle while standing in it. [3]

Adult fans, known as AFOLs, were already buying heavily. When LEGO began making licensed sets tied to films such as Star Wars and Harry Potter, adults bought most of that merchandise, and at one point they made up 70 percent of buyers of Mindstorms robots. Executives had long seen these fans as a source of irritation, but during the crisis the company began listening to them, drawing on them for design, software and marketing ideas, and formed an AFOL Engagement Team. [3]

Smithsonian Magazine, summarizing reports from Forbes, Quartz and others, says LEGO passed Mattel as the world's most profitable toy company, having overtaken Hasbro the year before. It credits a wider focus on adults and hobbyists, licensing deals such as Star Wars and Disney, The Lego Movie, video games and minifigures. It also quotes the New Yorker's contrast: Hasbro and Mattel grew through diverse toys, while LEGO focused on one iconic product and tried to get more kids to play with it. [4]

Business Insider reported that LEGO's revenue rose 13% in the first half of 2024 to $4.6 billion, while industry sales fell 1% over the same period. RTÉ adds that the company has also had success in television, film and gaming, and that its Legoland resorts remain popular. [5] [6]