How to Rebuild Lego

MARCUS BRANDT / AFP / Getty
Playing with lego

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In many ways, its success is no longer built on tiny studded bricks. It has moved from the business of selling construction toys to marketing highly developed models, even entire worlds. It's as if Lego has reinvented itself as a media company and the stories are told not in books or on film but in small interlocking blocks and through the imaginations of the children who play with them.

In 1999, the company struck its first license deal and began to produce sets based on the Star Wars movies. Since then, Lego has moved more and more into selling themed boxes. In an industry where licensed products account for roughly a quarter of sales, the company has offered products based on Batman, Harry Potter, Bob the Builder, Indiana Jones and SpongeBob SquarePants . Early last year Lego announced a multiyear partnership with Disney, acquiring the rights to produce sets based on a variety of the company's intellectual properties. This year, Lego started rolling out products based on Toy Story, Prince of Persia and Cars. "They pretty much have almost every license you want in the toy industry," says Lutz Muller, a toy analyst and the president of Klosters Trading Corp.

Lego has also created story lines of its own, like its deep-sea-adventure series called Atlantis, selling the story online with a 22-minute movie, minigames, a 3-D website and augmented-reality content. The site is intended to provide kids with Atlantis' major plot points key battles, the discovery of the city and its developers will be updating it during the year as new Lego sets roll out. "We've really focused on providing triggers for the boys to play," says William Thorogood, a design manager.

Now Knudstorp faces his biggest challenge: how to adapt Lego's plastic blocks to the pixel age. "We need to find out what is Lego in the digital space," Knudstorp says. The Lego website pulls in 20 million unique visitors a month and includes a program called DesignbyMe that people can use to put together a virtual Lego creation, then order a physical copy, complete with an automatically generated building guide that they can print. "It's taking the free-build experience and moving it to the virtual world and back again," says Trine Balle Kristensen, an online-experience manager.

The Web has also allowed the company to feed an adult fan base. Mindstorms, a robotic tool kit that uses Lego bricks, has developed a cult following among engineers and software developers. In 2008, Lego launched a series of architectural models of skyscrapers designed for Lego bricks by a fan. "It would have been unheard of 10 years ago," says Adam Reed Tucker, the operator of Brickstructures Inc., who pitched the idea at a conference.

But what the company lacks for now is an online experience to rival its physical toys. Later this year, Lego will make its most significant digital move yet, when it launches Lego Universe, a multiuser online role-playing game, in which participants become a Lego figurine battling evil in a world being consumed by a dark energy called the Maelstrom. "We're basically trying to take the essence of the Lego brand and put it into the virtual space," says Lisbeth Valther Pallesen, executive vice president in charge of the community, education and direct division.

The game will be familiar to anybody who has played the Lego-themed video games for the Wii or PlayStation. Users will be able to design and decorate their own personal space, but most of the game will consist of combat, collection and the completing of missions. If Lego Universe succeeds, its product will be pure media, a world in which the company's freestyle construction will be just a distant memory. On the Internet, at least, the little plastic brick that survived the Great Depression and the Great Recession could be a thing of the past.