Up Close: Jill Wilfert on Lego's licensing efforts

By Staff -- Playthings, 4/4/2008 1:11:00 PM

[Editor's note: A shorter version of this story appeared in the April 2008 issue of Playthings magazine.]

It’s been nearly 10 years since Lego first surprised long-time fans with the announcement that it would join the world of licensed toys with an assortment based on George Lucas’s powerhouse Star Wars galaxy. And while there have been a few missteps—a short-lived line based on Jurassic Park III comes to mind—the construction toy maker’s licensed toy business continues to flourish, and Star Wars-related characters remain a mainstay.

For 2008, Lego grows its licensed toy assortment with additions like Lucasfilm’s other marquee property, the Indiana Jones franchise, and Warner Bros.’ update of classic cartoon Speed Racer. Playthings spoke recently with Jill Wilfert, Lego’s vice president of global licensing and entertainment, about Lego’s continuing efforts to tap into entertainment properties for its building set business.

Where do your licensed lines currently fit in to the company business? What percentage of overall sales or market share? 

JW: We leverage licensing as a way to add another layer of relevance within our portfolio, both to excite kids who like to build and recruit inactive builders to the play pattern, so we seek global properties that have strong top-of-mind awareness among kids. Licensed products generate approximately 25 percent of our total sales globally.

How critical are licenses in introducing the brand to new fans and older collectors? 

JW: Over the years we have found that the right licenses do have the potential to recruit new users to Lego building, but we have to be careful here, because if a child isn't a builder, the introduction may not have long-term viability. Our brand is very highly penetrated in most of the main markets around the world, but we have seen that licenses tend to encourage kids to play more and longer with Lego products.

With adult consumers, Lego and licensing work in two ways: they often spur a reconnection to Lego building among a group who might not otherwise be purchasing Lego products, and they excite the strong collector market. We often hear that licenses like Star Wars are a great combination for the adult collectors because it combines a favorite childhood toy with a favorite childhood movie.

How do the licensed lines impact the company's bottom line?

JW: Licenses can both be beneficial or detrimental to the company's bottom line, as they can often be unpredictable and event-oriented, which can lead to higher peaks and lower lows. But, we're happy to say that we have seen a lot of stability in our licensed portfolio over the years, and many of the properties transcend the "event" model and have lasting appeal.

How has your licensing program changed since its inception?

JW: The Lego Group did not engage in licensing until 1999, when we added Star Wars to our portfolio. The decision to add licenses was not taken lightly and there was a tremendous amount of internal debate regarding this new strategic direction for the company. A considerable amount of consumer research was conducted to see how consumers would react to us heading in this direction. Given the strong success we had with our initial foray in to licensing, we have expanded our licensed portfolio in a measured way. We are not a company that is going to get involved with every 'hot' license on the market, as we prefer to focus on only a few global, high-impact licenses.

What issues make the success of a licensed toy line different than a non-licensed line? Are those issues any different now than they have been in the past?

JW: Certainly with licenses much of the success lies with the ability of the property to drive awareness and even more important, to be relevant to kids within our target age range. We have seen that video games have become very instrumental in this regard, and we feel that the Lego Star Wars video games have, for example, really helped to keep Star Wars, and Lego Star Wars, top of mind with kids, even when there has been no new "entertainment" content.

Licensors who approach their properties with a longer-term view versus a single minded desire to maximize volume also tend to be better suited for the Lego Group, as we are most interested in opportunities that have longer term potential. Careful management of the property overall and close relationships with retailers by the property owners are even more essential now than they have been in the past. Retail shelf space and promotional programs are highly competitive and retailers are even more savvy, and sometimes more cautious, than they might have been in the past because not every license drives toy sales.

How do you pursue licenses? How do you decide what you'd like to create next? 

JW: We are in regular contact with the major studios and property owners and we keep up to speed on what is in their pipeline and what might be relevant for a Lego set. We're able to narrow the field down relatively easily, as we are only interested in licenses that have global potential and that lend themselves to a meaningful Lego play experience. We are very much a global brand and we need to have the scale of a 'real' global launch for licenses to make sense for us. We also are most interested in properties that are going to be heavily supported by the licensor with mass media and promotion exposure. Overall brand fit is also high on our list and we are only interested in properties that we feel are aligned with our brand values. We've found properties that have both a high kid appeal as well as high parent appeal work well for us, as we know Lego play is an experience that many families enjoy together.

How big a role does fan feedback play in your creation of new licensed sets? 

JW: We definitely listen out to what our fans are saying regarding licenses that they would like to see us pursue, and when we are exploring a license we often check in with some of our core users to get their reaction prior to finalizing a deal. A good example is SpongeBob SquarePants. It was the No. 1 unaided property requested by Lego kids and has become a very strong seller for us.

Do you hear from adult collectors as well as kids? 

JW: We have really good dialogue with the collector community about their opinions on Lego sets in general, including the licensed lines, but kids definitely offer their opinions as well. We hear from kids all the time through our Lego Club and consumer services areas.

Do you field many offers from licensors to create Lego versions of their properties? 

JW: We are approached by a lot of companies, which is great as it's helpful for us to get an overview of what is out in the market. We are in the very fortunate position of being a brand that most everyone would like to associate with.

What have been your hottest licenses recently? What are your hottest licenses for 2008? 

JW: Star Wars continues to be a huge success for us. Over the past couple of years we have seen a phenomenon within the licensing industry as Lego Star Wars sales have increased globally, even 1 and 2 years after the latest movie release. We believe that the Lego Star Wars video games have definitely had an impact on our business, and also on the property overall. Additionally we have had great products coming from our development team, and we have continued to have strong retail support and strong support from Lucasfilm. We believe with Lego Star Wars that we have created a true co-brand property that leverages the best that both the Lego and Star Wars brands have to offer.

Beyond Star Wars, we have had strong success with a property like SpongeBob, which really stands out in our portfolio as the tone is different from anything else that we offer. We are also very excited about the Indiana Jones line that has just launched, and is off to a great start. In addition to the core toy products, a Lego Indiana Jones video game will be launched in June. We will also have Speed Racer products coming out next month which we believe will do great as the cars are awesome and it has cross- generational appeal. Finally we're launching a new range of Lego Batman products along with a Lego Batman video game, which is getting quite a bit of buzz already.

Within the preschool arena, we have two new Thomas and Friends products that are launching within our Lego Duplo range. Thomas and Friends is a great license for us as the demographic match between Thomas households and Lego households is very strong.

What about expansions to some of your existing licensed lines? 

JW: We have new sets launching within the Star Wars range, as well as an exciting new line based on the new Clone Wars television series. We're adding to the Lego Batman range and there will be a supporting video game. We have new Lego Duplo Thomas & Friends sets and new Lego SpongeBob sets.

Where do you hope to take Lego Licensing in 2009 and beyond? 

JW: Our plans for 2009 are still in the works but we anticipate that licensing will continue to be a strategic part of our overall portfolio both in 2009 and beyond.