Mattel to Buy Mega Brands

[Hapori Tohu]

In a move I didn't see coming but which makes perfect sense, Mattel today has announced their intentions of buying Mega Brands, creators of MEGA Blocks and possibly The LEGO Group's biggest rival in the construction toy market. As <a href='http://www.reuters.com/article/2014/02/28/us-megabrands-offer-mattel-idUSBREA1R0QB20140228' target='offsite'>Reuters reports</a>, Mattel has offered $460 million for the company, in a move that likely indicates a desire to stay ahead of LEGO as the world's largest toy company by sales. Sales of LEGO products have been seeing growth in the double-digit percentages for the past few years, while Mattel has been in the low single-digits - it seems to me that they're threatened by our favorite toy company and are looking to increase their competitive stance. With any luck it will just drive LEGO to make even more awesome products!

 

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[LQ1998]

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

[JAG18]

I'm not worried. LEGO can take Mattel behind the woodshed any day of the week.

Edited March 2, 2014 by JAG18

[InnerRayg]

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

I don't know that I agree with this; more competition for Lego means they'll have to streamline their product releases and find ways to cut costs; I kind of fear the day when they have to come to the conclusion that making a hundred more star wars sets is more profitable than investing in another Bionicle or Ninjago.

[Swert]

 

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

I don't know that I agree with this; more competition for Lego means they'll have to streamline their product releases and find ways to cut costs; I kind of fear the day when they have to come to the conclusion that making a hundred more star wars sets is more profitable than investing in another Bionicle or Ninjago.

 

Precisely. Mega Bloks was already selling for dirt cheap relatively, and Mattel is large enough to go toe-to-toe with Lego on that front. Plus, they would most likely retain all the IPs Mega Bloks had, which would be interesting to see what happens with those.

[Aanchir]

Keep in mind though that part of the LEGO Group's recovery after their financial downturn was the decision to market themselves as a premium brand, focusing on quality rather than on keeping the costs of sets low.

 

I think the immediate impact of this will be a changing licensing scene. LEGO and Hasbro will have to be really competitive when it comes to acquiring licenses, since Mattel is an incredibly large company and will be able to incentivise licensing agreements for Mega Bloks kits by "bundling" them with license agreements for other toy categories (dolls, etc). Not to mention that they will probably look into Mega Bloks kits of their in-house brands, as they have already done with Barbie.

 

Overall, though, I think this will really put a lot more pressure on other non-LEGO building toy brands than it does on the LEGO Group. That includes mainly K'Nex and Hasbro's Kre-O here in the United States, but also various other brands in Europe and Asia (Sluban, Oxford, etc.) Mattel's size might enable them to extend the reach of Mega Bloks to other markets more effectively than when Mega Brands was independently owned.

 

I don't think the LEGO Group will be going anywhere anytime soon. They managed to become the world's second-largest toy company even with such an extreme focus on construction toys. Contrast Hasbro and Mattel, which have always had incredibly diverse product portfolios and only recently started putting serious investment into developing their own products in the construction toys category. This should be more than enough evidence that the LEGO Group has an unparalleled level of expertise in this market. But in the long term, this will probably have serious implications for the entire toy industry.

[Spiderus Prime]

Keep in mind though that part of the LEGO Group's recovery after their financial downturn was the decision to market themselves as a premium brand, focusing on quality rather than on keeping the costs of sets low.

 

I think the immediate impact of this will be a changing licensing scene. LEGO and Hasbro will have to be really competitive when it comes to acquiring licenses, since Mattel is an incredibly large company and will be able to incentivise licensing agreements for Mega Bloks kits by "bundling" them with license agreements for other toy categories (dolls, etc). Not to mention that they will probably look into Mega Bloks kits of their in-house brands, as they have already done with Barbie.

 

Overall, though, I think this will really put a lot more pressure on other non-LEGO building toy brands than it does on the LEGO Group. That includes mainly K'Nex and Hasbro's Kre-O here in the United States, but also various other brands in Europe and Asia (Sluban, Oxford, etc.) Mattel's size might enable them to extend the reach of Mega Bloks to other markets more effectively than when Mega Brands was independently owned.

 

I don't think the LEGO Group will be going anywhere anytime soon. They managed to become the world's second-largest toy company even with such an extreme focus on construction toys. Contrast Hasbro and Mattel, which have always had incredibly diverse product portfolios and only recently started putting serious investment into developing their own products in the construction toys category. This should be more than enough evidence that the LEGO Group has an unparalleled level of expertise in this market. But in the long term, this will probably have serious implications for the entire toy industry.

I still scared for Masters of Universe Mega Bloks.

[LQ1998]

 

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

I don't know that I agree with this; more competition for Lego means they'll have to streamline their product releases and find ways to cut costs; I kind of fear the day when they have to come to the conclusion that making a hundred more star wars sets is more profitable than investing in another Bionicle or Ninjago.

 

Big bang themes like Bionicle and Ninjago make far more profitable than licensing. I think LEGO learned in 2004 that keeping their focus on the quality of the brick and building within it is what will keep them rising. And is sure has. Their rates have still not stopped rising by double digits every year, and I think they know why. They're definitely not stupid about it.

(If you haven't already, read Brick by Brick. It has a lot of information about how LEGO strategy works and were their prophet comes from. I found it very interesting.)

[InnerRayg]

 

 

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

I don't know that I agree with this; more competition for Lego means they'll have to streamline their product releases and find ways to cut costs; I kind of fear the day when they have to come to the conclusion that making a hundred more star wars sets is more profitable than investing in another Bionicle or Ninjago.

 

Big bang themes like Bionicle and Ninjago make far more profitable than licensing. I think LEGO learned in 2004 that keeping their focus on the quality of the brick and building within it is what will keep them rising. And is sure has. Their rates have still not stopped rising by double digits every year, and I think they know why. They're definitely not stupid about it.

(If you haven't already, read Brick by Brick. It has a lot of information about how LEGO strategy works and were their prophet comes from. I found it very interesting.)

 

This isn't correct - Ninjago and Bionicle might have done better than licenses like Pirates of the Caribbean or Prince of Persia, but Star Wars outsells them both handily and has done so consistently since it came out according to every annual report I've seen, which is quite a few.

 

In any case, Lego's doing great right now, but it really wasn't that long ago we faced the real possibility of the company disappearing completely - I'm optimistic, but I think just taking it for granted that Lego will always succeed is too hopeful - there's always the potential for failure.

[Lyichir]

 

 

 

I think this is actually a good thing for LEGO. Bigger competition means the strive for better products.

 

Though everything is becoming a monopoly now, that I don't care for.

I don't know that I agree with this; more competition for Lego means they'll have to streamline their product releases and find ways to cut costs; I kind of fear the day when they have to come to the conclusion that making a hundred more star wars sets is more profitable than investing in another Bionicle or Ninjago.

 

Big bang themes like Bionicle and Ninjago make far more profitable than licensing. I think LEGO learned in 2004 that keeping their focus on the quality of the brick and building within it is what will keep them rising. And is sure has. Their rates have still not stopped rising by double digits every year, and I think they know why. They're definitely not stupid about it.

(If you haven't already, read Brick by Brick. It has a lot of information about how LEGO strategy works and were their prophet comes from. I found it very interesting.)

 

This isn't correct - Ninjago and Bionicle might have done better than licenses like Pirates of the Caribbean or Prince of Persia, but Star Wars outsells them both handily and has done so consistently since it came out according to every annual report I've seen, which is quite a few.

 

In any case, Lego's doing great right now, but it really wasn't that long ago we faced the real possibility of the company disappearing completely - I'm optimistic, but I think just taking it for granted that Lego will always succeed is too hopeful - there's always the potential for failure.

 

Note that he said "more profitable" rather than "better selling". Star Wars is indeed a top seller almost every year, but Lego's in-house themes deliver more profit per set sold due to a complete lack of licensing fees.

 

I don't think Lego's going to face any difficulties in the near future. The company is not only doing better than Mega Bloks (and a mere change in ownership won't affect that dramatically), but also has a better reputation than any of its competitors. You certainly won't be seeing "The Mega Bloks Movie" being released to rave reviews and blockbuster success.

[believe victims]

I don't think the LEGO Group will be going anywhere anytime soon. They managed to become the world's second-largest toy company even with such an extreme focus on construction toys.

 

 

Slightly off topic, but this has always been amusing to me. LEGO is such a specific, focused toy company that mostly puts out only one type of product, but it became the second largest toy company by doing it.

 

To make a couple analogies, that's kind of like a pickle stand being the second best restaurant in New York, or like an instrument company that only produces a niche instrument called the Spleenbone competing with big brands like Yamaha. It's so strange to me.

[V-N]

 

I don't think the LEGO Group will be going anywhere anytime soon. They managed to become the world's second-largest toy company even with such an extreme focus on construction toys.

 

 

Slightly off topic, but this has always been amusing to me. LEGO is such a specific, focused toy company that mostly puts out only one type of product, but it became the second largest toy company by doing it.

 

To make a couple analogies, that's kind of like a pickle stand being the second best restaurant in New York, or like an instrument company that only produces a niche instrument called the Spleenbone competing with big brands like Yamaha. It's so strange to me.

 

 

On the other hand, that one type of product allows for enormous creativity and diversity. To use the same kind of comparison, it would be similar to an instrument company that only creates the swiss-army-knife-of-all-instruments. Yeah, they only create one product, but why make others if the same one works for most needs.

 

On the the matter of Mattel, I'm not worried about their purchase at all. They may attempt to change or improve MEGA Blocks, but they'll never be as good as classic LEGO bricks.

[Hitoshura]

Due to Leog's success I don't think this will affect their earnings too much. Like no one(not literally) wants Mega Blocks, they are just copy cats and made of really plastic that won't even stack.

[fishers64]

 

On the other hand, that one type of product allows for enormous creativity and diversity. To use the same kind of comparison, it would be similar to an instrument company that only creates the swiss-army-knife-of-all-instruments. Yeah, they only create one product, but why make others if the same one works for most needs.

 

On the the matter of Mattel, I'm not worried about their purchase at all. They may attempt to change or improve MEGA Blocks, but they'll never be as good as classic LEGO bricks.

 

This so much. I mean, other toy companies sell dollhouses, monsters, and action figures. With Lego, you can build all of those things and more, and customize all of them to your specs. Lego's success is no surprise.

 

Throw in an amazing story too, and it's a no-brainer.