German Toy Fair – LEGO To Increase Focus On AFOLs

[danth]

New article from Bricksfanz: LEGO To Increase Focus On AFOLs

Quote

But the biggest information to be taken from their press release, is the increased focus on the AFOL market. Every tenth Euro spent on LEGO is from sales to adults builders. Although the focus for LEGO will always be children, it seems there will be dedicated product lines, directly aimed towards adult LEGO fans.

http://bricksfanz.com/german-toy-fair-lego-to-increase-focus-on-afols/

Seems promising!

[The Island Chronicles]

 

1 hour ago, danth said:

Although the focus for LEGO will always be children, it seems there will be dedicated product lines, directly aimed towards adult LEGO fans.

Yeah! Like modulars! 

Edited January 29, 2020 by Brandon Pea

[fred67]

I realize it seems like a ball-park, off the cuff value, it's interesting to find out we're like 10% of revenue.  I think a lot of AFOLs overestimate our importance.

[The Island Chronicles]

28 minutes ago, fred67 said:

I realize it seems like a ball-park, off the cuff value, it's interesting to find out we're like 10% of revenue.  I think a lot of AFOLs overestimate our importance.

I believe it's a little higher than that. But I can't really prove it so....yeah. 

....and by overestimating our importance, you mean?

[danth]

34 minutes ago, fred67 said:

I think a lot of AFOLs overestimate our importance.

I think we've been underestimated.10% is a huge chunk.

[Masked Mini]

9 minutes ago, danth said:

think we've been underestimated.10% is a huge chunk.

Funny thing is.. You're both correct.
I've seen people argue both points endlessly with much gusto, passion and no support.
10% ballpark from TLG is massively more than I personally would have figured. I buy a lot of lego but most of it is second hand or clearance.
TLG basically gets very little of my lego budget directly (BAM, PAB, BNP).

[fred67]

@Brandon Pea @danth

@Masked Mini 

10% is a decent chunk, but if you run a company are you going to target 10% or 90%?  When we talk about why no new castle sets, or us train fans ask why new Creator Advanced train, it's because they make more money elsewhere.  They've actually said it outright in the past.  Now consider this - they didn't say AFOLs are 10% of their market - they said we're 10% of the revenue.  Why?  Because we have more money and buy more expensive sets.  I imagine, as a percentage of their audience, we're much less than 10%.

So it seems they've actively been doing this the past few years; my opinion is that profits, as great as they are for TLG, are slipping slightly (it's just not feasible to keep the kind of growth they had - it was bound to level off and fluctuate, so I don't know why everyone seems to panic about it), they are suddenly saying "well, AFOLs have more money, so maybe we make even more expensive stuff for them."

And that's around the time you start seeing the UCS Falcon, Hogwarts - even the Disney Castle - I'm sure a lot of children in wealthy families got one, but I'm also guessing the majority were sold to, and for, adults.  The big car sets (Mustang, Chiron), and Ideas probably also had a lot to do with it.  So we're 10% of the revenue because we tend to be the ones buying the more expensive sets.  UCS sets weren't new, of course, there's always been a market for the expensive, detailed sets, but there was a big jump in those giant sets in the past few years.

So I wouldn't expect to see the creator trains (not that they'll never make one, they do surprise us occasionally), or bulk bricks in single colors (castle fans have wanted "gray buckets" for a long time).  If they try to get more AFOL money, it'll be on ridiculously expensive large sets, IMO.  I don't think they're asking what AFOLs want, I think they're just trying to hook more adults with the giant nostalgia sets - Star Wars, Disney, Harry Potter (think about HP's main target audience - they are all adults, now).  My mom (90) has Disney sets - she's not a LEGO fan, she's a Disney fan.  I have a friend at work with the Mustang because he's a Mustang fan.  Another coworker wanted the HP set because he's a big HP fan.

EDIT: it also occurs to me if they start making an "adult" line of sets, they can cross boundaries they wouldn't have crossed before, sets based on the Matrix, or Mad Max, or some other license they wouldn't have touched in the past.

TL;DR; I think they are catering to adults, not AFOLs in particular, and I don't think AFOLs will see the kind of things they are hoping to see after hearing about this statement from TLG.

Edited January 30, 2020 by fred67

[danth]

26 minutes ago, fred67 said:

but if you run a company are you going to target 10% or 90%?

You're going to target 100% of course. 

10% of their revenue is half a billion dollars; they'd be crazy to ignore a market worth that. 

26 minutes ago, fred67 said:

TL;DR; I think they are catering to adults, not AFOLs in particular, and I don't think AFOLs will see the kind of things they are hoping to see after hearing about this statement from TLG.

I wouldn't be surprised if this ends up being true. 

Edited January 30, 2020 by danth

[The Island Chronicles]

@fred67 It would pain me if Castle never made a comeback. 

[leafan]

lol that figure is going to be thrown around now like it's a solid fact.

Let's see, the article says:

Quote

According to the consumer panel data of the NPD Group Germany, LEGO GmbH increased its consumer sales in Germany by 3.2 percent in the financial year 2019

So it's specifically for Lego GmbH, the German arm of TLG. One part of the entire company. Good news on those sales though, but that does not necessarily translate to profit.

Quote

Internal surveys show that every second child [2] in Germany received at least one new LEGO® product last year. In addition, every tenth euro was spent on an adult.

Internal Surveys = guess. I mean, how can they possibly know what I am buying that discount Lego Star Wars set in Tesco for? Me or my son? It's a pure guess based on consumer feedback, probably from a very specific, or set of specific, sources (such as the online shop sales and surveys).

57 minutes ago, fred67 said:

Now consider this - they didn't say AFOLs are 10% of their market - they said we're 10% of the revenue.

They didn't say revenue either, they said "every second child [2] in Germany received at least one new LEGO® product last year. In addition, every tenth euro was spent on an adult.". I quoted that first part because it's contextually relevant to the following statement of "every tenth Euro". That's Sales, and specifically in Germany.

Still, an interesting read.

[AmperZand]

4 hours ago, danth said:

New article from Bricksfanz: LEGO To Increase Focus On AFOLs

Bricksfanz has it wrong. LEGO doesn’t target AFOLs. It targets adults. Not the same thing. As far as LEGO is concerned, AFOLs are already ‘in the bag’. Non-FOL adults, on the other hand, are prospective AFOLs. It’s far more lucrative for LEGO to turn a non-FOL adult into an AFOL than it is to sell marginally more to an AFOL. 

[deraven]

4 hours ago, fred67 said:

Now consider this - they didn't say AFOLs are 10% of their market - they said we're 10% of the revenue.  Why?  Because we have more money and buy more expensive sets.  I imagine, as a percentage of their audience, we're much less than 10%.

This is the point I was going to make - AFOLs are a much smaller group in terms of absolute number of bodies.  Let's say we're 10% of revenue but 5% of the customer base (I think it's smaller than that since I have to assume AFOLs on average spend more than 2x the other consumer categories) so they can focus a relatively smaller % of resources at better developing that very small market segment and have a much higher rate of return in revenue.

Just making existing AFOLs happier could be a good boost, but focussing on the adult segment in general could of course bring in new AFOLs that have a similarly high impact on their bottom line.  I'm betting CAC vs LTV for an AFOL is a much more attractive ratio than for child and teen demos.  It only makes good fiscal sense for them to finally be putting more specific focus here!  

[meliander]

dedicated product lines

That's what excites me the most. I hope they mean new themes that contain experts builds throughout all of the sets. That would be amazing!

[Lego David]

I don't think TLG really understands what AFOLs actually want. They keep making sets that are supposed to draw Non-AFOL adults in (for example, Stranger Things, The Simpsons, and other adult-focused IP's like that) but they barely do anything for already exiting AFOLs. If anything this "Increase focus on AFOLs" probably means that they'll just make even more sets based on adult-focused IPs, or maybe'll even tackle with R rated movies. 

So yeah, no really excited about this. 

 

Edited January 30, 2020 by Lego David

[Mylenium]

I wouldn't make too much of it. There's already enough adult-targeted sets. Or does anyone really think kids buy a 300 Euro Bugatti? It doesn't get more "daddy candy" than that. Same for other things like the recently released Trafford soccer stadium. What more does anyone need? At the end of the day it will still have to be a cross-intersection of a) people being interested in LEGO in the first place, b) being interested in a specific subject and c) having the required massive funds to actually buy it. And there's also the antithesis to that by ways of Overwatch, which didn't last long and was pretty much ignored by everyone. It's not as easy as saying "Lets make an adult set based on a game." and just the same this would be a tricky proposition for other genres as well. LEGO must be careful to not navigate themselves into corners here or they'll end up like what happened in the model train manufacturer crisis a few years ago. So for what it's worth, perhaps things do not need to change that much at all...

Mylenium

[The Island Chronicles]

1 hour ago, Mylenium said:

Or does anyone really think kids buy a 300 Euro Bugatti? It

Yeah! But what about adults who want to build a city, but don't want to use modulars or the buildings that City or Creator offers? Maybe City should add a line of 13+ sets to its roster. How about City 13+. I mean.....12 is the usual age limit for their sets. 

Edited January 30, 2020 by Brandon Pea

[Mylenium]

2 hours ago, Brandon Pea said:

Yeah! But what about adults who want to build a city, but don't want to use modulars or the buildings that City or Creator offers? Maybe City should add a line of 13+ sets to its roster. How about City 13+. I mean.....12 is the usual age limit for their sets. 

That's a fair point, but ultimately we are kinda getting there already with the reintroduction of actual building models in the Creator 3in1 series and if you only look for it, you can find enough cars in there just as you can find similar stuff in Friends, Hidden Side, Ninjago. They may not always be off-the-shelf solutions, but a lot of that stuff is easy enough to modify even for less experienced builders. In fact something like Emma's Art Stand would already fit a generic city quite well once you get rid of the pink blinds for instance. Similarly, last year's Heartlake City Restaurant is very City-ish and if you combined two or three of these sets would build into a nice almost modular building. Sure, LEGO could certainly throw in a few more such sets or at least change their marketing so people become more aware of these alternative options, but overall I don't see that we necessarily need yet another dedicated product line. And of course it would still be a matter of whether you could actually buy all this stuff. You know, City enthusiasts pining over those options without being able to afford them would not serve any purpose on either front.

Mylenium

[The Island Chronicles]

1 hour ago, Mylenium said:

but overall I don't see that we necessarily need yet another dedicated product line. 

I can say that about a lot of things Lego does.

It's not a product line. Lego is the product line. City is just a theme under the product line. I'm actually a business major. I study these things. 

I see potential in a 13+ spin off of Lego City. 

 

Edited January 30, 2020 by Brandon Pea

[deraven]

1 hour ago, Brandon Pea said:

I see potential in a 13+ spin off of Lego City. 

Yes, something as simple as that could be interesting.  Or something like Creator Expert 3-in-1; sets in the $100-150 range in the scale of some of the (older, less interior detail) Modulars but with instructions to build 3 distinctly different buildings/municipal facilities.  A cross between a Modular building and a jumbo city parts pack.  That's the kind of thing that they've ignored recently and that the current line of Modulars doesn't really work for since we're paying for a lot of so many small elements that go to the specific interiors and so eat up funds that could otherwise be directed at building out a city street or skyline.

I mean, I enjoy the techniques and intricate touches they've added and the designs overall, but definitely less desire to buy multiple copies than there used to be so those funds go to bulk brick or Bricklink instead.

[Masked Mini]

19 hours ago, fred67 said:

hey didn't say AFOLs are 10% of their market - they said we're 10% of the revenue

That is the same thing in the context of determining future investment and predicting ROI, revenue is market share.
Arguably that makes the (number pulled out of my bulk bin) 0.0001% that AFOLs make up in the market , MUCH more attractive if all you need to do to generate 10% of total revenue is please that tiny minority.
The problem is in how TLG approached that tiny minority with deep pockets. They are trying to treat us like the unwashed masses (joke) making up the other 90% of their revenue. We don't need necessarily need an AFOL fan service line to be in stock 10-15 deep in every store (big cost). They just need an actually modern, reliable way online storefront that will put those sets into AFOL hands. There is no reason why TLG couldn't have a presence here to pitch AFOL set ideas and then sling a few (ten) thousand of them through S@H or Bricklink. They could milk a lot more than 10% total revenue out of us with a different form of engagement that meets us where we live and coincidentally avoids some of the major costs of old fashioned mass market retail.

 

19 hours ago, fred67 said:

I think they are catering to adults, not AFOLs in particular

Damn. You make an excellent point here. Adult Fan of Lego could very well mean vastly different things to us and TLG. To them it could mean any Adult with deep wallets who happens to buy, as you put it, a UCS priced set. And yes additional licensing allows TLG to draw in more of their "AFOL"s. But it would leave us AFOLs out in the cold.



Once in the bag though you need to keep feeding them or they leave said bag.

18 hours ago, AmperZand said:

As far as LEGO is concerned, AFOLs are already ‘in the bag’.

[BrickJagger]

15 hours ago, meliander said:

dedicated product lines

That's what excites me the most. I hope they mean new themes that contain experts builds throughout all of the sets. That would be amazing!

Yeah, I wouldn't get too excited by that because that's almost certainly not going to happen. It's far more likely that they're going to roll out a bunch of Forma-style "kits" and call it a day.

[The Island Chronicles]

1 hour ago, deraven said:

Yes, something as simple as that could be interesting.  Or something like Creator Expert 3-in-1; sets in the $100-150 range in the scale of some of the (older, less interior detail) Modulars but with instructions to build 3 distinctly different buildings/municipal facilities.

I actually didn't have modulars in mind when I gave the proposal. I actually had something that is a step above the regular City sets - but more focused on town planning than vehicles. Buildings would be more detailed both in and out. Instead of fronts, buildings could have removable roofs. Printed pieces would be used instead of stickers. Unless stickers is just the better option. 

[Mylenium]

15 hours ago, Brandon Pea said:

It's not a product line. Lego is the product line. City is just a theme under the product line. I'm actually a business major. I study these things. 

However you wanna skin it. As a non-native speaker I'm sure you can cut me some slack for mixing up things or using terms incorrectly interchangeably. :P That aside it's ultimately irrelevant what you print on the box and how you sort your hats. At the end of the day introducing a ton of themes/ sub-themes/ genres/ series/ tiers can end up more confusing than helpful. Anyone care to remember that "Master Builder Series" debacle that never went anywhere because the Cloud City set was actually quite terrible? To me there is no point in some marketing directors playing out their fantasies from behind their office table. Therefore I also don't see how you would place that 13+ thing you want. It seems to me you still want it to be very City-like and how then would you communicate this within the existing series other than slapping on a different age rating? It's that old Matroska figurine thing of layers within layers that you can only take so far. It makes for lousy advertising and marketing it would be a pain in the rear. You'd be caught between fire and flood on this one - make it separate and people may not recognize its relation to City, keep it in there and it gets drowned out by the other stuff...

Mylenium

[The Island Chronicles]

@Mylenium Dude! It could work. Ok?

[Mylenium]

6 minutes ago, Brandon Pea said:

It could work. Ok?

I'm not saying it couldn't work, I just don't see it as clear-cut as yourself. I've seen a few of our clients' products bomb in my time in the media industry due to lack of distinction, that's why I have some reservations on muddying up the waters too much. Something like City+ just seems an odd proposition to me. That's all I'm saying.

Mylenium