– Hey guys, this is how
Star Wars saved Lego. Now, everyone loves
Legos, especially Matt. I mean, he’s built an
entire town at this point. Even though Lego as a
company has only been around for about 90 years, it has been voted the toy of the century twice. Nothing like a bold prediction for the greatest toy of the next 81 years. Although, to be fair, it probably will be the greatest
toy of the next 81 years. Of course Lego has come a long way since it was first formed back in 1932. Back then, there were only six employees and they were all woodworkers building things such
as ladders and stools. In 1935, they made their first toys. A wooden duck, as well as a
Numskull Jack riding a goat. I guess Numskull Jack is some
kind of Danish fairytale, I don’t know. Danish things confuse me. They adapted the name
Lego from the Danish words for leg and goat, which
together means play well. Also, I should probably be banned from saying any words
that are not english. Saying any words? I can’t even speak english correctly. – [Camera Man] No, no you can’t. – It wasn’t until 1949
that they started to build the plastic building
bricks that we know today. Now at first, this was a
very limited selection. Just a 4×2 brick and a 4×1, which while it sounds very simple, even with just six of these there are millions of
possible combinations. Unfortunately, in the 1960’s,
their wooden toy warehouse was completely destroyed in a fire. Because of that, Lego
decided that it was time to abandon that side of
the business and go all in on the plastic building bricks
that we know and love today. With this newfound direction, Lego was able to completely
focus on creating more types of bricks and different sets. And this is something that
continued for years and years. Of course, people loved it and Lego began to spread
all across the world. In 1978, the company made $142 million. But fast forward to 1993 and
they were making $1.2 billion. However by 1993, growth
on Legos simple toy had begun to stagnate. Over the next five years, they tripled the number of sets offered, however the sales did not improve. What also did not
improve were their costs, which started to rise dramatically. Put simply, Lego just
didn’t know how much it cost to manufacture the vast
majority of their bricks. During this period, sets
like Mindstorm and Technic included some really cool components such as fiber optic kits and micro motors, but the issue was that in some cases, these individual components cost more than the entire kit was being sold for. These kits were a big hit with consumers, but there’s only so much you can do when you’re selling products at a loss. Lego entered the year 2000 in rough shape. In 1998 they had their first deficit, and between 1999 and 2000
they lost about $100 million and had to cut one thousand jobs. Thankfully, during this time, Lego made a decision that
ultimately would save the company. Expanding into licensed sets. Star Wars, Harry Potter,
and their awesome line of rad Bionicles, I used
to play with them as a kid, really did turn the company around at a time where a lot of
their other product lines were straight up failing. This was especially apparent
when Lego introduced Galidor. Now this was based on a kid’s TV show, but the main issue was
that it wasn’t compatible with standard Lego bricks and ultimately ended up being one of the biggest
failures in Lego history. What wasn’t a failure
were the Star Wars kits. Some years, these sold almost more than all the other licenses combined. Now it wasn’t all perfect. Some years either Star
Wars or Harry Potter wouldn’t release a new movie, but Lego still did have
to pay for the licenses, but overall this was a huge turning point in the history of Lego. By 2004, Lego got very serious about simplifying their business. They started by selling
the four Legoland parks for a deal that was
worth about $460 million. With this new found
cash, they then decided to start cutting down on
the variety of bricks, going from about 14 thousand
options down to five thousand. New advances in technology allows for a much more efficient design of the sets, and the actual manufacturing process is pretty much entirely
automated at this point. There are essentially no people who actually have to touch the Lego bricks from start to finish. Because of this, Lego was able to make about two million bricks per hour, which equals to 15 billion per year, and over 200 billion across
the entire lifespan of Lego. I wonder how that statistic adds up with how many billions of
people have stepped on Legos. Alright, Jake, we’re calling you out. You gotta come on and help us determine how many people have
stepped on Lego bricks. This doesn’t sound very exciting actually. I don’t think anyone
would wanna watch that. – [Camera Man] I would
watch the sh*t out of that! – Film releases such as The Lego Movie and the latest Star Wars films have made a big difference
to Legos bottom line. At this point, the licenses
from things like this equal about 60 percent
of their overall sales. I mean, look at their biggest sets. Hogwarts from Harry Potter is
a massive $400 set they sell. And one of the most popular ones they’ve made in quite a while is the Millennium Falcon from Star Wars, which comes in at a massive $800. So when you go to watch
the new Lego movie, visit Legoland, or buy a new set, just remember that without licenses such as Harry Potter and Star Wars, we might all be stuck in a
dark dark world of Mega Bloks.