Lego

[Clearwater]

https://www.theguardian.com/lifeandstyle/2017/jun/04/how-lego-clicked-the-super-brand-that-reinvented-itself

 

Give the common "future of the hobby" and "future of Hornby" debates, I thought this was an interesting piece about how Lego has moved with the times

 

David

[The Johnster]

But Lego's success is precisely because it hasn't re-invented itself.  It's diversified into kits for specific projects, movie tie-ins, little people, but the basic product, the original range of bricks in the original sizes, is still the core of the business.  This wouldn't have worked for Hornby or we'd still be getting Rovex Princesses and Standard track.

 

Hornby are in a cleft stick.  The traditional trainset game is pretty much a busted flush, and they have been over the last 2 decades too slow to ditch it and try and grab a cabin aboard SS Scale rtr Model Railway, and are paddling furiously to catch up.  The image is that modellers of my generation still have to re-assure ourselves that modern Hornby products are actually very good scale models in many cases; we feel differently about Red Box than about Blue Box.  To the general public, Bachmann, Dapol, Heljan, or Oxford elicit a response of 'who?', and Hornby means train set, oval of track, engine, and a couple coaches around the xmas tree.  There is a limit to how much an old, trusted, brand can continue to trade off past glories with models that say 'made in China' on the bottom, and H have probably reached it.

 

They pulled of a very clever marketing trick with the Hornby Dublo takeover, in the use of the name as Triang Hornby for a while and then just Hornby, getting away with the impression formed in most peoples minds that they were the slightly upmarket Hornby Dublo while in fact being generically 'budget' Triang.  Perhaps another rebranding of this sort is in the offing; hope not, it would be just as disingenuous as the first.  

[MarkSG]

The other thing that article misses is that one of Lego's problems was that their intellectual property in the bricks themselves had expired.

 

Once upon a time, only Lego could make bricks to Lego's design, because Lego owned the design right and the patents for it. But those rights are time-limited, and they started to expire in the late 20th century. Once they were gone, anyone could - and many manufacturers now do - make bricks that are exactly the same dimensions as Lego bricks, the only difference is that they don't have the word "Lego" on them.

 

As well as the things mentioned in the Graun article, Lego's other really clever move was to stop caring about copycat bricks, and instead focus on kits which use the bricks, and individually designed minifigures. Because, although each individual brick can be copied, the kits can't - they are still subject to design right. And, as and when each kit's design right expires, Lego can just bring out new kits with new designs that have new intellectual property in them. The same applies to minifigures; because these are more than just a lump of plastic in a standard geometric shape, each minifig is a unique, and hence protectable, design.

 

While there are, possibly, lessons which can be learned from Lego's experience (and how to move on when your original business model is lost is an important one), I'm not sure that any directly apply to model railway manufacturers. The intellectual property context, in particular, is very different here - it is, and always has been, possible for different manufacturers to make competing models of the same prototype, so there's no design right to protect and, equally, none to lose. (At least, that's true for models of real prototypes, as the design right vests in the original, not the model. Fictional prototypes are different - so Triang's "Giraffe wagon" would have been protectable - but they're not really a major part of most manuafcturers' current range).

 

I suppose the one thing you can take away from Lego's success in turning their fortunes around is that you need visionary leadership that doesn't just go by whatever happens to be fashionable elsewhere, but instead looks at what's right for the company. Which, ironically, means that any other company trying to directly copy Lego's approach probably doesn't have it.

[Clearwater]

My point in posting the link was not suggesting either a complete copy of strategy or adoption of 1950s standard models but more that you can think something has had its day but smart management can, and have done, work out what the product's core propostion is, make it relevant to a 21st century market place and turn a failing company into a profitable one. Do I have the answer for Hornby? No - if I did, I'd buy the brand whilst it's cheap... that's the key point as Mark identifies - it's the brand

 

David

[Ozexpatriate]

The LEGO Group turned themselves around by eliminating distractions and focusing on their core business.

 

They also do a lot of business fundamentals extremely well. Their customer support is outstanding - obviously spare parts is much easier for LEGO than for other businesses, but they don't make every component available all the time.

 

Their logistics are strong. Movie tie-in products are on shelves before the movie opens in cinemas. They also manage their retailing operations well - for example, they don't undercut their retailers with their direct channels (online, catalogue and LEGO-branded stores).

 

Hornby was given a lesson on the dangers of non-core business distractions with the Olympics merchandising disaster and they appear to have taken steps to improve relations with retailers, but it's hard to compare a £55.8m company with a £4,467m one. The economies of scale are vastly different.

[34theletterbetweenB&D]

...They pulled off a very clever marketing trick with the Hornby Dublo takeover, in the use of the name as Triang Hornby for a while and then just Hornby, getting away with the impression formed in most peoples minds that they were the slightly upmarket Hornby Dublo while in fact being generically 'budget' Triang...  

 Whatever, with my purely 'business' hat on, the play made using that brandname 'Hornby'  has been pretty spectacular. I have over the past dozen years felt on several occasions that surely they had gone too far this time in offering very dated / inferior product: significant dilution of the brand value imminent. This activity going on alongside some 'good and better' model releases which rank among the best available RTR OO products.

 

...The traditional trainset game is pretty much a busted flush, and they have been over the last 2 decades too slow to ditch it and try and grab a cabin aboard SS Scale rtr Model Railway, and are paddling furiously to catch up.  The image is that modellers of my generation still have to re-assure ourselves that modern Hornby products are actually very good scale models in many cases; we feel differently about Red Box than about Blue Box...  

I would offer a balancing view, from the perspective of someone who was very happy to find Bachmann introducing RTR OO scale models of overall 'competent kit/scratch builder' quality just under 20 years ago, reasonably priced compared to both OO kits and HO RTR. And the choice of subjects majoring on common items just iced the cake. At last, some worthwhile OO RTR product following on from where the brief Mainline/Airfix flurry had left off.

 

For me at least, Hornby's catch-up to parity properly began with the BR std 7MT. One horrible but rectifiable train set curve compromise excepted, a very worthy piece. They have missed the boat in wagons: early on while the going was good and cheap in China they surely could have tooled a couple of dozen common subjects as accurate models which would now be good cash cows. But in coaches - other than the gangwayed Gresleys -  they have done pretty well.

 

Recent activity now. While I'll just as happily as ever buy suitable offerings for my interest from Bachmann's range (where's that all-new V2 then?) or that by any other maker; what I have mostly been able to buy RTR over the past few years have been models in Red boxes. The QoS all steel Pullmans, non-gangwayed Thompson stock, J50 and K1 my 'stand outs'. They can make all the tts fitted Smokey Joe class products they like if it is profitable and good luck with it; this doesn't detract from the models they also offer.

[kevinlms]

The LEGO Group turned themselves around by eliminating distractions and focusing on their core business.

 

They also do a lot of business fundamentals extremely well. Their customer support is outstanding - obviously spare parts is much easier for LEGO than for other businesses, but they don't make every component available all the time.

 

Their logistics are strong. Movie tie-in products are on shelves before the movie opens in cinemas. They also manage their retailing operations well - for example, they don't undercut their retailers with their direct channels (online, catalogue and LEGO-branded stores).

 

Hornby was given a lesson on the dangers of non-core business distractions with the Olympics merchandising disaster and they appear to have taken steps to improve relations with retailers, but it's hard to compare a £55.8m company with a £4,467m one. The economies of scale are vastly different.

Focusing on your core business doesn't always work. Coca-Cola isn't going to well on their liquid sugar product. In fact several of their recent products have been marketing disasters.

 

Some of their changes have involved products with less sugar in them, but hasn't gone down well with their traditional market. Fact is overall people are turning away from them, totally.

 

 

Then again, you don't see big, bouncy blondes on the beach, on TV much these days!

[rue_d_etropal]

I think everyone is missing the real point. Lego had a market that covered from small childern up to adults. They have retargeted different products to suit different age grouos an also some big differences for girls. They have got involved in the physclogy of how toys work, and adapted .

The problem with the way model railways has developed is that it has stuck to a traditional, outmoded view on what the younger end want, and then concentrated on what adults want, well some anyway. They hae done nothing for those in the midsdle, and without that bridge, most won't grow from the basic early age toys to the top quality items for adults. They nee to look at what people are actually 'playing' with at all ages, and introduce something that plugs those gaps. Some might have thought DCC would do that, but it is not enough. The average teanager will play for as long as they are allowed to, on computer games. That is an area where companies such as Hornby should get involved. Start some Hornby linked computer games. They are not all about fighting, with many about building groups, town etc. Railways could, it should be part of this. Having the Hornby name involved wll keep the name in the places it needs to be.

What is a bit ironical, is that Playstation  have a base, where games are tested, less than a mile from where Hornby Dublo made model trains.

Instead of listening to people who want more, and much more detailed models, Hornby need to do some proper research on what children actually want. For children, and some adults it is the journey, not the destination that is important, they have forgotten that.

[Ozexpatriate]

They nee to look at what people are actually 'playing' with at all ages, and introduce something that plugs those gaps. Some might have thought DCC would do that, but it is not enough. The average teanager will play for as long as they are allowed to, on computer games. That is an area where companies such as Hornby should get involved. Start some Hornby linked computer games.

Hornby PLC does do something similar with Scalextric - with "app race control" (ARC) - a virtual reality augmentation.  I thought it was a good idea but have no idea how well it sold.

 

I'm not sure how well the economics of this actually worked - they outsourced the software development and I don't know how well they recovered that cost.

 

On the railway side they do have RailMaster, which is more than DCC.

 

I agree that the concept is sound in terms of winning more interest in the brand, but given the cost of software development, versus the number of likely users, it's hard to see it being economical.

[brianusa]

IMHO, Hornby had better cater to the market that is already loyal to them; aging males who have grown up and play with trains as it might stay their demise a little longer. Larger companies with more famous names than Hornby have disappeared for ever. Lego has taken over the kiddie market and barring a world upset, is going to go further but they better hope for a high childbirth era as like Hornby, their current kids will grow up and find other hobbies and interests just like their predecessors. There will be the 'hangers on' just as in the model train hobby today but as we know, nothing like its heyday, so will it be with Lego.

 

Brian.

[34theletterbetweenB&D]

...Larger companies with more famous names than Hornby have disappeared for ever. Lego has taken over the kiddie market and barring a world upset, is going to go further but they better hope for a high childbirth era...

 We are pretty much at 'peak child' (thank you, the late Dr Hans Rosling) now globally. And you are bob on about far more famous outfits tanking. A multibillion dollar revenue business overshooting demand tends to create a hole in the accounts so deep, that there isn't a feasible rescue plan.

[Jongudmund]

The LEGO Group turned themselves around by eliminating distractions and focusing on their core business.

 

.

 

Actually that's not true. They almost went under towards the end of the 90s. They diversified into buildable action figures called Bionicles, that came with their own tie in movie, and they signed their first ever merchandising tie in with Star Wars. If they had stuck with their core business of plastic bricks and original intellectual property they would have disappeared in the early 2000s.

 

They have subsequently branched out into movies (The Lego Movie is well worth a watch even if you don't like movies and made a box office fortune), licensed trading card games (2 on the go at present), licensed magazines (look in the comic section and count how many have the Lego logo on and a "free" toy on the front), more books than you can shake a stick at, and have created TV series to promote at least 4 of their most recent kids-oriented toy ranges (Ninjago, Chima, Mixels and Nexo Knights). They have even created their own Star Wars TV series to create their own toys in the Star wars universe.

 

Lego has also courted the adult collector market, through it's Ultimate Collector Series (UCS) brand, the Modular Buildings and its Architecture range. These are not for kids - prices are often North of £150. 

 

They have licensed Lego elements to computer games for all their main franchise tie-ins. They also worked with the games development company to release Lego Dimensions, where you get to build the Lego toy and then see it come to life in the game. There are loads of toys you can buy to bring to life in the game.

 

The one thing the Lego Company did not do is focus on their core business. They have evolved into a multimedia company with very strong portfolios in numerous markets.

Edited June 12, 2017 by Jongudmund

[Jongudmund]

The big thing in the toy world are collectors "blind bags". You buy a figure in a bag or a box and you don't know what it is. You have to collect them all so you keep buying the bags. There are rare ones in different colours and so on.

 

I'm not sure Hornby could do the same with wagons. Not many modellers fancy a lucky dip.

[Ozexpatriate]

They have subsequently branched out into movies (The Lego Movie is well worth a watch even if you don't like movies and made a box office fortune), licensed trading card games (2 on the go at present), licensed magazines (look in the comic section and count how many have the Lego logo on and a "free" toy on the front), more books than you can shake a stick at, and have created TV series to promote at least 4 of their most recent kids-oriented toy ranges (Ninjago, Chima, Mixels and Nexo Knights). They have even created their own Star Wars TV series to create their own toys in the Star wars universe.

I don't believe LEGO Group owns most of these properties or does the work "in house" themselves.

 

All the DK books are produced by Dorling-Kindersley with license payments to LEGO Group.

 

The three LEGO movies are the property of Warner Brothers, as are some of the video games.

 

I expect that in the licensing contracts they can exercise some creative control (LEGO Systems A/S, was one of many production companies involved in 'The LEGO Movie') and obviously there's a lot of licensing of rights to the LEGO brand, but the LEGO Group makes plastic bricks.

 

Their relationship with Disney is interesting. They clearly have obligation to make toys for Disney franchises outside Star Wars and Disney Princesses some of which were short lived at LEGO - like "The Lone Ranger" sets. Interestingly their 2016 license and royalty expenses (DKK 2,893m) were almost 6x their licensing revenue (DKK 555m).

 

LEGO got themselves in trouble with ownership of the theme parks and developing video games in house.

 

Other than apps available on their website, I think the console games are now all developed by outside video-game companies and licensed from LEGO Group.  Having said that I'm not sure how/where LEGO Dimensions is developed and whether this is done 'in house'.

Edited June 12, 2017 by Ozexpatriate

[john new]

If you look at two great British traditional business names, Hornby and M&S, both are slowly fading because of (a) evolving markets and (b) other people are doing their bread and butter business segments better than they currently are. With M&S it is effectively supermarket own brand clothing and I guess with Hornby it is Bachmann for trains plus other interests, especially computer gaming, as challengers to the rest of their market. However, of the two if I had to back one or t'other I'd probably back Hornby as the one with a better chance of diversifying enough to survive long term. 

Edited June 12, 2017 by john new

[kevinlms]

Here's Australia's Parliament House in Lego.

 

Too late for any PM Knifings!

 

https://www.theage.com.au/politics/federal/inside-the-stunning-and-hilarious-lego-parliament-house-replica-20181005-h16ac0.html

[The Johnster]

The big thing in the toy world are collectors "blind bags". You buy a figure in a bag or a box and you don't know what it is. You have to collect them all so you keep buying the bags. There are rare ones in different colours and so on.

 

I'm not sure Hornby could do the same with wagons. Not many modellers fancy a lucky dip.

 

If it had a reasonable chassis and NEM couplers and was knocked out at under a tenner, I'd take a few punts at it...

[PatB]

Just to tie Lego and toy trains together, I note that most of Lego's TV ads here in Oz, where we're now well into the pre-Christmas marketing season, are concentrating on their train products, both the Cities range and in the Duplo range.

 

Clearly Lego think there's still mileage in the train-set market if approached appropriately. I can certainly see the sense. A lot of children do still seem to like trains but also want play-value and the ability to incorporate the trains into their own stories. And something that's easy to use for the non-technically talented youngster (or parent). A conventional 00 train set from the likes of Hornby is limited in the first two criteria (without buying quite a bit more quite expensive "stuff" and is also quite fiddly when it comes to the third.

 

The Lego products are compatible with stuff that the majority of children who will receive them already have, making world building much easier and (a bit) cheaper. With one of the sets, plus an existing, modest, Lego collection the play value and flexibility already far outstrips an oval of 00 track on which Thomas endlessly circulates with Annie and Clarabel. That's before adding train specific add-ons like extra track and points which appear to be modestly priced in comparison to "proper" 00 stuff. By contrast, Hornby Junior doesn't appear to be compatible with anything else and Hornby's other 00 starter stuff, Thomas or otherwise, sacrifices simplicity and play value to maintain compatibility with 00 standards more appropriate to adult modellers.

 

TBH, I find the Lego Cities idea so intriguing that, were I a bit more affluent, I'd be tempted to have a go myself at building a properly operable Lego layout. Lego Minories anyone ?

 

In short, if the object of the exercise is to get young children interested in world-building with an emphasis on railways (which is, after all, at the fundamental core of layout building, if not  railway modelling as a whole), I'd hazard a guess that Lego are currently doing a better job of it than Hornby or, indeed, any of the other specialist model railway manufacturers. 

[Jongudmund]

The Lego trains being advertised are new out this year. They have a completely new control system called Powered Up which can run off a phone app, replacing the infra-red system they had used for the last 10-15 years. All the trains are battery operated and you can get rechargeable batteries if you want. (They gave up on powered track at the turn of the century)

 

Of course it's still all retro compatible. They will eventually sell the new Powered Up elements so people can swap out the infra-red stuff. But the rolling stock and such will work.

 

I quite like the new passenger train. It comes with one engine so two sets will make a decent length double ended train (and give me a spare Powered Up system to swap into another train if I want). The freight train is less inspiring. I'm not keen on the wagons and the engine is too European for my liking.

[Jongudmund]

Imo the train manufacturers should have been looking at battery locos (recharged through micro USB like a phone) and controlled off a phone or tablet a long time ago.

[Reorte]

Imo the train manufacturers should have been looking at battery locos (recharged through micro USB like a phone) and controlled off a phone or tablet a long time ago.

Makes sense for Lego but for detailed, realistic models the socket would need to be hidden underneath, which means more handling than ideal. I'd prefer recharging from the track (could just be a dedicated bit of charging track in the fiddleyard).

[Zomboid]

Makes sense for Lego but for detailed, realistic models the socket would need to be hidden underneath, which means more handling than ideal. I'd prefer recharging from the track (could just be a dedicated bit of charging track in the fiddleyard).

No reason why both couldn't be possible. Inductive charging pads would be an option too in that world.

[peach james]

The Lego trains being advertised are new out this year. They have a completely new control system called Powered Up which can run off a phone app, replacing the infra-red system they had used for the last 10-15 years. All the trains are battery operated and you can get rechargeable batteries if you want. (They gave up on powered track at the turn of the century)

 

Of course it's still all retro compatible. They will eventually sell the new Powered Up elements so people can swap out the infra-red stuff. But the rolling stock and such will work.

 

I quite like the new passenger train. It comes with one engine so two sets will make a decent length double ended train (and give me a spare Powered Up system to swap into another train if I want). The freight train is less inspiring. I'm not keen on the wagons and the engine is too European for my liking.

 

 

Change was 2006 from 9V via the rails to plastic rails (with the truely horrible IR system at first).  Then replaced with PF, and now being replaced with "Powered Up".  From a hobbyist prospective, they are missing lots of tricks, even within the "system" of play that they have.  PF is a robust connection design, and to change it AGAIN isn't all that helpful.  It does mean back to one style of connector rather than 2 (Mindstorms RJ style, and PF), but it doesn't add anything, as the current Powered Up box connectors have some horrible limitations from a fandom prospective.  (not stackable, unlike PF...).  I'd have rather seen a Bluetooth PF rx, similar to the S Bricks that I have, but with less buggy software, and a dedicated transmitter.  Keep PF for a connection standard- the previous one (9V) lasted from ~1986-2006, and still has a PF adaption to it.  A new rechargeable battery pack physically smaller than the current one (with less Ah storage) would also make sense.  

 

James

[Ozexpatriate]

... That's before adding train specific add-ons like extra track and points which appear to be modestly priced in comparison to "proper" 00 stuff. By contrast, Hornby Junior doesn't appear to be compatible with anything else and Hornby's other 00 starter stuff, Thomas or otherwise, sacrifices simplicity and play value to maintain compatibility with 00 standards more appropriate to adult modellers.

LEGO recently introduced a new track package 60205, (currently on back-order in the UK). This addresses what was a big hole in the ability to customize a trainset beyond the basic oval. There are never enough straights in the LEGO oval trainsets, particularly if people also purchase the points package 60238 (switch tracks).

 

Interoperability is always the strength of LEGO. Their recent Hogwarts Express* set (75955) is completely compatible with the other trains - adding a lot of play value to younger enthusiasts.

 

* Scale modellers will find much to object to in this model but it is actually a vast improvement over the old set - except for the coaches which were selectively compressed to four wheelers. The old set had bogie coaches.

 

I've seen comments on RMweb from people who are less than keen on the new Bluetooth controller over the old infrared power functions controller. (Hopefully the battery pack is a bit smaller than the power features battery pack.)  EDIT: James was apparently reading my mind.

Edited November 20, 2018 by Ozexpatriate

[Ozexpatriate]

Then replaced with PF, and now being replaced with "Powered Up".

James, do you know how different the PF traction component (88002, "train motor") is from what I see in the "Powered Up" Cargo train (6214559)? They appear to be the same form factor, but the electrical connector looks different.