Lego to bring video game-making in-house as profits rise

Lego is building up its capability to make its own video games as the world’s largest toymaker invests heavily in developing its own digital play experiences alongside its bricks and mini-figures.

The Danish toymaker had outsourced its video game studio as well as theme parks and other non-core activities after its brush with bankruptcy two decades ago.

But Niels Christiansen, Lego’s chief executive, told the Financial Times that after a strong period of growth, in which its revenues doubled to $10bn since 2019, it was adding new digital capabilities to its core physical toy business.

“We can definitely say as long as we’re under the Lego brand we can cover experiences for kids of all ages, digital or physical. [Games development in-house] is something we’re building up,” he added.

Lego has enjoyed success with video games developed by external studios, as well as its more recent tie-up with shooting game Fortnite, which has attracted 87mn players. It has invested several hundred millions of dollars in tripling the number of software engineers it employs since 2022 and built up its digital infrastructure. The toymaker has also released a number of Lego sets based on video games such as Super Mario and Sonic the Hedgehog.

Christiansen’s comments came as the Billund-based company continued to outpace US-based rivals such as Mattel and Hasbro in revenues and profitability, growing faster than a toy industry that has been weighed down by existential worries about digital devices stealing children’s play time.

Lego on Tuesday reported revenues last year increased 13 per cent to DKr74bn ($10.1bn) while operating profit rose 10 per cent to DKr18.7bn ($2.7bn).

Mattel’s revenues were flat at $5.4bn in 2024 while operating profit rose by a quarter to $690mn. At Hasbro, revenues fell almost a fifth to $4.1bn while it rebounded to an operating profit of $690mn.

Christiansen said Lego would not “overreact” to the threat of tariffs from US President Donald Trump despite importing most of its sets into the US from Mexico.

He said Lego liked to “produce as late as possible” to avoid having excess inventory so would not pre-ship any sets. He added Lego had got through the Covid-19 pandemic as well as surging inflation and raw material costs “by not overreacting, and it’s the same approach here”.

He added: “Right now, there are no tariffs, but there is uncertainty.” Lego has announced a new factory in Virginia in the US but it will not open until 2027. “It will be good when it comes on stream. We made that decision before tariffs.”

The chief executive concluded: “In the big picture, tariffs are not what keeps me awake. That’s being relevant.”

He stressed there was increasing competition for children’s time with digital products such as YouTube. Lego has tried new tie-ups such as with Fortnite and Formula 1 in an attempt to attract older children. “We have made quite a few investments in the future — I’d almost rather overinvest. That’s the benefit of being family-owned and long term,” Christiansen added.

Lego over-extended itself at the start of this century by moving into peripheral businesses and moving away from only making its iconic bricks. But Christiansen believes it has learned its lessons and is better able to support more activities as it is a much bigger company. Lego’s founding family also bought back its Legoland theme parks recently as the company increasingly looks at the likes of Disney as a rival rather than toymakers.