By Joe Pulizzi published November 8, 2011

LEGO Does a Netflix in Closing LEGO Universe

LEGO Universe Closes

It’s a sad week in the Pulizzi household.  LEGO recently announced that, effective January 31, 2012, they were closing their multiplayer online game called LEGO Universe.

According to Jesper Visltrup, Vice President of Marketing for LEGO, despite having over 2 million registered users and very positive feedback about the game, LEGO could not convert enough paying members to keep the game viable.

Focusing on the Wrong Metrics

Now, I don’t know if this is a publicity stunt, or if LEGO plans on releasing a new online game, but let’s take the news at face value.

From all accounts, LEGO has determined that the success of LEGO depends upon direct profitability of LEGO Universe.  Why? Why judge the success of brand engagement activity solely off of direct revenue?

  • PlayLand areas at McDonald’s don’t produce direct revenue.  They take up a ton of space and McDonald’s must employ people to keep them clean.
  • Kraft’s iFood Assistant, even though an incredibly helpful application, doesn’t turn a profit.  Kill it.
  • American Express cannot directly prove that AMEX Open Forum drives more credit card sales.  Bye bye.

Is this move by LEGO short sighted?

Let’s look at some numbers.

Let’s say, of the two million members, 50% are adults and parents.  Then let’s take the remaining one million members and estimate that 10%, or 100,000 children, are somewhat active on the site.

My son spends an average of 30 minutes per day (that’s a low estimate) at LEGO Universe.  If we use that as a general estimate (I know many children that spend multiple hours per day on LEGO Universe), that means an average user spends 15 hours per month engaging with the LEGO brand.

What’s the value of that engagement?  Priceless.

I can honestly say that we have purchased a heavy does of LEGO products directly because of LEGO Universe.  Can LEGO track it directly?  Nope.  But just because you can’t track it doesn’t mean it’s not working. It’s ROI gone a muck.

LEGO Universe was an innovation.  It was worthy of being talked about.

Did LEGO Pull a Netflix?

Sometimes we marketers focus on the wrong metrics. For example, does a certain number of website visitors or Facebook likes define success? Of course not.  For example, if a BtoB company has only 10 enewsletter subscribers, but those subscribers are the ten most important customers, it’s probably worth it.

The point here, as with all content marketing activities, is to clearly define what success looks like. LEGO Universe should be treated like any other consumer-facing engagement activity, not just off of direct sales.  In this case, I believe the objective should not have been direct sales of the product, but ancillary sales from direct engagement.

Not happy with direct sales?  Try these:

  • LEGO Universe book sales
  • Halloween costume sales
  • Television and DVD specials
  • Limited edition LEGO Universe products

And the list goes on.

I feel sad for those people that have lost their jobs creating an amazing product for loyal LEGO customers.  I feel sad for the kids. I feel sad for innovation. But most of all, I feel sad for marketing in general. Marketing took a step back this week.

I hope I’m wrong.  I hope.

Author: Joe Pulizzi

Joe Pulizzi considers himself the poster boy for content marketing. Founder of the Content Marketing Institute , Joe evangelizes content marketing around the world through keynotes, articles, tweets and his books, including best-selling Epic Content Marketing (McGraw-Hill) and the new book, Content Inc. Check out Joe's two podcasts. If you want to get on his good side, send him something orange. For more on Joe, check out his personal site or follow him on Twitter @JoePulizzi.

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  • http://GrowMap.com Gail Gardner

    I don’t believe you are wrong – I think your thinking is right on and they have made a huge mistake that will cost them money they will never attribute to this change.

    Many businesses have people making decisions when they do not clearly understand the benefits or value of what they are evaluating. IBM used to do really dumb things fairly regularly which we in the field attributed to “bean counters”.

    Even when you CAN quantify something you still have to use common sense. They once reduced inventory on a critical part that took an entire string of tape drives down to TWO in the entire country because we only used 24 a year. True – but we used all 24 during thunderstorm season so 24 a year DOES NOTE mean 2 per each month.

    There are vastly more decisions being made that CAN NOT be tracked using analytics. For example, if I tweet about your product and some of my followers tell their parents or siblings or friends who don’t even own a computer about it and they buy it you will NEVER attribute those sales to my tweet.

    Anyone who believes they can accurately attribute what generates sales does not understand how tracking works. I could give example after example of how I KNOW that tracking attributes sales to the wrong sources – often 75% of the time.

    Your analysis is correct – the good will and continual reminders about Lego drove far more sales than they know. Remove those reminders – and right before the holiday season when children tell their parents what they want and parents are trying to think of educational toys to buy = not very wise at all.

    • http://blog.junta42.com Joe Pulizzi

      Thank you Gail. Great analysis. Love this line:

      Anyone who believes they can accurately attribute what generates sales does not understand how tracking works.

      • http://www.GrowMap.com Gail Gardner

        Thank you, Joe. And if anyone wants to know HOW I know that analytics does not attribute sales to the appropriate source I would be happy to expound. I really should write that into a post somewhere. I have a very clear example that will make it very easy to understand.

        I don’t know if you are aware that I really appreciate the work you’re doing.

        • http://blog.junta42.com Joe Pulizzi

          Thanks so much Gail. I certainly appreciate all your sharing and support.

          Would love to see that post!

          • http://GrowMap.com Gail Gardner

            Hi Joe,

            I do plan to write up how I discovered how inadequate analytics was for determining what generates sales and how any business that uses AdWords can easily replicate what I did to prove it for themselves.

            I haven’t decided where I will publish that information just yet. I am researching what additional blogs might be interested in having me write for them regularly – probably once a month but I am open to other schedules and just agreed to do five posts per month for one social media site. If you have any suggestions do please let me know.

          • http://blog.junta42.com Joe Pulizzi

            Thanks Gail…keep me posted and I’ll give it some thought.

  • http://www.productbookshelf.com Olaf Kowalik

    Joe, I feel your pain. I spent many hours with my son playing and strategizing around this MMO game. After attending our local Lego show in Seattle and meeting Lego Universe employees I was shocked to hear that they were shutting down the game. I agree that they are not using the right valuation metrics here. I am sure there is more to the story than they are saying publicly, but if you look at the outpouring of grief on the Lego Universe forums, I would say their brand equity is taking a huge hit. Many people on the forums indicate that marketing outside the core Lego community was weak and may have contributed to the lack of paying members. I do think that the game itself was positioned a bit too narrowly because it is most appealing to a small age range, but when you think about it in terms of their overall ecosystem, I really wonder what is going on behind the scenes. Perhaps they just lost the original vision and didn’t know where to take it.

    • http://blog.junta42.com Joe Pulizzi

      Thanks Olaf…I have had multiple conversations with parents about actually boycotting LEGO products. That’s hard to stomach as I love LEGO through and through, but that’s where this kind of decision has left us. My son is heartbroken as well.

      Maybe the original vision was wrong and set out by setting the wrong expectations internally?

  • A LEGO Alumnus

    As someone who worked directly on this project for a number of years, I have observed time and again that LEGO’s digital business has yet to mature to the point where the kind of lateral productization described in this post, comes naturally.

    LEGO is simultaneously hobbled by a lack of experience with digital services and products, and a strong aversion to allowing leadership from (or indeed even listening to) anyone outside of the established management ranks. Unfortunately, I’ve seen other companies suffer from precisely this deadly combination, and the results are always the same – no defined vision, outdated and unimaginative market strategies, and poor execution.

    In the years to come, it’s possible that LEGO’s digital business will develop the necessary sophistication to operate outside of the toy business paradigms that have made its traditional business areas so successful. For now though, pursuing licensing partnerships, as their press release states they will, is surely the right way to go.

    • http://blog.junta42.com Joe Pulizzi

      Thanks for the insight on this. It seems you are very right on this one.

      They should ask themselves what Steve Jobs would do?

    • Another LEGO Alumnus

      I too have worked on LEGO digital products for a number of years. And i totally agree with you that LEGO’s digital development is plagued with inexperienced directors from the plastic side, who mean well but don’t understand the digital world.
      @ the author, you are assuming that the figure 2million users is correct..and not just some hyped up number that makes the director look good. I personally believe they had under 100k and even with the free to play, no one was joining.

      • http://blog.junta42.com Joe Pulizzi

        Interesting take…let’s say they even had 100k free only users. What’s the value of that? A LOT.

        • http://www.GrowMap.com Gail Gardner

          And it isn’t just the numbers – it is that the people playing this game are passionate lovers of Lego – future and possibly already present influencers – and they just turned them from huge fans to major detractors in a moment.

          And talk about bad timing! Why would you want to cause ill will just as the holiday shopping season kicks off in a bad year? NOW is when those kids and their parents would be filling their shopping carts with Legos.

          It is a little difficult for someone like me to understand how they could make such an incredible blunder and no one inside the company had sufficient influence to stop them.

          I don’t have any children, and I don’t have any LEGOs lying around but when I buy gifts for kids they are ALWAYS educational gifts like Legos.

          I even went out of my way trying to locate a copy of LEGO CAD because of a project I remember from a W.I.T.I. (Women in Technology International) conference I attended in San Jose where students used computers to design LEGO projects and then actually tried to BUILD their designs – which taught them where their computer designs went wrong so they could correct the CAD drawings and complete the projects in 3D.

          That kind of teaching is priceless – especially today when so few kids get the opportunity to build complex mechanical or electronic devices with parents, teachers or mentors and cars today are not as easily understood visually.

          IMHO the reason boys score higher on spatial tests is because they used to actually work on things that had gears so they KNEW if you turned gear A clockwise which way gear B or C would turn. Only a few girls had those experiences.

          Today, educational products like LEGO and LEGO CAD provide foundations for children interested in architecture, mechanical engineering or inventing – and those children with a passion for learning and imagination are the ones playing this game.

          I hope LEGO wakes up and realizes that the reason so many adults still love LEGO is because they were introduced to them as children – in the same way that the reason many are passionate about Apple is because they were given access to Apple computers in school. Students become teachers become administrators who BUY YOUR PRODUCTS and now kids playing with LEGOs become engineers, bloggers and social media influencers who influence MANY to BUY YOUR PRODUCTS – and NO you can’t measure that influence accurately and you never will.

  • Louis

    My son grew up playing with LEGOS and was one of the most creative children I have ever seen. We never bought him pre built kits that had instructions, what we did have was boxes of LEGO pieces and if he saw something he liked he would build it from the pieces piled in his box, never from a kit. My favorite one was when he built the Millennium Falcon better than the one from the kit. To this day he still enjoys “creating” with his LEGOS, he is 23 years old. He went to Brown College in the Twin Cities for computer game development. Up until a few days ago he enjoyed working for the LEGO co. dare I say loved his job…my point LEGO is closing down creativity from young minds that enjoy helping other young minds expand their own creativity. Carrying on the LEGO tradition…a portion is gone…hopefully not forever. This post is for my son…who, I know, was an asset to the LEGO CO.

  • http://www.makesocialsell.com Jeff Molander

    So easy for people to show up and say “they don’t get it.” Sorry, Lego people but you’re whining too much for my taste. What is it that is so plaguing? What is it that YOU are offering the company beyond statements offering they’re “not getting it?”

    “… operate outside of the toy business paradigms that have made its traditional business areas so successful”

    What paradigm do you suggest they operate in? They’re a toy company! Are you suggesting they get into the digital give-stuff-away-for-free-in-hopes-that-it-“engages” or “deepens loyalty” paradigm?

    Digital is maturing, folks.

    “What’s the value of that engagement? Priceless.”

    Joe I’ve bused your chops on this before. I doubt that your household will stop buying or reduce the buying activity because Lego decided there’s a threshold of things they can afford to give away for free (ie. the comic book).

    • http://blog.junta42.com Joe Pulizzi

      I know Jeff…I was wondering when you were going to show up.

      I’ll give you a non online example. LEGO magazine. LEGO cannot show DIRECTLY that LEGO magazine grows their business…but it does. Same thing for LEGO Universe. Just because you cannot tangibly prove 100% that a marketing activity is increasing sales, doesn’t mean it doesn’t. Actually, LEGO could have done a better job showing just that…if they were focused on driving sales because of LEGO universe and not just focused on paying subscribers.

      Same for your book Jeff. You didn’t write your book to make direct sales (at least not become a millionaire). You wrote your excellent book because it positions you as a thought leader and leads to more consulting and business opportunities for you. That’s all we are talking about here.

      I’m not whining because I LOVE it so much and they should keep it…I’m arguing that they are measuring the wrong thing…that it is driving sales for them, but they are not looking at that. It could be the best marketing initiative they have right now, but who knows?

      Thanks for commenting Jeff.

      • http://www.makesocialsell.com Jeff Molander

        Joe, I respect the fact that your opinion represents the substance of entire industries– advertising, branding and to a large degree I’ve come to know (through you mostly) custom media. I simply cannot see the world as absolutely as you and everyone else can: That “just because I can’t prove it works doesn’t mean that it doesn’t.” It doesn’t mean that it does either… but I know, you’re certain. And it’s your right to be certain :)

        But we can agree that they could have made a better effort perhaps, yes (to tie use it in ways that create demand/sales).

        And, no, I did not say you were whining. That was directed at these anonymous people showing up on your fine blog pretending to be from Lego. If they are or are not they should at least say who they are. It’s 2011 already!

        And, no, I did not write the book to be a thought leader. I do not consult, I speak, train and write. I wrote it to make money… lots of money! Yes, millions actually. And no I’m not kidding :)

        • http://blog.junta42.com Joe Pulizzi

          Thanks Jeff. Stop by anytime my friend. Truly appreciate it.

          • http://www.GrowMap.com Gail Gardner

            Oh, Jeff, it is Joe’s vision that is expansive and yours that is limited. Do you really believe that seeing your kids playing with LEGOs or an online LEGO game or having LEGO magazines lying around does NOT remind people to buy LEGOs or kids to ask for more of them? Really?

            Why are we inundated with logos for big brands everywhere we look? Is it not to remind people – especially people who run on autopilot and rarely engage their brains and haven’t read a book since high school – to BUY?

            Even intelligent people aren’t always thinking about specific products – UNLESS something REMINDS THEM the way LEGO magazine and games do.

            I guarantee you that parents buy more LEGOs in households where their kids play with LEGOs and read the magazine or play the video game than in households that don’t. For people like me it is NOT necessary to commission a study to find out the obvious – what SHOULD be obvious to anyone with any common sense and actual marketing experience.

        • http://www.GrowMap.com Gail Gardner

          @ Jeff Molander: P.S. Employees of a company who SAYS who they are when commenting about controversial decisions made by that company are highly likely to become EX-employees of said company and possibly find it difficult to get employment again.

          I am glad they are wiser than you are about that. Social Media is your area of expertise and you don’t realize that?

          • http://www.makesocialsell.com Jeff Molander

            Gail, I think we’re done. All the best to you.

            Joe, I appreciate your blog but have a difficult time offering critical thought at it. Cheers!

  • http://www.makesocialsell.com Jeff Molander

    Hi, Gail…

    You said, “Anyone who believes they can accurately attribute what generates sales does not understand how tracking works.”

    Precisely. Tracking is not a perfect science.

    “I could give example after example of how I KNOW that tracking attributes sales to the wrong sources – often 75% of the time.”

    So don’t track? Gail, I’m confident that you don’t really mean this. Sorry to do it again, Joe, but here’s what David Ogilvy himself has to say on the importance of tracking and direct response metrics, Gail.

    • http://www.GrowMap.com Gail Gardner

      No, I’m not saying that I don’t use analytics…what I am saying is that it requires a large dose of common sense, logical deduction and carefully structured testing to not be mislead by them.

  • Lisa

    You are so right. My son’s love for this game has made him love LEGO even more, if that is possible. Now that the LEGO Company is breaking his heart, I don’t know how it’ll play out …

  • http://bit.ly/SaveLEGOU Save LEGO Universe

    Sign the petition to save #LEGOUniverse! bit.ly/SaveLEGOU

  • http://www.guardiansofelestra.com Thom Jones

    I’ve been having a similar discussion with my kids about how Lego has made a mistake here. I think that the points about indirect contact time with Lego are accurate, but there is also another thing that is reinforced–that Lego, while a permanent brand, offers products that are only temporarily available. I have seen my older son get frustrated when sets from lines he likes disappear too quickly, and ultimately, he subtly changed his preferences. Now, there are two million people who love to play the game, and it’s being discontinued which may make people wonder about Lego’s commitment in any way that is beyond a single set purchase.

    I also think that there is another mistake here–one of simple economics. We are in a bad economy, and have been for a while. Getting two million players in this time may not be an accurate picture of the numbers they would get if the economy were in good shape. So, it seems like a simple matter for Lego to say that projections have to be downgraded during such times and to use LU as a way to keep people engaged when they may not be able to purchase hundreds of dollars worth of sets.

    Finally, along the lines of ideas that they missed, I think that some people have said that they seemed to push Ninjago too much in LU. I think that pushing any set or line too much is a problem, and they should have looked at it from the other side. Look at their lines (not licensed things like Star Wars or Pirates of the Caribbean) and insert LU elements into new sets. For instance, add stromlings in a Ninjago set or maelstrom horsemen in the Castle sets. That way, when kids get sets, they will get LU elements and perhaps want to find out about the game. Also, they could have done a Universe set with various characters with an assortment of minifig pieces so that the user could create their own minifig just like in the game. Just a few thoughts.

  • Hugh Firebaugh

    As a dad of a kid who plays lego universe and a Creative Director who works with brand building. I can give one anecdotal piece of evidence. My 7 year old son does not differentiate digital from the toys as neatly as we marketers. For instance – we purchased NIJAGO toys soley based on his experience with NIJAGO online. Before that – he was a Bey Blade kid but when he found something similar in the brand he was loyal to he wanted that instead. The online universe not only keeps the brand vital in the child’s mind it keeps the toys vital. Instead of moving onto a different toy brand it keeps them engaged with the toys they already have. My son will go immediately upstairs after he has used his computer time and continues playing the SAME adventure with his toys. as a result of this immersion, he has lego t-shirts, we go to lego shows, he watches master builder videos, and yes we buy legos, lots of legos: lego sets, lego pieces, lego games, lego wii games – the list goes on. The shut down has him perplexed – are legos going away? (No I assured him legos will be around for quite awhile). Why are they closing the game? (Because it isn’t making money.) Lego isn’t making money? – all my friends play with legos. (The game isn’t making money). But we all play – we talk about it at school.

    This is priceless advertising that hits your target demographic square in the head and keeps the non-digital version of the brand relevant and fresh. Before lego universe, my son played Pirates of the Caribbean online and his room, birthday party, halloween costume, and many many toys were pirate themed. Now we are shopping around for another gaming experience for him and I dare say that whatever we land on will occupy his imagination and our discretionary toy, party, and extras budget will go to fueling that and legos will become less of the leading brand in his mind. Will we still buy legos – of course – but probably not in the quantity as this past year as we will have to make room for something else and tomorrow’s legos wil be yesterday’s pirates.

    • http://blog.junta42.com Joe Pulizzi

      Hugh….amazing example. Thanks for sharing!

  • scott skillman

    I am not a marketer and probably am not qualified to discuss the topic here, but… I am an attorney and father. My kids have been playing Lego Universe and my 8 year old was so upset about the closing he told me that he no longer wants to be a “lego engineer” when he grows up. That, is what I call a marketing failure.

    He puts all his attention into Mine Craft now. In my uninformed and irrelevant opinion, The Lego people looked at the finished product from the developer and found it less engaging than mine craft. The result being, “you’re fired” Even though they are in fact missing the point entirely. The point being I suspect they found the class half empty and therefore unacceptable. I agree with Joe and I find Molander’s positions unpersuasive.

    • http://blog.junta42.com Joe Pulizzi

      Thanks for stopping by Scott (fyi, I have an 8 year old as well).

      Great (and very sad) point you make.

  • Noel Torcivia

    Hmm… I honestly did not following the Lego Universe. But, I know my 8 year old son did. He is crushed. I know he was constantly buying legos with his money to create his own real lego universe. I too think Lego needs to look at the bigger picture in real market value. I guess Lego sales probably will drop off from after this move. Bad financial move.

  • Thomas Alexander

    Joe and all,

    I agree Lego is making a poor business decision. Like most of the previous stories, my son invested a fair amount of time in the game. In turn, he also went to the Lego store and created a lot of his virtual characters to real ones. Instead of dwelling on what cannot be, I’ve chosen to turn this into a learning example for my son. He now understands that games, while fun, need to be consumed in moderation; much like anything in life. My comments are not meant to stifle creativity nor the imagination of a child, but to prepare my son for the unfair world.

    After a small discussion, my son then asked, “Can we go outside and make a snowman?” I replied, “How about we build a Lego Snowman?”

    “Even better Dad, even better.”

    Thomas

    • http://blog.junta42.com Joe Pulizzi

      Classic Thomas. Thanks for sharing. Great story.

  • Sakaki

    My six year old played online during the summer.. probably only for a few weeks. He has cried everytime he remembers Lego Universe is no longer available. No tantrums, no anger or yelling. Just silent tears streaking down his face while he asks if maybe they’ll open it again in the future. It breaks my heart. The really don’t seem to realize the impact this game had on young little minds. I think they’ve been quick to judge no giving the game enough time to cause a reaction and I think their parameters for evaluation need tweeking.

    It’s sad to see that many other kids feel like my son does.

  • http://www.facebook.com/parker.grassle Parker Grassle

    I was 11 when I playd it the most now I wish there was a way to get them
    to get the game going agan. ); I wonder if they are going to bring it back?

  • UNKROWN

    bring back lego universe