The world’s largest toy maker by revenue, The Lego Group, is privately controlled by family interests in Denmark. Merlin Entertainments therefore provides one of the only ways to buy into the growth prospects for Lego. The visitor attraction company runs six LEGOLAND Parks and is set to open new sites in Asia.
Merlin Entertainments is the world’s second largest visitor attraction operator and has the leading market position in Europe. The world’s largest visitor attraction operator, Walt Disney, has been driven by Disneyland resorts.
Financial issues at Disneyland Paris, owned by Euro Disney, show that the sector isn’t always a walk in the park. However, LEGOLAND Parks enjoys a strong market position and is benefiting from the growing popularity of Lego.
LEGOLAND Windsor
Source – LEGOLAND Windsor website
The power of Lego
The owner of Lego, The Lego Group, offers an insight into the strength of the toy brand. The Lego Group’s revenue in 2014 increased by 13% on 2013 and is up by 78% against 2010.
The growth continued into the first half of 2015 with revenue 23% higher than H1 2014. Other toy makers can’t match this performance with first half 2015 revenue at Mattel down by 5% and Hasbro’s revenue up by only 0.2%.
Toy companies have been hit by the growth of digital devices with consumers moving from board games to iPads. However, Lego’s market niche in “playful learning” has seen its popularity go from strength to strength.
The 2004 “The Lego Movie” has further bolstered the brand with the film generating over US$500m in box office revenue. A sequel is planned for 2018 and three spinoff movies are reported to be in the works.
Poster for The Lego Movie
Source - IMDB
The Lego Group’s owner has a 29.9% stake in Merlin and as such the interests of the two companies are aligned. Merlin Entertainments acquired four LEGOLAND Parks from The Lego Group in 2004 and currently runs six sites.
Merlin Entertainments in focus
Merlin Entertainments has three divisions which are 1) LEGOLAND Parks 2) Midway Attractions and 3) Resort Theme Parks. Midway Attractions are smaller, indoor sites where visitors stay for a few hours rather than a whole day.
Midway Attractions’ brands include indoor LEGOLAND Discovery Centres which are located in city centres or shopping malls. Other Midway brands include The Dungeons, Madame Tussauds, Sea Life and the Eye Brand.
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