Lego, the world's largest toymaker, is significantly increasing its investment in digital initiatives, including developing video games in-house and launching new "Smart Bricks." This strategy is driven by the belief that digital experiences are a crucial complement to its core physical toy business, especially as children increasingly engage with screens. The company has tripled its software engineers since 2022, and CEO Niels Christiansen expressed a willingness to "overinvest" in these areas, citing the benefits of being a family-owned, long-term focused company.
This push into digital comes after a strong period of growth for Lego, with recent financials showing revenue up 13% to $10.1 billion and operating profit up 10% to $2.7 billion. The company continues to outperform rivals like Mattel and Hasbro. Lego's digital spin-off, Lego Digital Play, reported a $1.4 million pre-tax profit in its first year, with a turnover of $12.4 million, even though it's unclear if it has released any products yet. This division, established in February last year, aims to create digital entertainment for future generations.
A key part of Lego's digital innovation is the introduction of "Smart Bricks" and the "Smart Play" system, unveiled at CES 2026. These 2x4 bricks contain an ASIC chip, sensors, lights, a speaker, and an accelerometer. They wirelessly charge and form a Bluetooth mesh network, allowing them to interact with "Smart Tags" embedded in tiles and minifigures. This technology aims to bring Lego sets to life with sounds, lights, and reactions to movement, with initial Star Wars-themed sets launching on March 1st. For example, a $70 Darth Vader's TIE Fighter set includes one smart brick, one smart tag, and one smart minifigure.
While Lego sees these innovations as a way to "expand physical play," some play experts express concern that Smart Bricks could undermine the imaginative play traditionally associated with Lego. Critics, such as Josh Golin of Fairplay, argue that children already use their imagination to bring Lego creations to life, and adding electronic features might detract from this. However, Professor Andrew Manches noted that while concerns about security and privacy exist, the reduced cost and size of components have made seamless integration of digital technology into toys more feasible, offering exciting innovation in combining physical and digital play.
