New Versions of Older Exclusives - what does it mean to LEGO Investing

[Alpinemaps]

3 hours ago, Migration said:

Great, I'll be singing Kenny Rogers for the rest of the night now.

 

[Val-E]

Another point is that the more sets they make in a premium price band, the more demand is spread around as there are much less people able or willing to spend 200 USD plus on a single set, far less 400. It´s like having a bunch of new resellers come onto the market.

I agree, it won´t be an overnight disaster but it will gradually erode growth of sets and it will also change buyer mentaility, similar to deflation. Why pay more now when I can wait some time and get more for less. Only the impatient and the needy will sustain demand.

[Fenix_2k1]

Sorry but I'm not sure i agree that more choice erodes demand because they're opening new sectors to high end sets.  A technic porsche guy might have no interest in star wars, i love the star wars stuff but no interest whatsoever in minecraft, same with Ninjago. Disney Castle well that has a pretty broad spectrum of appeal. You also have to realise that children's toy budgets have gone through the roof. And where a £200 lego set used to be the domain of just AFOLs these days parents have no issue blowing that kind of money on a top level lego set for timmy. The other  factor is more adults now find less stigma associated with being an AFOL and I'm sure that watching the lego movie made a lot of adults remember that when they were kids they wanted a basement full of lego that they can now afford. People start collecting then find items they want are no longer sold so they start paying over the odds but everyone has their limit.  

Yeah there's the odd person prepared to blow 5k on a 10179, but not many.  For example i reeaaally want one, i could afford one but then it starts to invade the budgets of my other hobbies. 5k gets me several snowboarding hols or trackdays and upgrades for my car. Plus at 5k when i open the box to build it, i pretty much half its value. So as a purchase it just doesn't make sense. 

I think there will always be a market for 2x maybe 3x profit on lego but those big numbers have always been unsustainable.  And when you know there's demands for a set out there but the price has put it out of reach of most people, as a company you'd have to be pretty dumb not to entertain the idea of a reissue.

Not to mention that pieces and techniques available now can make more accurate models than was possible 10-15 yrs ago.

[Sprocket77]

49 minutes ago, Fenix_2k1 said:

Sorry but I'm not sure i agree that more choice erodes demand because they're opening new sectors to high end sets.  A technic porsche guy might have no interest in star wars, i love the star wars stuff but no interest whatsoever in minecraft, same with Ninjago. Disney Castle well that has a pretty broad spectrum of appeal. 

You're right that the Technic Porsche might not take money out of the other areas because it's different enough and might open up new customers to Lego. But, @Val-E is right in that if they make too many high priced sets then those sets will end up cannabalising sales from each other. This is particularly true about Star Wars exclusives where by releasing too many of these sets each year they do reduce the market for each. Parents may be able to afford a €200 set and Timmy might get that for Christmas, but Timmy is probably getting a choice of the 3 sets, not one of each.

Another issue I see is that a new AFOL who wants to collect Star Wars, may buy all three of this year's exclusives, but then might not have the spare cash after that to go back and get the sets he missed, just hurting our market. 

[c_rpg]

2 hours ago, Fenix_2k1 said:

Sorry but I'm not sure i agree that more choice erodes demand because they're opening new sectors to high end sets.  A technic porsche guy might have no interest in star wars, i love the star wars stuff but no interest whatsoever in minecraft, same with Ninjago. Disney Castle well that has a pretty broad spectrum of appeal. You also have to realise that children's toy budgets have gone through the roof. And where a £200 lego set used to be the domain of just AFOLs these days parents have no issue blowing that kind of money on a top level lego set for timmy. The other  factor is more adults now find less stigma associated with being an AFOL and I'm sure that watching the lego movie made a lot of adults remember that when they were kids they wanted a basement full of lego that they can now afford. People start collecting then find items they want are no longer sold so they start paying over the odds but everyone has their limit.  

Yeah there's the odd person prepared to blow 5k on a 10179, but not many.  For example i reeaaally want one, i could afford one but then it starts to invade the budgets of my other hobbies. 5k gets me several snowboarding hols or trackdays and upgrades for my car. Plus at 5k when i open the box to build it, i pretty much half its value. So as a purchase it just doesn't make sense. 

I think there will always be a market for 2x maybe 3x profit on lego but those big numbers have always been unsustainable.  And when you know there's demands for a set out there but the price has put it out of reach of most people, as a company you'd have to be pretty dumb not to entertain the idea of a reissue.

Not to mention that pieces and techniques available now can make more accurate models than was possible 10-15 yrs ago.

It's definitely true that children these days are getting insanely expensive toys. The obligatory iPad for the 7 year olds is not a myth. So compared to that a 200€ Lego set is peanuts. Keep in mind that the second best selling set of 2015 was 75105, which has about a 150€ RRP! If that is the set average folks buy, I'm 100% sure there is a market for sets that cost 2x or even 3x as much.

I also keep saying this, but people don't seem to realise how much money a lot of folks have. I don't know what it is like in other countries but I drive to work everyday and half the people that are passing me are driving 50000€ Audi's, BMW's and Volkswagens.

Edited April 21, 2016 by c_rpg

[inversion]

46 minutes ago, c_rpg said:

It's definitely true that children these days are insanely expensive toys. The obligatory iPad for the 7 year olds is not a myth. So compared to that a 200€ Lego set is peanuts. Keep in mind that the second best selling set of 2015 was 75105, which has about a 150€ RRP! If that is the set average folks buy, I'm 100% sure there is a market for sets that cost 2x or even 3x as much.

I also keep saying this, but people don't seem to realise how much money a lot of folks have. I don't know what it is like in other countries but I drive to work everyday and half the people that are passing me are driving 50000€ Audi's, BMW's and Volkswagens.

Where I work you are more likely to see €150 000 cars. The clothes on the children are my monthly salary (which is on the very high end for fresh graduates). These LEGO sets are pocket money for them. People do have the money and large LEGO sets were always toys of the wealthy. That is not the issue. There is room for super expensive stuff as long as there are offerings on the low end too.

[Rimmit]

4 hours ago, c_rpg said:

I don't know what it is like in other countries but I drive to work everyday and half the people that are passing me are driving 50000€ Audi's, BMW's and Volkswagens.

All driving an expensive car means is that you drive an expensive car.

In the US the #1 car driven by a millionaire isn't a Ferrari or a Porsche, it's the Ford F-150.

[Val-E]

In Europe that would be considered an agricultural vehicle! Lego make one as well, though so guess there´s a reason.

Edited April 21, 2016 by Val-E

[tjj1984]

8 minutes ago, Rimmit said:

All driving an expensive car means is that you drive an expensive car.

In the US the #1 car driven by a millionaire isn't a Ferrari or a Porsche, it's the Ford F-150.

It wouldn't shock me if this were true, but do you have a source?

[Ed Mack]

14 hours ago, Migration said:

Who exactly buys them then? Only collectors? Resellers? Over the last few years I've purchased many large exclusive with high MSRPs and all of them came from kids that outgrew their collections. The parents that bought those sets for their kids don't give a .... about the secondary market. Their kids wanted something so they bought it. Lego as an investment will end only when kids no longer care about the product.

Honestly, I think resellers are the main buyers of exclusives.  Sure, "regular" customers buy a percentage, but the trend to larger sets over the past 15 years is directly related to the secondary market in my opinion.  If you look back to the year 2000, there were 5 sets with 1000 pieces or more.  Fast forward to  2015, there are FIVE times that amount.  What changed LEGO's philosophy to bigger sets?  More and more resellers buying them is the main reason.  Kids didn't change.  Parents didn't change.  The economy has sucked for a decade.  Resellers have played a major role in buying exclusives and will play a major role in the demise of exclusives.  If the market tanks, you will go right back down to 5 exclusives a year.   

[inversion]

4 minutes ago, Ed Mack said:

Honestly, I think resellers are the main buyers of exclusives.  Sure, "regular" customers buy a percentage, but the trend to larger sets over the past 15 years is directly related to the secondary market in my opinion.  If you look back to the year 2000, there were 5 sets with 1000 pieces or more.  Fast forward to  2015, there are FIVE times that amount.  What changed LEGO's philosophy to bigger sets?  More and more resellers buying them is the main reason.  Kids didn't change.  Parents didn't change.  The economy has sucked for a decade.  Resellers have played a major role in buying exclusives and will play a major role in the demise of exclusives.  If the market tanks, you will go right back down to 5 exclusives a year.   

One big thing changed Ed. The kids did: they grew up.  The AFOLs were nowhere back then. Now it is perfectly accepted by society to play with LEGOs, people look at it the same way as skiing. In some creative circles it is even hip. I am not saying that your point of view is invalid since I also think that resellers exacerbate demand, but it is not the whole story. Even in Hungary, where wages are a fraction of what you can see in the US people are flocking to the stores when new exclusives come out.

So I would not be all doom and gloom, on the other hand in my opinion sets like Hoth hurt LEGO even more than certain remakes. You can't sell a terd if you put a ribbon on it (UCS badge) and it offends people who are fans of the line. The premium appeal is at stake here.

[Deanfjr]

resurrect the grand carousel

[zskid00]

22 minutes ago, Ed Mack said:

Honestly, I think resellers are the main buyers of exclusives.  Sure, "regular" customers buy a percentage, but the trend to larger sets over the past 15 years is directly related to the secondary market in my opinion.  If you look back to the year 2000, there were 5 sets with 1000 pieces or more.  Fast forward to  2015, there are FIVE times that amount.  What changed LEGO's philosophy to bigger sets?  More and more resellers buying them is the main reason.  Kids didn't change.  Parents didn't change.  The economy has sucked for a decade.  Resellers have played a major role in buying exclusives and will play a major role in the demise of exclusives.  If the market tanks, you will go right back down to 5 exclusives a year.   

LEGO in 2000 was not doing that well and they didn't turn things around until a few years later.  Their number of licensed themes has also grown by leaps and bounds since then which has a substantial impact on the increase in exclusives.  The maturing of the LEGO consumer also has a part to play.  All of those kids and teens who grew up with LEGO Star Wars in the early 2000's are starting to earn wages (or higher wages) and have disposable income.  Not to mention the LEGO media blitz with tv shows, video games, and movies that keep the brand at the forefront of the public conscious.  As LEGO grows so does their product line, exclusives included.

On a side note if I had put money in mutual funds 10 years ago today, I would be sitting on a hefty profit right now.  Not that the stock market is the only indicator for a healthy economy, but it counts for something.

Edited April 21, 2016 by zskid00

[Ed Mack]

6 minutes ago, inversion said:

One big thing changed Ed. The kids did: they grew up.  The AFOLs were nowhere back then. Now it is perfectly accepted by society to play with LEGOs, people look at it the same way as skiing. In some creative circles it is even hip. I am not saying that your point of view is invalid since I also think that resellers exacerbate demand, but it is not the whole story. Even in Hungary, where wages are a fraction of what you can see in the US people are flocking to the stores when new exclusives come out.

So I would not be all doom and gloom, on the other hand in my opinion sets like Hoth hurt LEGO even more than certain remakes. You can't sell a terd if you put a ribbon on it (UCS badge) and it offends people who are fans of the line. The premium appeal is at stake here.

Believe me, it's only become a lot more "hip" if you can make a case that LEGO sets appreciate better than gold.  

[KShine]

8 minutes ago, inversion said:

One big thing changed Ed. The kids did: they grew up.  The AFOLs were nowhere back then. Now it is perfectly accepted by society to play with LEGOs, people look at it the same way as skiing. In some creative circles it is even hip. I am not saying that your point of view is invalid since I also think that resellers exacerbate demand, but it is not the whole story. Even in Hungary, where wages are a fraction of what you can see in the US people are flocking to the stores when new exclusives come out.

So I would not be all doom and gloom, on the other hand in my opinion sets like Hoth hurt LEGO even more than certain remakes. You can't sell a terd if you put a ribbon on it (UCS badge) and it offends people who are fans of the line. The premium appeal is at stake here.

Since our economy relies on the ability to convince everyone to buy as much turd as possible, I think that you can.

[tjj1984]

9 minutes ago, Ed Mack said:

Honestly, I think resellers are the main buyers of exclusives.  Sure, "regular" customers buy a percentage, but the trend to larger sets over the past 15 years is directly related to the secondary market in my opinion. 

Hey Ed, I've got a question for you--On the first page of the Bubble Thread, you said 

"For years, Jeff and I would hang in the Battlefield forums on the XBOX site and the forum members all thought that the developer, DICE, was listening to them and adapted their business strategy around some fanboys and their whims. I think the same thing applies with LEGO investors, which as a whole, make up a small percentage of all LEGO customers. We think we affect LEGO and their sales practices...I really doubt it."

Obviously, you can't have it both ways. Has your opinion evolved over the past 3+ years?

 

[Ed Mack]

1 minute ago, tjj1984 said:

Hey Ed, I've got a question for you--On the first page of the Bubble Thread, you said 

"For years, Jeff and I would hang in the Battlefield forums on the XBOX site and the forum members all thought that the developer, DICE, was listening to them and adapted their business strategy around some fanboys and their whims. I think the same thing applies with LEGO investors, which as a whole, make up a small percentage of all LEGO customers. We think we affect LEGO and their sales practices...I really doubt it."

Obviously, you can't have it both ways. Has your opinion evolved over the past 3+ years?

 

Yes.  That was 50,000 members ago.  

[tjj1984]

Just now, Ed Mack said:

Yes.  That was 50,000 members ago.  

Haha, fair enough. I guess a better way to phrase the question would have been what specifically has caused your opinion to change. That number alone is pretty persuasive.

 

[exciter1]

Yes.  That was 50,000 members ago.  

I think that number is still a fraction, since many long time QFLLs don't even know what BrickPicker is.

[Phil B]

3 minutes ago, exciter1 said:

I think that number is still a fraction, since many long time QFLLs don't even know what BrickPicker is.

But OTOH, there are also folks in the 50,000 who are like me and only buy exclusives for themselves, not multiples for investment.

[exciter1]

But OTOH, there are also folks in the 50,000 who are like me and only buy exclusives for themselves, not multiples for investment.

I do believe there are many members here who just want the value of their current collection, like the info/news, deals, and enjoy the community.

[Battrax]

1 hour ago, Rimmit said:

All driving an expensive car means is that you drive an expensive car.

In the US the #1 car driven by a millionaire isn't a Ferrari or a Porsche, it's the Ford F-150.

You need something for your PA to tow to the seaside that gold-plated speedboat you use to get to your yacht for your monthly excursion to Panama "for purely recreational reasons not anything to do with money, honestly".

[Battrax]

17 minutes ago, exciter1 said:

I do believe there are many members here who just want the value of their current collection, like the info/news, deals, and enjoy the community.

I joined for the brickfolio, stayed for the reselling...

[Mos_Eisley]

I would also bet that the total revenue generated from exclusives is far less than from the more affordable ranges, so I think Ed can have it both ways. 

[c_rpg]

1 hour ago, Rimmit said:

All driving an expensive car means is that you drive an expensive car.

In the US the #1 car driven by a millionaire isn't a Ferrari or a Porsche, it's the Ford F-150.

That's just plain silly  I'm not saying anyone who drives these types of cars is a millionaire, but it does show that most of them have some extra cash to spend. I think it's a perfectly good indicator of how well people are doing financially. Someone who is barely making a living is not going to be driving an expensive German car or buying overpriced plastic bricks.