GoKawiilLEGO's near-bankruptcy traced to Knudstorp's 2004 licensing overhaul
By the early 2000s LEGO had diversified into theme parks, an in-house game studio, clothing and TV content, and by 2003 it had lost nearly a third of its revenue in one year, reportedly coming within about 18 months of running out of cash. New CEO Jørgen Vig Knudstorp, appointed in 2004, didn't scrap those ventures but restructured how LEGO ran them: selling majority ownership of its theme parks to Merlin Entertainments while retaining licensing rights, and closing its internal game studio in favor of licensing deals with outside developers, which produced titles like Lego Star Wars and Lego Batman.
GoKawiil's interpretation of the reporting above, not reported fact.
The episode is being used as a lesson that expansion into adjacent businesses can drain focus and cash from a company's core product, suggesting that owning a venture and operating it day-to-day are different risks. Knudstorp's approach of retaining brand control through licensing rather than full ownership offers a template entrepreneurs might apply when deciding which parts of a growing business to hand off before a crisis forces the choice.
- LEGO lost nearly a third of revenue in 2003 and reportedly neared running out of cash within 18 months.
- CEO Jørgen Vig Knudstorp restructured rather than eliminated side ventures, licensing parks and games instead of operating them directly.
- Licensing deals from this shift led to products like Lego Star Wars, Lego Batman and eventually The Lego Movie.
LEGO Icons Creator Expert Set — The article's about LEGO rediscovering focus on its core brick sets, so there's no better way to appreciate that than building one yourself. These Icons sets capture the craftsmanship and design obsession that reportedly saved the company when it stopped spreading itself thin. Great for reliving the brand's turnaround story brick by brick.
See LEGO Icons Creator Expert Set on Amazon → Affiliate link — we may earn a commission on purchases, at no extra cost to you. Product picked by AI based on this article; it is not a tested recommendation.Source: entrepreneur.com — Saahil Mehta, 2026-10-02
Published there as: “What LEGO’s Near-Collapse Taught Me About Saying ‘No’”
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