Nanoblock: Building a Niche Under the Radar
A closer look at the micro-sized building block maker and LEGO competitor from Japan
I have always enjoyed games and toys, and while playing video games when you’re over 30 is widely accepted nowadays, playing with brick toys to build miniature stuff is not quite up there with the coolest grown-up hobbies (for most people). For that reason probably, and because I have been moving around a lot, I haven't really played LEGO bricks for the past ten years or so, save for the occasional afternoon with my niece when I am back home.
Rewinding back to 2018 and I am wandering around San Francisco’s Japantown mall by myself on a Saturday afternoon, bored and looking to spend money I don’t have when I stumbled upon something amazing. Something I didn’t know I needed in my life:
I can safely say that this tiny panda instantly won me over. I was under its cuteness spell and wanted to try building it of course, but I was also intrigued by the packaging and the overall design, something I’ve always admired with Japanese products since I traveled there a few years ago (another topic for another time). I bought the toy and brought it back to my overpriced, underequipped single room in the Tendernob. It took me under an hour to build it, and I was hooked.
So what is Nanoblock?
“With elements of construction of 5 mm high, nanoblock ® is, the most incredible construction game in the world. It allows to build mini figurines of an unequalled precision.” (source)
Nanoblock is the “Original micro-sized building block”, a building hobby from Japan with its smallest block measuring 4mm x 4mm x 5mm. That’s super tiny.
Building these takes time and precision and feels oddly therapeutic. While I’ve had experience with building LEGO models or assembling Warhammer pieces as a teenager, Nanoblock brought a different experience as it manages to maintain a balance between a challenging yet calming experience. They come with thorough, detailed instructions making it really not that difficult, but the intricate and tiny nature of the pieces obviously require your undivided attention, in a calming and soothing way:
Following my purchase of the Giant Panda figure, I’ve started acquiring more models every other week, allowing myself an hour of relaxing building from time to time. I was working on an early-stage startup project at the time, and felt a lot of pressure from running around and constantly feeling behind. These late-night building sessions felt very therapeutic and, for someone like me who has a hard time focusing on one thing at a time, helped a lot to unwind.
“For the construction set fan seeking a superior building experience, Nanoblock offers a greater challenge, sophistication and detail than any other system.” (source)
So apart from the size, what differentiates Nanoblock from LEGO and others? The strategic positioning of Nanoblock is clear: it addresses an older demographic and caters accordingly with the choice of models. It all started with architectural models and replicas of work renowned monuments, but has since expanded to animals, space, Japanese tradition, daily life and food, and even special licensing items in collaboration with other brands.
Being a startup guy and as I’ve continued enjoying Nanoblocks for a number of years, I’ve started wondering about the company and being interested in its positioning, strategy, and some of the behind-the-scenes information. I would find Nanoblocks available in the most random places, from Japantown (makes sense) to the bookstore chain in my hometown in Normandy (random), while not being able to find any in Vancouver for example. Who’s behind Nanoblock, how do they market these toys, and how do they perform against LEGO and other competitors?
The first thing you naturally do in 2020 when researching a company is to go on their corporate website. In the case of Nanoblock, it turns out to be a bit more difficult, as we have a Japanese website, a US website, and a French Website (I stopped looking after three countries, there might be more). they’re all in English but providing slightly different information and products. My assumption is that the websites are managed by local distributors, hence the differences.
While Nanoblock seems to be present on a bunch of markets, its online presence is a bit dusty across the board, with Schylling toys’ (the US distributor) last tweet dating back to 2017, or the Japanese website’s timeline not being updated since 2014. On the other hand, the Japanese and French social media profiles are active and generate a bit of engagement, posting somewhat regularly.
I did run into a big annual event, the Nanoblock Award, a global online building contest, running yearly and open to everyone. The dates for 2020 are from September 23rd to November 23rd. I am quite tempted to participate myself:
But this doesn’t tell me much about the company’s origin, story, and strategy. Who are the founders, why choose this niche and how did they manage to build a profitable company with LEGO towering over the building block business? There’s not much about this back story on the websites, except that the toys started to be sold commercially in 2008 and are designed by a Kawada Ltd. We have a lead!
Kawada Ltd defines itself as an “all-around toy company”, showcasing a range of products declined from Nanoblocks and others, articulated around the concept of “learn, play, enjoy and heal”, which I find pretty dope, I’m not gonna lie.
“Our mission is to continue to communicate the wonder of toys and hobbies-not just to children, but to people of all generations” (source)
How can you not like that? The website breaks down the philosophy behind the “all-around toy company” catchphrase and explains that the business is articulated around 4 big axes: Toy trading, a Domestic and International Network, Product Development/Manufacturing, and Licencing Business.
This confirms our assumption that Kawada probably relies mostly on local distributors for promotion, hence the varying degrees of quality and involvement online from one market to another. We also learn that the business was started in 1952 as a toy wholesaler in Tokyo, and that the diablock brand of block toys was launch launched ten years later, as early as 1962. For reference, LEGO was started in 1932.
Kawada’s big break seems to come in 2008 with the establishment of an Overseas Business Development Division and the launch of Nanoblock, the miniature block toy. And it appears to be going up since, with the latest update being a new president in August 2020, Masakazu Kobayashi, a change that has not yet been updated on the Bloomberg’s company profile, which also doesn’t provide a lot of info:
I went a bit further down the rabbit hole to try and find some facts and figures about the company’s financial performance and earnings but wasn’t able to locate anything on Crunchbase or any other sources that I would usually trust. I also wasn’t able to find much about the company’s founders, or about Schylling and Mark’s Europe, the US and EU distributors. I guess I’ll let go of that angle, for now!
Cool fact / Idea break:
As I was investigating Kawada Co Ltd, I kept running into Toshiaki Kawada, a Japanese pro-wrestler that used to go by the name “Dangerous K” in his heyday. While it doesn’t matter much here, I think it would be cool to have a Nanoblock figure made after him, for sharing the last name with the head company. Just a thought *wink wink*
Fans and community
Facing the apparent lack of a unified Marketing push from the company itself, I started looking for other sources of organic engagement for Nanoblock. Some products, especially in the toys and niche hobbies industries, can benefit from a self-sustaining niche bordering with cult-following.
But as I explored Reddit, Quora, Facebook, Instagram, and others, I failed to identify any distinct, engaged community like virtually every other niche hobby I can think of. I mean, Ultimate Frisbee, Quidditch, and Ferrets Gone Wild all have significantly more fans on Reddit than Nanoblock! While there are some anecdotal Facebook and Reddit groups, most of the content consists of people showcasing their collection with little to no engagement, while the rest of the discussions revolve around requesting instructions missing from sets, which appears to be a big thing.
It’s also not excluded that there might be significant non-English speaking communities that I haven’t been able to find. There seem to be a lot Nanoblock fans in Thailand for example, but my Thai is unfortunately quite rusty so my investigation was forced to a halt on that front. ขอ อภัย
While I wasn’t able to find a real community rallying around the hobby, and most of the content online seems to be one-off videos or articles here and there, I did run into one true Nanoblock influencer:
Christopher Tan, a full-time Nanoblock artist from Malaysia, is displaying his work online and leading an agency designing and even manufacturing bricks. Their portfolio is super cool with pieces made for clients ranging from Starbucks to HSBC, Nikon and Google. I recommend checking out Tan’s talk at TEDxSunwayUniversity in Malaysia from 2017, giving some insights on his career and on Nanoblock as a hobby:
In the talk, Tan brings up that Kawada’s reason for designing micro-sized building blocks came from Japan’s high property prices and the fact that people live in small spaces, making collecting large toys challenging. He also breaks down the differences between Nanoblock and LEGO, which he defines as conceptually different:
“LEGO was designed for playability, meaning you build something and then you play with it. If you build a car you can push it around, turn the steering wheel… (…) Nanoblock on the other hand is like pixel art in 3D: You build something and then you put it aside for display.” — Christoper Tan, TEDxSunwayUniversity, 2017.
He also explores the technical difference between LEGO and Nanoblock, the latter uses a double-fin locking system and the former a tube locking system, and touches on his creative process to come up with custom Nanoblock models. It’s pretty insane to me and extremely cool that someone can live off of such a hobby, quite amazing.
Personal outlook and business opportunity
Even though I wasn’t able to find a lot of hard data about the company, it seems to me that Kawada has found a nice niche in the micro-size building blocks business and that Nanoblocks seem to be doing quite well globally, being present in 30+ countries. I’m quite fascinated by the relatively untapped potential that the company has between the licensing deals (Dragon Ball, Disney, Pokemon, etc), the various distribution channels already established and the communities of fans that could gather around a fun, cross-generational product.
I am in no way qualified to be advising a multi-million dollar (maybe?) company, nor do I pretend to know anything about the toy industry, but I like to work on this type of mental exercises, and as a big fan of Nanoblock, here are some of the things I would like to see from Kawada:
- Unified, branded online strategy: I would love to see more consistency with the brand’s online presence. While the product is very cool in itself, I for one would enjoy a closer look at the company culture, especially after reading about Kawada’s values.
- Empowered community: A logical step following the previous point. Organizing things such as the yearly Nanoblock awards fall under that category, but the brand would benefit a lot from managing and promoting content creators, communities, and fans.
- More licensing deals: I was very surprised when I stumbled upon DBZ Nanoblock figures at my local bookstore. While I really enjoy the architecture and animal models, I think there is a lot of adoption value in these licensed series, especially when considering popular IPs such as Pokemon, Dragon Ball, Disney, and more. This is basically the entire Funko POP model, and it hasn’t worked too bad for them. Obviously easier said than done but a couple of niche licensing deals could have a huge impact, especially in markets such as Japan where the collector culture is very strong.
- Flagship stores: Nanoblock’s distribution model seems based around these pop-up stations in stores and malls, but I would love to be able to visit a flagship store for the experience. I actually found out there is one next to Tokyo Skytree, that I’ll have to visit at some stage, but I would be interested in the demand for more local stores in strategic markets. I get that cleaning up little blocks all over the store’s floor every day would be a pain, but still.
I will conclude on this very pretentious note of me giving advice on how to run a business in an industry I have no knowledge about whatsoever, hoping that you enjoyed the article and are inspired to get some micro blocks and build something cool! I am curious to see what Kawada has in store for the future and hope to see more from the company with a new president at its helm.
Let me know if you enjoy Nanoblocks and if you plan to participate in the Nanoblock awards 2020. Who knows, we might share the podium: