DIGITAL FITNESS IS ON A RUN
©Zwift
Digital fitness is on a run, literally, as training at home becomes the new normal. Peloton’s Q4 earnings showed a 172% YoY jump in revenue, and its connected subscribers were up 113% YoY, Apple announced Fitness Plus, its new virtual fitness product, and Zwift, an indoor training app, reached unicorn status after a USD 450 million funding round.
The pandemic has exploded the market for digital fitness, as people shifted to online workouts during the pandemic, and gyms have been slow to reopen. As funding is poured into at-home fitness trend, start-ups are muscling up as gyms file for bankruptcy on the other end. It is clear that investors are eager to get on-board with technologies that can help approximate the gym experience at home, as the COVID-19 pandemic has shut down public workout facilities all over the world and will have changed the way we train in the future.
Adding to the flurry of deals in the space, Tonal, a startup with a strength-training system, raised USD 110 million in funding from investors including L Catterton, as well as Delta-v Capital, the Amazon Alexa Fund, Steph Curry of the Golden State Warriors, and golfer Michelle Wie. The system utilizes resistance technologies to approximate more traditional dumbbell and barbell-based weight training. Tonal also used the occasion to note that it has begun working with the Mayo Clinic for physical therapy trials as well as selected hotels and resorts.
Tonal’s fundraise comes after weight-training startup Tempo raised USD 60 million in July and Lululemon acquired Mirror for USD 500 million in late June, which has recently upped its projected revenue for Mirror from USD 100 million to USD 150 million. Also, earlier this year, L Catterton already invested in Hydrow, a younger rowing startup that recently raised USD 25 million.
After leading the latest USD 450 million investment round in Zwfit, Stephen Shanley, director at KKR, underlined the convergence of technology and health, complemented by a sticky and growing community as key drivers in the future. Shanely said: "Zwift is the preeminent digital brand for the global cycling community with a best-in-class product that sits at the intersection of digital health, gaming and at-home fitness. We see tremendous potential ahead as Zwift invests further in its digital and physical products to enhance the experience for its global community of enthusiastic users."
Zwift, an online fitness platform that immerses cyclists and runners in 3D-generated worlds, has now raised USD 620 million altogether and is valued at north of USD 1 billion. Alongside KKR, the latest funding round in exchange for a minority stake in its business, was joined by Permira, the Amazon Alexa Fund and Specialized Bicycle’s venture capital fund, Zone 5 Ventures, alongside earlier backers Highland Europe, Novator, Causeway Media and True.
Since its 2015 founding, 2.5 million people have signed up to enter a world that, as Outside magazine once described it, is “part social-media platform, part personal trainer, part computer game.” That particular combination makes Zwift’s app appealing to both recreational riders and pros looking to train no matter the conditions outside, charging USD 15 per month for its service among a loyal base of users.
Today, in order to use the app, Zwift’s biking adherents need to buy their own smart trainers, which can cost up to USD 1,000 and are made by brands like Elite and Wahoo. Meanwhile, runners use Zwift’s app with their own treadmills. Now, Zwift is jumping into the hardware business itself, making Zwift a more immersive and seamless experience for users. Given the runaway success of the in-home fitness company Peloton, it would not be surprising to see a treadmill follow, or even a different product entirely.
Alongside young, up-and-coming fitness ventures, Apple has quietly been becoming a digital health and fitness company for a while now, with wellbeing becoming a key selling point for its Apple Watch. Now Amazon wants in on the fitness-wearables game, after unveiling a device called Halo, which is a fitness band. The space is currently dominated by the Apple Watch and devices from Fitbit, which is awaiting regulatory approval for an acquisition by Alphabet’s Google. Amazon’s Halo product builds on these older fitness tracking devices with features that have never been seen in a mainstream wearable device, including one that tracks a user’s emotional state by listening to the tone of their voice, and another that provides a three-dimensional rendering of their body with an estimated body fat percentage.
Amazon’s Halo, a subscription service and accompanying fitness band that unlocks an array of health metrics, including activity, sleep, body fat and tone of voice analysis, to determine how you sound to others. Amazon's entry into the fitness space is odd indeed, and ambitious. The subscription to Halo includes the basic fitness band that has one button, no screen and tracks your heart rate, steps and temperature, but a Halo subscription will offer a suite of “labs” developed by partners. They are short challenges designed to improve your health habits, like meditation, improving your sleep habits, or starting up basic exercise routines.
The easiest way to describe Apple Fitness Plus is to compare it to something like Peloton, where you are exercising with interactive videos on an iPhone or iPad. However, unlike Peloton, Apple Fitness Plus does not have a live element to it, which means all the videos are on demand. Also, unlike on Apple Watch, or Zwfit as well as Peloton, there is currently no integration of competition with your friends or family on the Fitness Plus platform. Where on the Apple Watch you can set challenges with other users, designed to encourage you to push harder, walk further or just try that bit harder, on Fitness Plus, there is a wealth of new fitness trainers on offer for the new Fitness Plus service, from all walks of life and disciplines. The idea is that this is a team you can recognize over time, much as you would in a studio fitness set up. The different trainers will appear in each other's videos from time to time, so there will be a level of cohesion between the sessions, and allow you to find your favorites when it comes to who you want to work out with.
It is unsurprising that Apple has expanded its services to include a fitness subscription to rival Peleton and Fitbit, complementing its existing hardware portfolio, as well as Apple’s ambition in healthcare after introducing its Research App last year. Apple Fitness Plus is a collection of workouts that you can tune into on your iPhone, iPad, or Apple TV. The new Fitness Plus service is offered on a stand-alone monthly or annual basis, or alternatively integrate in Apple One, Apple's new services subscription service. If you sign up to the premium tier, then you will get Fitness Plus, News Plus, Apple TV Plus, Apple Arcade and Apple Music, along with massive amounts of iCloud storage for a monthly fee.
The fitness industry has already been experiencing the massive growth of digital fitness, out-of-studio experiences and social fitness. Notable platforms, such as Peloton, have created enormous awareness, brand recognition and loyal followings. While some fitness platforms offer solutions that were able to fully replace the in-studio experience, they were often supplemental to the studio experience. Consumers still desire physical human interaction but often schedules, travel and other issues impede their ability to get to a physical gym. Today’s new connected offerings provide fitness, training, social interaction, gamification and many forms of engagement for the consumer.
From established names like Peloton to rivals like Zwift and the recently-announced Apple Fitness Plus, digital fitness and guided home workouts you can access on an app or your smart TV are booming in popularity, offering tailored workout plans and a list of achievable goals for people to begin their fitness journey. The "gamification" of exercise is a great way to get the same feeling of hitting goals and stimulating the reward centre of the brain like a normal videogame and encouraging you to keep playing, and continuing to pay your subscription fees.