Adidas enters Fitness Tech

Adidas has just announced their acquisition of the Austrian Fitness App company Runtastic for $220 M Euros ($239 Million US). This is another huge splash in our industry this year that every coach and gym owner should be aware of. In case you haven’t seen our thoughts on the movement in the fitness tech space here’s a quick recap of what else has happened since February this year:

– Under Armour acquired MyFItnessPal and Endomondo.
– ClassPass acquires FitMob who had recently acquired GymSurfing.
– Fitbit had a very successful IPO.
– [MindBody IPOs one day after FitBit] to cement their status at the largest player in the space focused on the professional side of the fitness market.

An early mover into the digital tracking space Runtastic is a consumer focused fitness app and hardware company that wants to, according to their website, “make sports funtastic.” This TechCrunch article states that the company has released over 20 consumer fitness, health and endurance apps and also plays in the hardware space with wearables and other fitness monitors. Runtastic’s apps have garnered more than 140 million downloads in total, with around 70 million registered users at the point of acquisition.

What are Adidas' goals?
Their direct competitor, Under Armour, was an early mover into digital health and has been very public about wanting to create the largest digital health ecosystem in the world. It has, for anyone wondering, if you go by the amount of registered users across its platforms. Adidas, as an fitness product and apparel company, is looking at the long-term direct multi-platform engagement that UA and other companies will have and wants to ensure exposure for its brand and products for years to come. The variety of apps that Runtastic created since 2009 has collected over 70 M registered users using their software for fitness, nutrition, and overall health. With this purchase Adidas now has their hands in digital fitness, hardware, sleep-tracking, and digital nutrition

What does this tell us?
Runtastic is similar to MyFitnessPal if you look at the business structure and numbers. It offers consumer focused software that sells community, data tracking, and the idea that their tools will help you improve your own health. The MyFItnessPal team, who had the largest nutrition tracking app by far, sold their company because they believed their registered users were more valuable as a source for data and lead generation for Under Armour when compared to what they thought they could make from each user through MFPs app alone. My best guess is that the Runtastic team found themselves in a similar situation having built consumer focused apps that have traditionally struggled with Retention and low Lifetime Value challenges.

I’ve said this before and I’ll say it again. Out of all the professional services within the fitness industry the parties that have the highest retention and customer lifetime values are small to medium sized gyms and the coaches who provide great service to their clients. Companies like Runtastic may be getting giant paydays right now ($240 M oh my god) but if you do the math you’ll see that the lifetime value of their customers is surprisingly low. Keep up the good work my friends. Growth and exposure are coming your way.