COVID killed the gym, but what’s next is so much better
A deep dive into the evolution of fit-tech and a look at companies paving the way for digital health disruption in a post-pandemic world.
If you’re just joining us in 2020, welcome to what some are calling the most “canceled” year of all time. Though the lockdown has wreaked havoc on several industries including service, hospitality, transport, retail and more, the consumer health and wellness sector has managed to escape the tumult by quickly adapting to consumers’ changing needs.
In this post, I’ll discuss the shift to at-home exercise and why it’s here to stay, the rise of on-demand, social, gamified and personalized fitness, and what I believe is next on the horizon.
The Work(out) From Home Exercise Boom
Faced with more free time, fewer excuses, and mounting anxiety about the next 2020 curveball, consumers are embracing (and accelerating) the fitness industry transformation. Although the majority of Americans (59%) say they don’t plan on renewing their gym memberships once the pandemic ends, the sector shows no signs of slowing down. In fact, Americans are spending more money on fitness than their college tuition fees and a recent analysis by market research firm Report Ocean found that the online fitness category is expected to reach $44.7 billion globally by 2026, up from $6 billion last year.
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Since COVID-19 forced people into lockdown, online orders for fitness equipment spiked 55%, leaving manufacturers unable to keep up with demand. Peloton bikes were notoriously backordered for upwards of six weeks and people were turning to second-hand markets to buy used and often damaged weights, paying up to 4x the normal price to be able to exercise at home.
As we approach month 8 of the pandemic, the modern living room has completely transformed into a multi-purpose study, entertainment and exercise arena. Fitness studios have modified their offerings to deliver live-stream group classes, and gyms everywhere have been forced to re-examine their business models, creating new online platforms for their members (e.g. Equinox’s Variis app).
In effect, what we are witnessing is a growing correlation between the future of work and the future of fitness.
Not only is there a technology overlap between the “equipment” used to facilitate WFH and that of at-home exercise, but the pandemic is also opening people’s eyes to the fact that traditional infrastructures used for such activities (i.e. the physical office, the gym) may have less utility than they think. Put simply: The longer people continue to work from home, the longer at-home exercise will stick around, which inevitably seems to be the case.
The future of fitness is…
On-demand.
As the pandemic forces people into new routines with flexible working hours and children at home to care for, people are looking for fitness solutions that match their new haphazard lifestyles. Gone are the days of booking classes in advance to secure your spot, of paying late fees or facing no-show penalties when something else comes up, or of being forced to exercise during perfectly cadenced time slots that don’t fit into your natural energy patterns.
Today, with the rise of on-demand fit-tech solutions, these pain points are behind us. There’s been an increase in popularity of on-demand subscription workout apps such as Obè, Aaptiv, CENTR, ClassPass Home, and Apple Fitness+ and of connected home devices such as Peloton, MIRROR, Tonal, Tempo, FormeLife, Hydrow and more — all of which provide access to thousands of workouts in a range of categories, time durations and instructor profiles, accessible whenever and wherever the user feels is best. No commutes. No cancellation fees. No rigid schedules. And no more hoping to get time with your favorite trainer.
Social.
In an increasingly connected world, the feeling of disconnectedness is pervasive. Even though people are more regularly working out from the comfort of their homes, there is still a premium to be put on guided exercise and communal experiences that offer a sense of accountability and encouragement. For this reason, studios and group classes will continue to stick around, but they will likely look very different in a post-pandemic world.
Before COVID, people were already showing an increased preference for tribe-based wellness experiences and continue to gravitate toward fitness solutions that provide this sense of camaraderie and community despite challenges faced by pandemic lockdowns. FitGrid recently launched a first-of-its-kind social network for studio goers, Peloton users have come together through fanpage Instagram accounts with community branded memes, and apps like Nike Run Club and Strava allow users to post run completion stats to their social networks without leaving the app as well as give/receive “cheers” or “kudos” to other users, helping virtually build camaraderie.
Gamified.
In an era where technology has made it possible to “keep score” between yourself and others, there’s been a noticeably increase in connected home devices, wearables and fitness apps that incorporate leaderboards, badges, and metrics to foster a sense of healthy competition. In fact, these features are becoming so popular that the Global Healthcare Gamification Market is expected to grow at a CAGR of 50.8% by 2028, with exercise games predicted to be the fastest growing segment within the category.
Beyond leaderboards at popular HIIT and cycling studios such as Orangetheory, Peloton and Precision Run by Equinox, fit-tech gamification is being popularized by apps like Zwift, which enable users to interact, train and compete with fellow cyclists in a virtual world, and by new connected home devices such as Liteboxer and Ergatta — the former of which has been compared to the “Dance Dance Revolution of in-home boxing” by Digital Trends due to its beat-driven boxing-based workouts.
Personalized.
People are becoming more accepting and willing to trade private information for bespoke experiences that benefit their daily lives. This can be seen with the increased adoption of wearables and their improved metrics like tone of voice analysis and blood-oxygen saturation (Amazon Halo, Apple Watch Series 6); with innovations like the Oura Ring, which has been used to help mitigate the spread of COVID-19 for the NBA; and with connected home devices such as Tempo and Carbon Trainer, which offer the support and guidance of digital instructors, who — even though are not physically present — can provide feedback and correct form through computer visioning technology.
A caveat: Athletes have been training with heart-rate monitors since the early 80’s. What’s innovative isn’t necessarily the type of data that’s being captured by these devices (though advancements on this front have been pretty awe-inspiring), but rather the ease at which the average person can now access this data, and the variety of tools and programs on the market that can use it to customize users’ exercise routines.
Freeletics CEO Daniel Sobhani commented on the growing trend of fitness personalization in a recent interview with TechCrunch in response to the company’s $25M Series B raise: “We focus so much on personalization because, in the end, there is no one-size-fits-all solution when it comes to health and fitness” Sobhani said. The future of fitness will be able to cater to “the everyday hurdles people face when it comes to working out regularly — time, space, equipment, knowledge, money, confidence and so on.”
What’s Next?
There’s no denying that the fitness evolution is here and is rapidly accelerating. Over the past 7 months, the market has become saturated with competing solutions that are all beginning to look the same, and the rise of on-demand, social, gamified and personalized fitness offerings are just the beginning.
As we look toward the future, the next wave of fitness will be defined by the following questions and macro themes:
· Digitization of the fitness gig economy: With studios going vitrtual, will group fitness instructors and personal trainers take to new online platforms that allow them to make more profit and win market share while enabling easier discovery of their services? (Pioneers: Core, Playbook, FlexIt, TrueCoach)
· The tech giant fitness takeover: Will “big tech” companies like Google, Apple and Amazon continue to consolidate the smaller wearables market or develop their own connected home devices such as smart bikes, treadmills or rowers? (Pioneer: Google’s acquisition of Fitbit, Amazon’s partnership with Echelon bikes, the recent launch of Apple Fitness+). If this proves to be the case, at what point will this horizontal shift to “fitness as a service” within the current wearables/ mobile ecosystem crush the market share of popular connected home equipment makers (e.g. Peloton)? Further, will Big Tech companies begin to use consumer fitness data to advertise on other platforms or create future product offerings?
·Fitness benefits for freelancers: As companies continue to stall on hiring full-time employees after waves of summer layoffs, will freelance HR benefit providers (e.g. Catch) expand their offerings to include digital fitness services or subscription discounts in an attempt to match the “work perks” offered at larger, established firms?
· Wellness under one roof: Will fitness companies like Equinox and ClassPass continue to expand their services to form a curated universe of health & wellness needs including meditation, mental health, nutrition, teledoc referrals, product recommendations, and content? (Pioneer: The Well) If this prediction pans out, will the expansion of related services create a behavior change that blurs the lines between “going to the doctor” and “going to the gym”, shifting toward a new one-stop-shop for holistic care?
· Widespread utilization of fitness data: Will data about people’s fitness and activity levels become mainstream metrics used to decide our health and life insurance rates? (Pioneer: HealthIQ) Even more out of bounds, are we approaching a day in which connected home device owners and wearable users realize the ability to export their fitness data and use it at their next cardiologist or dietician appointment?
· Expansion of HIPAA and privacy laws: If widespread digitization of fitness data continues to run its course, what privacy rules will govern this use of PII (Personal Identifiable Information) and how will that differ internationally or across product segments?
Of course, nobody knows what the future holds, but it’d be wise to expect the fitness evolution to closely follow the future of work phenomenon and for fitness companies to continue adopting omnichannel business strategies that mimic the changes seen with the transformation of brick-and-mortar retail (i.e. a mixture of in-person and online instruction as well as new offerings that use data to enrich the user experience and improve exercise efficacy).
The fact of the matter is: if companies don’t continue to adapt and differentiate, they will inevitably fall behind, and the market will always favor survival of the fittest.
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