When you look back over the recent past and the flow of funds being invested in the fitness and wellbeing space the bottomline is this: value is increasingly moving to digital platform business models. The facts are irrefutable . This trend is not surprising and reflects this recent post titled Airbnb Is Showing Us The Future Of Fitness Betterment & Health. It is an idea I've been referring to for over a decade; the future is digital and omni-channel D2C platforms. Here's a quote:
"Like hotels (in the case of Airbnb), fitness facilities are not the center of the plate for competition in the industry any more. The center of the plate are the businesses who have the potential of owning the customer and therefore the market is going to be served by platforms. Think of Mindbody Online or Class Pass which can provide omni-channel solutions more easily and effectively than bricks and mortar businesses alone. The same is true for health care; check out Doctor on Demand and what Amazon is up to with Alexa in this regard."
The string of acquisitions and investments in health (most valuable ones here) wellbeing (think calm) and fitness platforms in the recent past is again reaffirmed with the announcement that Softbank has invested another $300 million in Gympass. By comparison I'll remind you that the market capitalization of Planet Fitness today, the largest health club chain in the world founded in 1992 with 13 million members, is $6.47 Billion; Gympass has a valuation in excess of $1 Billion and was founded in 2012. Gympass is one of many Unicorn's in the fitness and wellbeing platform space that demonstrate a fundamental trend.
Consider investments in the past few years like Peloton and its recent IPO filing with an anticipated value well exceeding $4 billion, Vista Equity Partners' acquisition of Mindbody Online for $1.9 billion earlier this year, Aaptiv's 2018 transaction putting its value at over $200 million and E-Gym's transaction that recently landed another $20 million. We could go on and on with examples of digital and bricks and mortar platform plays so forgive me for the many not included here.
All of this while Life Fitness, one of the largest supplier of commercial fitness, was acquired for a mere $490 million, and Nautilus stock continues to plunge with a market cap of $72 million as of this writing. There are obviously the "haves and the have nots" and the reasons are clear - a failure by some to embrace the change that is upon us. This is hard to deny. The world is going digital and the only way to remain relevant is with a robust and thoughtful strategy like this.
Enter Gympass, the global discovery platform that helps companies engage their workforce in physical activity by providing frictionless access to thousands of fitness facilities, announced its U.S. launch in 12 key markets less than a year and a half ago.
The seven-year-old brand, has seen rapid growth since 2012 and expansion throughout Western Europe and Latin America. It has rolled out in New York, Los Angeles, San Francisco, Chicago, Atlanta, Miami, Nashville, St. Louis, Houston, Columbus, Minneapolis and Kansas City, adding many fitness facilities and tens of thousands of users. Gympass is arguably trying to be the Airbnb of the fitness space. So is ClassPass but with a twist.
Considering all of the investment activity the bottomline is this : the market will be owned by digital platforms or by bricks and mortar brands that integrate with them. Savvy bricks and mortar operators will need to leverage their physical footprints with a simultaneous move to platforms as an adjunct to create omni-channel experiences (just like Target and Wallmart in retail and grocery). Where the money is flowing shows that platform business models will be THE major growth engine for the foreseeable future. We have clearly entered the period of digital disruption I have been talking about for some time and the implications to the fitness and wellbeing marketplace are not yet fully baked.