The evolution of fitness & wellness (Part 1)
Opinion piece on how fitness & wellness experiences have evolved over time and what we can expect to see in the future as technology advances
Hey there! I’m Jordan Pascasio, Investor at Next Ventures.
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The pace of innovation within the fitness & wellness space over the past decade has been captivating to watch unfold. Methods to optimize human performance have shifted from gym membership to in-person boutique studios to horizontal digital experiences that leverage applied game mechanics and smart hardware. While the significant uptick in fitness & wellness-focused digital experiences was initially a force function of the COVID-19 pandemic, its emergence has helped accelerate the space’s evolution by orders of magnitude.
In the near-term, continual innovation will help to unify siloed digital experiences (e.g., Peloton, Whoop, Calm) and the data generated within them, paving the way for Data-as-a-platform (DaaP) to take center stage. Real-time and predictive insights gleaned from DaaP-based experiences will enable personalized and proactive solutions that support several opportunity areas such as precision health and value-based care. In theory, continuous background data collection and analysis across horizontal fitness & wellness data repositories could help eliminate unnecessary doctor visits, reduce misdiagnosis, and catch issues early enough to be solved with simple procedures1.
In the long-term, a fitness & wellness-focused metaverse can provide immersive experiences and communities built around the shared interest of a healthier future. Before diving into such an esoteric notion, let’s examine how we got to where we are today and why such ideation is well aligned with emerging generations and their expectations for future fitness & wellness experiences.
Fitness & wellness innovation up to this point
🏋️♂️ Phase 1: Big box gyms
Not too long ago, the gym monopolized the fitness & wellness scene through varying models. Planet Fitness provided affordability and inclusivity, while 24 Hour Fitness offered a sprawling gym floor and constant full court runs for you hoopers out there. Equinox brought the concept of Globo Gym to real life, offering upscale equipment, amenities and decor that targeted young up-and-comers and consumers with higher disposable income. While gyms do a fine job augmenting one’s physical fitness to a certain extent, common pain points include a lack of self-motivation to overcome workout plateaus and the fact that most gym goers are focused on themselves (i.e, lack of communal relatedness within a proximity-based social graph), resulting in members feeling unfulfilled.
🥊 Phase 2: Boutique studios
The second phase of the fitness & wellness evolution came when in-person boutique studios isolated certain workout types such as HIIT, pilates, boxing and running on the treadmill, and combined them with professional instruction in a group setting. Some studios even crossed into the mental health space, offering sessions focused on meditation, breath work or sensorial deprivation. However, running a boutique studio is no walk in the park, forcing owners to solve a tricky business model puzzle in order to survive. Rent payments and operational costs in populous cities pile up quickly, as do the costs to subsidize and retain the most talented instructors - and skimping on the latter will severely affect studio performance as member/guest motivation and retention is highly driven by affinity for certain instructors. Additionally, increased studio liquidity and optionality made customer acquisition difficult and expensive, prompting the creation of platforms like ClassPass to help with discovery, lead gen and marketing efficiencies. The confluence of all of these factors resulted in a price tag floor of ~$25 just for one session, with some studios charging up to $50. The unit economic vulnerabilities of boutique studios that lacked a digital footprint were fully exposed during the pandemic in which many had to shutter their doors because the business model didn't work at zero or reduced capacity. However, it’s important to note that even when at full capacity, boutique studios remain accessible only to high income consumers in metropolitan areas, and fail to reach internet scale.
📊 Phase 3: Horizontal digital experiences + applied game mechanics
Around the same time that boutique studios started to take hold, we saw v1 of digital fitness & wellness experiences start to emerge. Connected wearables like FitBit and dietary tracking apps like MyFitnessPal provided consumers with new ways to ingest their health data and performance, albeit in a self-contained and unengaging way that lacked any sort of gamified engagement loops to spur incremental progress. Fast forward five years and v2 experiences started to realize the immense value of incorporating proven game mechanics and design principles into their products' DNA from day one.
To expound upon the notion of applied game mechanics (AGM) further, I’ll borrow some framework from Bitkraft’s recent piece on the topic. Best practices to drive engagement and retention in non-game contexts such as fitness & wellness originally came from design concepts used within mobile free-to-play (F2P) games. These best practices are rooted in the principles of self-determination theory (SDT), which is a macro theory of human motivation and personality that suggests that people are motivated to grow and change by three innate and universal psychological needs - autonomy, competence, and relatedness.
Bitcraft posits that SDT not only gave birth to many of the mobile F2P game mechanics (e.g., goal setting, social loops, progression systems, leaderboards, etc.) that optimize player engagement and retention, but also provided a whole new set of UX strategy levers for non-gaming companies to pull by incorporating AGM within their respective experiences.
For context, the case studies below detail how three selected fitness & wellness companies incorporate AGM into their digital experiences:
Strava:
FightCamp:
Whoop:
AGM combined with digital distribution and connected hardware provided a huge step forward for fitness & wellness experiences in terms of engagement, retention and scalability. However, the lack of interoperability across the increasing number of digital fitness & wellness experiences led to the creation of siloed data repositories that consumers have to manage individually in order to extract useful information.
Present day & beyond
🔮 Phase 4: Present day and near-term innovation
Present day and near-term fitness & wellness innovation is in large part driven by two high-level themes:
Consumer behavior and expectations are evolving rapidly as digitally-native generations age up. Gen Z and Millennials spend more time playing video games than any other leisure alternative, including social networking and streaming movies/series
The predictive algorithm-driven consumer experiences that digital natives frequently interact with (e.g., Netflix, TikTok) have resulted in proactive hyper-personalization being table stakes across all digital interactions
Let’s explore both themes to better understand how they are permeating into the fitness & wellness space and what kind of innovation we can expect over the next 5-10 years.
AGM transitioning to ‘game first’
While AGM helped transform fitness & wellness experiences into self-betterment staples, we’re starting to see companies go beyond subtly incorporating effective game design principles and mechanics into their experiences. Emerging fitness & wellness companies are creating true ‘game-first’ experiences, offering fully animated games (with storylines) or immersive, high-intensity races. Just last week, interactive home rowing machine Aviron raised $4.5M from Samsung Next, Formic Ventures, GFC and Y Combinator. When asked about how the company differs from AGM-utilizing incumbents, CEO Andy Huang provided the following explanation (via TechCrunch):
“What makes Aviron really different is we’re not gamifying the fitness experience by added new graphics or achievements to the end of your workout. What we’re doing is gaming the fitness experience. What makes games really fun and exciting isn’t the bells and whistles. It’s the characters, it’s the story, discovering new things and unlocking them.”
Even Peloton, who pioneered the concept of subtlety incorporating AGM into fitness experiences, has announced its latest idea to get people to exercise: an in-app video game tentatively called Lanebreak. The game, which will only be available for Peloton bike owners and subscribers, involves riders changing their cadence and resistance to meet various goals and control an on-screen rolling wheel. The move to introduce a ‘game-first’ experience offers a new way to encourage current users to take more classes and diversifies the company’s audience pool by using the power of gaming to appeal to a nascent audience who previously may have not have been interested in using Peloton.
Not only do 87% of Gen Z and 83% of Millennials play video games at least once a week, but the two digitally-native generations also account for 89% of total users of online or app-based workouts2. Additionally, Gen Z is the most health-focused generation yet, increasing their health & wellness spending by 5% compared to millennials over the past year3. As a result, we should expect ‘game-first’ experiences to be a mainstay not only within fitness, but also across the broader digital health ecosystem. Examples of the expanded proliferation include YuLife’s insurance offerings that inspire members to build healthy habits through quests within its ‘Yuniverse’ or EndeavorRx’s FDA-Approved ADHD video game treatment for kids.
Interoperability across horizontal digital experiences will enable Data-as-a-platform
The future of digital health is personalized and proactive, ushering in a new age of science-based, intelligent lifestyle improvements. Think about every time you access Netflix, TikTok or your news app of choice. The content served upon opening the app is hyper-personalized with accuracy that is, at times, disconcerting. While these types of personalized features are prevalent across most industries, consumer empowerment via-predictive intelligence within digital health has a lot of catching up to do. The aforementioned lack of interoperability across the increasing number of digital fitness & wellness experiences has led to the creation of siloed data repositories that consumers have to manage individually in order to triangulate causal information. But what if we could unify these siloed repos, enabling the use of Data-as-a-platform (DaaP) to drive precision health solutions? DaaP-based digital experiences could leverage AI to recognize negative health issues before they occur or suggest weekly exercise/dietary/sleep plans to optimize human performance. For example, imagine I’m a user who is on a self-prescribed self betterment plan that includes working out 4 days a week with my Tonal and conducting guided, performance-based breathing exercises multiple times a day via the Breathwrk app. I specifically want to see how the addition of these activities into my daily routine can affect my sleep quality (monitored by my Oura ring) and my ability to maintain a flat glucose curve (monitored by my Levels CGM and app) and vice versa. In an ecosystem of siloed data repositories and digital experiences, triangulating insights and linking causes and effects across the four experiences is friction-filled and time consuming. However, an app sitting atop the four experiences could recommend a particular Breathwrk exercise as I wind down for bed based on its historical effect on my sleep quality and HRV (via Oura data), which then enables me to better maintain a flat glucose curve the following day (via Levels data). An interoperable ecosystem enabled by data ubiquity provides real-time and predictive analysis, affording us agency to unlock preventive and personalized self-care and laying the foundation for new care delivery models.
As healthcare costs and premiums continue to rise, we’ve already seen the use of telehealth as an effective and low cost alternative to traditional in-person care. It’s estimated that telehealth could save the US $6B dollars annually4. However, while telehealth is a great first step in combating increasing costs of care, it still operates under a fee-for-service care model. Leveraging DaaP to drive more value-based care going forward is an extremely valuable use case. With value-based care, doctors and hospitals get paid based on patient health outcomes, not on numbers of procedures done or patients seen. Here’s an example of value-based care from the Cleveland Clinic:
If you have a chronic condition such as diabetes, value-based care can help you avoid complications of the disease. Instead of going to several institutes to get care, you work with one integrated team that already knows you and your health background. This team, which may consist of your primary doctor, supporting healthcare professionals and nutritionists, would help you:
Keep your blood sugar under control
Stay on a healthy diet
Set up a realistic exercise program
To the degree that providers and insurers can get people activated and engaged in their own care, using enabling technologies and interoperable data likely offers better potential to achieve improved health outcomes at a lower cost5.
So who is working on achieving this broad vision of interoperability now? While we’re still in the early innings, Apple (Health app) and Google (Google Fit) are leading the charge in creating connected fitness & wellness interoperability, albeit within their respective walled gardens of app distribution platforms. For example, Apple’s HealthKit is a toolkit that helps developers create fitness & wellness apps that can synchronize with the standard Health app (a default app on iOS devices), allowing users to track their lifestyle, store fitness & wellness data in a single place and share said data with healthcare providers to improve primary care. Apple’s goal is to become a non-negotiable integration point everyone can rely on6. However, both Apple and Google have suffered recent setbacks when attempting to facilitate the healthcare piece of the equation. We should also assume future aversion to Big Tech becoming yet another chokepoint to critical aspects of one's life. It’s not clear how Apple or Google would manage (or even monetize) the flow of health data from their centralized health-tracking platforms (with the user’s consent of course) at scale, but I’m sure Epic would have a comment or two on the matter.
In an effort to enable data interoperability outside of walled gardens, companies like Terra (Next Ventures investment) are building the Plaid for the fitness & wellness space, offering APIs that allow developers to hook into fitness & wellness data generated by software and hardware. Not only can this enable the use case of creating a preventive self-care application that leverages data across horizontal fitness & wellness experiences, but it also allows for innovative B2B2C solutions that eliminate the need to go through an Apple or Google chokepoint. In an interview with TechCrunch, Terra CEO and co-founder Kyriakos Eleftheriou brought up the example concept of linking music selection to heart rate:
“So, as your heart rate goes up — say, from exercise — your music player could read that data from your wearable and shake up its shuffle.”
Other ideas could include insurance providers plugging into individual fitness & wellness data to underwrite policies that are better aligned with a member’s lifestyle or Peloton using Whoop’s HRV and recovery data, coupled with a user’s Peloton workout history, to recommend an intensity-appropriate next class.
Disclaimer: Next Ventures and/or Partners at Next Ventures are investors in Terra.
✨ Phase 5: The metaverse of health
As the number of digital fitness & wellness and health solutions become increasingly interconnected and as emerging generations deeply rooted in gaming and passionate about wellness age up, the notion of a health-focused metaverse becomes more and more inevitable. By now, it’s hard not to become aware of the concept of a metaverse, or a virtual world with digital persistence (i.e., no technical limitations) that unlocks creative spaces and identities for social experiences. Most recently, Facebook is on the record stating that it will start transitioning from a social media company to a metaverse company, with Zuckerberg saying, “In many ways, the metaverse is the ultimate expression of social technology.” Over the past year, Facebook not only launched Oculus Move, a program that tracks physical activity across Oculus’s VR apps and games, but also announced that it’s working to integrate Oculus Move data with Apple’s Health app, indicating that fitness & wellness may play a big part in the company’s grand metaverse vision.
In Part 2 of this piece, I’ll explore why the fitness & wellness space has a gigantic business opportunity in the metaverse. Here are a few concepts that I’ll look to touch upon:
Interest-based communities specific to certain activities or chronic conditions
New fitness & wellness creator monetization models
The merging of virtual & physical worlds
Parallel worlds spawning ‘Move-to-earn’ gaming models
If you are building or investing in the fitness & wellness or digital health space, I’d love to chat! Please reach out to jordan@nextventures.com, or I can be found here.
https://every.to/everything/healthos-549946?sid=410
https://www2.deloitte.com/us/en/insights/industry/technology/digital-media-trends-consumption-habits-survey/summary.html; https://www.lesmills.com/us/clubs-and-facilities/research-insights/audience-insights/why-home-fitness-is-the-next-frontier-for-your-club/
https://wslstrategicretail.com/article-detail/gen-z-is-redefining-wellness-4-must-know-findings
https://medium.com/lifestyle-flywheel-investing-entrepreneurship/investment-thesis-healthtech-b72ea576d6af
https://www2.deloitte.com/content/dam/Deloitte/za/Documents/life-sciences-health-care/za-2020-global-health-care-outlook.pdf
https://every.to/everything/healthos-549946?sid=410
Big facts about the coming interoperable ecosystem. Mehdi Yacoubi and Vital are working on it, Future integrates Oura and Apple Watch, etc. I can't wait for when I can see my glucose levels next to my sleep, meals, and workouts.