The evolution of fitness & wellness (Part 2)
Opinion piece on more esoteric applications that we can expect to see in the fitness & wellness space as technology evolves
Hey there! I’m Jordan Pascasio, Investor at Next Ventures.
Every month I write a piece encompassing health & wellness. If you would like to receive it directly in your inbox, subscribe now.
In Part 1 of this two-part piece, I covered how the fitness & wellness space has evolved over time and how game-first designs and data interoperability will play a big part in driving innovation and new types of fitness & wellness experiences in the near-term. I ended Part 1 by looking further ahead to the buzzy concept of the metaverse and how it can provide immersive experiences and communities built around the shared interest of a healthier future. However, after putting some more thought into it, I’ve decided that covering metaverse use cases in isolation doesn’t do any justice to the revolutionary change that we’re witnessing in technology today. Instead, I’d like to explore the value chain underlying the metaverse in order to paint a more holistic picture of how emerging technologies such as Web3 and NFTs roll up into the broader vision of a decentralized metaverse - all while relating them to real use cases within fitness & wellness of course!
Before diving into Web3, let’s first examine the two phases that preceded it:
Web 1.0 (1980s - early 2000s)
In the early internet days, Web 1.0 represented the first decentralized, digitally connected space that enabled information to be searchable and transferable. However, Web 1.0 had its drawbacks as the information flow was unidirectional. In other words, it was a read-only web experience that precluded any site from being able to capture user data. As a result, features such as search, payment and commerce were not possible, eliminating the ability to monetize.
Web 2.0 (2000s - present)
Web 2.0 enabled bi-directional information flow, bringing concepts such as social networks and ecommerce into the world and enabling companies to capture rich data. However, the drawback is that the data aggregated by centralized platforms (e.g., Facebook, Twitter) is eventually used to extract value out of consumers or businesses. Additionally, centralized platforms can make the decision to demonetize, deplatform, or censor users, leaving users with nothing to show for as neither content nor followers are portable across alternative platforms. True ownership, or the concept of a ‘Self-Sovereign Identity’, is not achievable when there are middlemen or aggregators in the value chain.
Web3 (imminent future)
Web3, often hailed as the next version of the internet, enables true ownership and interoperability. Built on top of immutable and transparent blockchain networks, Web3 combines decentralization with community governance to ultimately remove the intermediaries that have traditionally monopolized value. Let’s use the simple use case of identity as an example. In Web 2.0, every company that provides a product or service requires authentication methods such as username+password or OAuth.Companies also typically require users to also hand over personal information upon onboarding. Conversely, utilizing a wallet address in a Web3 app (decentralized app or ‘dapp’) is completely anonymous unless the user decides to tie their own identity to it publicly. If the user chooses to use the same wallet across multiple dapps, their identity is also seamlessly transferable across them, allowing the user to build up their reputation over time. To summarize, Web3 puts ownership and value capture back into the hands of creators and suppliers, allowing them to create direct relationships with consumers and to eliminate centralized platforms acting as middlemen.
🧘🏽♀️ Fitness & wellness Web3 use case: Social tokens for fitness creators
COVID-19 turned the fitness instructor monetization model on its head. Before the pandemic, instructors made the majority of their income teaching at boutique studios such as Barry’s or training clients at big box gyms such as Equinox. However, once the coronavirus emerged, instructors scrambled to adjust how they monetized their skill set with IRL channels decimated. Zoom classes quickly became the quick reaction method of choice for instructors who wanted to facilitate both live-stream and on-demand sessions for their students and followers. Platforms looking to optimize production quality and distribution relative to Zoom’s capabilities started to gain traction shortly thereafter with startups such as Moxie and Playbook receiving venture funding in early-Q4 2020 to scale their respective platforms. Since then, we’ve seen a handful of additional challengers come to market looking to optimize the way fitness instructors monetize digitally.
Because of the digital transformation within the space, the line between fitness instructors and creators is blurring and the need for content dissemination via a fitness endemic platform is paramount for this emerging class of digital creators. That said, the current Web 2.0-based platforms suffer from the aforementioned drawbacks of functioning as centralized aggregators. If you’re a believer that digital fitness will have staying power into the future, it’s worth exploring some of the progressive Web3 frameworks being utilized in the broader creator economy to apply to our fitness creator use case. Specifically, I’d like to explore social tokens.
The ability to invest in creators via social tokens through platforms such as Rally, Roll and Coinvise enables creators to launch vibrant and independent (i.e., decentralized) economies within their communities. Here’s a quick explainer on how Rally’s creator coin works:
Create a Coin. Creators can launch their own branded coin on the Rally ethereum network - unlike centralized platforms, Rally has no fees
Drive Community Participation. Creators can build more meaningful relationships by rewarding their most loyal and active fans with coins
Engage & Enlighten Supporters. Supporters who hold these coins gain access to private communities, exclusive content and physical (merch) + digital goods
Here are a few creators on the Rally platform, some of which you may recognize:
Because these economies are predicated on supply/demand mechanics, increased content value and awareness should drive demand for the coin higher, benefiting the coin price and those who bought a stake in the creator early on.
As it relates to fitness instructors, leveraging a ‘fitness creator coin’ could be a brand new monetization and engagement framework to utilize. Instructors benefit from the initial startup capital earned from the coin ‘IPO’, which is purchased by early supporters of the respective instructor (think about how many instructors have highly-engaged, localized followers). In exchange for holding the fitness creator’s coin, supporters benefit from access to exclusive workouts, content and merch. If the fitness creator is able to sustain the quality of their workout-related content and keep it evergreen, then more consumers should, in theory, purchase the fitness creator’s coin for access. This provides the fitness creator with a stream of revenue going forward that’s directly driven by the community that they cultivate and maintain. In this model, the success (or failure) of both the fitness creator and the consumer is aligned.
In terms of monetization, fitness creators will no longer be beholden to the take-rates of current Web 2.0-based digital fitness platforms, which keep 3-20% of earnings depending on the platform. Some even charge a fixed monthly subscription rate on top of a take-rate. Any value built up in a creator coin economy is owned by creators and their communities and completely independent of third-party platforms. By building their own digital economy, fitness creators no longer have to contend with fears around demonetization, deplatforming, and censorship. Instead of value accruing to a single platform aggregator, there can be a more direct connection between creator and consumer that is interoperable across any application (e.g., streaming, audio, chat).
🖼 NFTs and Digital Ownership
NFT stands for non-fungible token, but let's start with defining the word fungible. Fungible, or the idea of fungibility, is defined as “able to replace or be replaced by another identical item”. For example, imagine we both have piggy banks full of quarters. You and I are able to exchange our quarters without the value of each coin ($0.25) changing, no matter the mint date or the state it honors (remember when people used to collect those things?). Note that fungibility is relative; it really only applies when comparing multiple things. In contrast, non-fungible items are unique and not interchangeable. I can print out an exact replica, to scale, of the Mona Lisa, but my print out would never fetch the ~$850M price that the original piece is said to be worth. The exclusivity of the original asset, as validated by a third-party certificate of authenticity in this case, is what drives the value and its non-fungibility.
Digital assets face these same challenges and risks of replicability. The holder of a digital asset has no way of proving that they have the real thing without validation from an intermediary. Now let's add in the ‘token’ piece to tie everything together. Tokenizing or minting a digital asset on the blockchain serves as a digital certificate of authenticity, backed by math, on a public ledger, that incontrovertibly proves that the holder owns a one-of-a-kind digital asset.Equally as important is the fact that NFTs enable the interoperability of digital assets, allowing them to be portable across products.
Most people are familiar with the concept of NFTs at this point given the traction within the world of collectibles (e.g., digital trading cards, art) and gaming. Across the top 50 projects, NFT sales volume YTD (as of September) has reached nearly $9B. Notably, Play-to-Earn game Axie Infinity eclipsed over $1B in volume just in the month of August. For those that aren’t familiar with the game, Axie Infinity uses NFT-based creatures (called ‘Axies’) that can be bought, sold, traded, and bred to battle each other and to earn digital tokens that can be exchanged for fiat currency.
There is no doubt that the prices/valuations of various NFT-based assets will continue to rise and fall going forward - no different than any speculative asset class in the past. There’s a non-zero chance that the hottest speculative assets today (e.g., BAYC, CryptoPunks) will be worthless in 10 years. However, it’s important to recognize that the true value of NFTs lies in the underlying technology that enables immutable digital ownership and proven scarcity, driving value for digital assets and unlocking the proliferation of new digital economies.
“NFTs use blockchain technology to denote digital ownership—of anything. NFTs aren’t a fad themselves; they may power a fad, but they aren’t the fad.”
- Rex Woodbury, Index Ventures
👾 Fitness & wellness NFT case study: Genopets
Disclaimer: Next Ventures and/or Partners at Next Ventures are investors in Genopets.
In Part 1, I detailed how we’re starting to see companies go beyond subtly incorporating Applied Game Mechanics (AGM) into their experiences. Leading and emerging fitness & wellness companies such as Peloton and Aviron are creating true ‘game-first’ experiences, offering animated games with complete storylines or fully immersive experiences. Taking it one step further, Move-to-Earn NFT game Genopets is unique in that the project not only uses immersive gaming as a lever to achieve an active lifestyle, but it also is entirely predicated on a crypto-economic network (Solana) that enables the incorporation of NFTs, adding the concepts of ownership, proven scarcity and self-expression via a user’s ‘Genopet’ to the overall player experience. For the Millenials out there, think Neopets meets the training and battling of Pokémon (Blue version of course) meets the parallel worlds of Pokémon Go.
Procured from the foundational Free-to-Play mobile gaming model, Genopets is the first mass-market NFT game to welcome crypto-native and non-crypto players with open arms. By combining Free-to-Play and Play-to-Earn, Genopets is a first for NFTs. The project’s Dual Earning Economy allows anyone to mint their Genopet for free and participate in the open marketplace, differing from other Play-to-Earn experiences such as the aforementioned Axie Infinity which requires an upfront investment to get started.
A player’s NFT-based Genopet is procedurally generated by infusing their personality traits and psychological profile into a Genopet that best matches them as determined through a series of Myers-Briggs-esque questions. Completing step challenges will speed up a player’s Genopet evolution process and unlock a variety of unique abilities and cosmetic attributes, increasing its rarity, and thus, value. Additionally, everyone who plays Genopets will have full ownership and selling rights over the NFT-based assets they earn and cultivate through physical activity, whether that be the Genopets themselves or other in-game assets (more information can be found in the company whitepaper). This cycle of value creation through quantified units of movement is what predicates the Move-To-Earn model.
There is certainly the risk of the game being too complicated to hit an idea cross-section of game-focused players and individuals that exercise enough to gain meaningful benefits in-game. As such, one of the main questions remains whether the game design will be motivating enough to actually improve health levels at scale and over extended periods of time. Luckily, we have a precedent example to use as a data point thanks to a team of researchers from Stanford University and Microsoft Research who conducted a peer-reviewed study in 2016 on the influence of Pokémon Go on physical activity.
The team concluded that Pokémon Go led to significant increases in physical activity over a period of 30 days, with particularly engaged users (i.e., those making multiple search queries for details about game usage) increasing their activity by 1,473 steps a day on average, a more than 25% increase compared with their prior activity level. Based on the period of time that the study was conducted (Dec 2016), they estimated that the game had already added an estimated 144 billion steps to US physical activity. If engagement with Pokémon Go could be sustained over the lifetime of its many users, the team estimated that the game would add an estimated 2.8 million years of additional lifetime to its US users. Furthermore, Pokémon Go was able to increase physical activity across men and women of all ages, weight status, and prior activity levels, showing this form of game led to broad sweeping increases in physical activity with significant implications for public health. In particular, they found that Pokémon Go was able to reach low activity populations, whereas all 4 leading mobile health apps studied in the work largely drew from an already very active population.
However, it’s important to note that while Pokémon Go was proven to benefit public health, enthusiasm for the game itself was ephemeral. As interest in the game declined over time, so did the uptick in physical activity that came along with it. In theory, a Move-to-Earn model like Genopets could help mitigate player churn by coupling the game experience with financial incentivization via sales of unique, NFT-based Genopets and other in-game digital assets. If Genopets is able to emulate the monetization ability seen in Axie Infinity (thousands of players in developing countries use the game as their primary source of income), it would significantly benefit player retention and maintain increased levels of physical activity over longer periods of time.
As emerging generations deeply rooted in gaming and passionate about wellness age up, NFT games have the potential to not only be the gateway to blockchain’s mainstream adoption, but also be the gateway to a healthier future through Move-to-Earn gaming models that financially incentivize players to stay fit while having fun doing so.
Currently, Genopets connects a gamer’s real-world steps with their progression, customization, and value creation in the Genopet universe. As the platform expands, it will look to apply additional quantifiable units of movement, as tracked by fitness wearables, to its blockchain-enabled experience.
“Genopets is one of those revolutionary projects that binds people’s everyday lives to blockchain through gaming and NFTs. It’s going to change the way people own and use their health data.”
- Wayne Fu, Managing Partner at OFR, former Head of CorpDev at Binance
✨ The Metaverse
The metaverse is all about enhancing the human experience by facilitating fully immersive, spatial interactions that provide a sense of presence and spawn connections and communities based on shared common interests. For additional color, below is how endemic industry experts are defining the concept:
In many ways, we’re already living in a quasi-metaverse. The internet facilitates a decentralized way to access a variety of information repositories and experiences (i.e., websites, apps) pertaining to a particular topic of interest. Let’s use travel booking as an example use case. A user can glean user-generated recommendations from world travelers on TripAdvisor, rent short-term lodging from a stranger halfway around the world on AirBnB, and book a flight in minutes on Kayak - all while coordinating with friends in real-time over Zoom. However, it’s important to note that all of these pieces are siloed, requiring a user to access each of the aforementioned sites/apps individually and with varying logins and credentials.
In many of my previous pieces, I’ve covered the emergence of various metaverse experiences that have popped up over the past couple years, including virtual concerts in Fortnite’s Party Royale, immersive movie premiers in Roblox that allow players to explore a digital twin of the film setting, and virtual birthday parties in Nintendo’s Animal Crossing. However, these nascent metaverse experiences are still closed in nature (i.e., centralized), lacking any backend infrastructure that enables true decentralization and interoperability. For example, Roblox is still employing a steep take-rate on all items that are sold for Robux, and a rare skin purchased in Fortnite is not portable to any experience in Roblox or Animal Crossing. The question remains whether the metaverse will leverage a Web3 design and NFTs to enable full decentralization and interoperability or whether a centralized authority (e.g., Facebook) will keep the experience closed. If it’s the latter that prevails, let’s hope that the centralized party doesn’t operate in a similar manner to the IOI in Ready Player One 😉
Fwiw and to give you an idea of how serious Facebook takes its role as the future keeper of the metaverse, the social media giant announced last week that it’s planning to rebrand the company with a new name to focus on building the metaverse.
In the event that an open metaverse resembling Web3 (more so than Web 2.0) and utilizing NFTs to facilitate digital economies and digital asset portability were to come to fruition in the coming decades, below are various fitness & wellness opportunities that the metaverse could facilitate:
Interest-based communities: The metaverse will provide evolutionary innovation to human socialization. Community formation within parallel worlds is increasingly based on shared interests instead of legacy social graphs driven by offline proximity, allowing for more genuine connections and like-minded relationships to form. Similar to Chinese social metaverse phenomenon Soul, which boasts 33M MAUs who are assigned to and navigate 30 different interest and personality-based ‘planets’, a metaverse focused on fitness & wellness could offer ‘lands’, ‘planets’ or simply ‘spaces’ specific to certain activities (e.g., cycling, meditation) or chronic conditions (e.g., diabetes)
Creation + discovery: Within virtual, interest-based communities, multiple stakeholders can create and capture value, including individuals, informal groups, organizations and commercial enterprises. Examples of fitness & wellness UGC can include workout plans, hiking trail recs or sleep hacks. Contributors can also host AMAs, group discussions or 1v1 consults specific to a community focus. For individual creators, the aforementioned social token framework represents a possible distribution method well-aligned with the concept of an open metaverse
Merging of virtual & physical worlds: Fitness & wellness activity and biomarkers from the physical world can be linked and leveraged in the virtual world to earn rewards (e.g., digital assets) and to share data with friends/communities, leaderboards or virtual health professionals - all aggregated through the connected, interoperable data ecosystems and verified via tokenization
Parallel worlds spawning ‘Move-to-earn’: Users can earn NFT-based cosmetic or ability upgrades for their avatars or unique digital assets through ways like exercising more, meditating more or sustaining normal glucose levels over a period of time. Earning cosmetic-based digital assets also provides native brand activation opportunities for companies like Nike or Peloton. Imagine getting a super rare pair of digital sneakers for your avatar as a reward for completing a solo marathon. Moreover, this aspect gives users the ability to monetize by exchanging rare items or tokens on secondary markets for fiat currency
It’s been fascinating to watch the evolution of fitness & wellness first hand. The bulk of the iterations detailed in Part 1 occurred over the past decade, with COVID-19 accelerating the shift into the digital realm just over the past year and a half. While it’s unlikely that the fitness & wellness space will be an early adopter of Web3 and NTFs, the general expected growth of the creator economy, which is inclusive of fitness & wellness creators, could prompt more experimentation. The existence of a fully developed metaverse (open or closed) is still so far away, but there’s no doubt that more progressive spaces (e.g., gaming, media) will push the boundaries of our imagination and open up opportunities to incorporate fitness & wellness components that ensure a healthier and more prosperous future.
If you are building or investing in the fitness & wellness or digital health space, I’d love to chat! Please reach out to email@example.com, or I can be found here.