When you’re a fitness gear company, your goals are simple: you want people to buy more fitness gear. That’s why it makes sense that Under Armour, a company that makes athletic clothing, is buying up popular fitness apps, but the company’s master plan is very simple: people exercise more when they have apps that nag and reward them to do so, and those people need more shoes and clothes.
CEO Kevin Plank explained to Bloomberg News that investing in tracker businesses creates a “halo effect,” giving users of the tracking services a favorable impression of the brand. That’s good, but doesn’t entirely explain why the company would spend $475 million for MyFitnessPal and $85 million for Endomondo. The members of the sites would have to wear out a lot of shoes to cover that kind of investment. Part of it is the existing user base of both sites: MyFitnessPall has 80 million registered users, and Endomondo has 20 million. Even when you consider inactive users and possible overlap between the two apps, that is a lot of people who can potentially have Under Amour products marketed to them from within the apps.
That doesn’t even take into account possible income from selling premium subscriptions and money from selling ads for non-Under Armour products within the apps and their corresponding websites.
One thing that Under Armour won’t be doing, told Bloomberg News, is designing and marketing its own wearable fitness trackers. While Nike’s Nike+ services seem to be doing okay, its FuelBand wristband wasn’t so successful and has been taken off the market.
Under Armour Buys Apps in Bid to Become Top Fitness Tracker [Bloomberg] (Warning: auto-play video)
by Laura Northrup via Consumerist