JUNE 14, 2016 The Disruptors of Sports: Smart Sports Equipment • Digitalization looks set to drive future growth in the sports equipment category. Smarts sports equipment enables athletes and amateur sports participants to monitor, track, analyse and improve their athletic and fitness performance. • While the market for sports goods equipment is expected to grow at a compound annual growth rate (CAGR) of 3% from 2016 to 2020 globally, smart sports segments are likely to grow much faster. For example, the market for platforms that integrate sports equipment with coaching software is expected to grow at a CAGR of 51% globally from 2014 to 2021. • Smart sports equipment is expected to account for around 7.5% of the total sports equipment market by 2020, up from an estimated 2.9% in 2015. • Research and development departments of sports goods companies have been very active in launching new products or in embedding digital technology in their existing range, in order to capitalize on the growth of the smart sports market. • In the years ahead, improvements in technology and an increase in competitiveness with more companies offering smarts sports products should drive down prices and encourage more widespread adoption among amateur sports participants. DEBORAH WEINSWIG Managing Director, Fung Global Retail & Technology [email protected]US: 646.839.7017 HK: 852.6119.1779 CHN: 86.186.1420.3016
equipment category. Smarts sports equipment enablesathletesandamateursportsparticipantstomonitor,track,analyse and improve their athletic and fitnessperformance.
• Whilethemarketfor sportsgoodsequipment isexpectedtogrowata compoundannual growth rate (CAGR)of3%from 2016 to 2020 globally, smart sports segments arelikely to grow much faster. For example, the market forplatforms that integrate sports equipment with coachingsoftware is expected to grow at a CAGR of 51% globallyfrom2014to2021.
• Smartsportsequipmentisexpectedtoaccountforaround7.5% of the total sports equipment market by 2020, upfromanestimated2.9%in2015.
• Research and development departments of sports goodscompanies have been very active in launching newproducts or in embedding digital technology in theirexistingrange, inorder tocapitalizeon thegrowthof thesmartsportsmarket.
• In the years ahead, improvements in technology and anincreaseincompetitivenesswithmorecompaniesofferingsmarts sports products should drive down prices andencourage more widespread adoption among amateursportsparticipants.
D E B O R A H W E I N S W I G
M a n a g i n g D i r e c t o r , F u n g G l o b a l R e t a i l & T e c h n o l o g y d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m
U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9
Digitalizationhasbecomesoimportantwithinthesportinggoodsindustrythat Adidas, in its 2015 annual report, referred to it as one of themaintrends currently affecting the sector. The smart sports category—whichincludesequipmentandwearablesintegratedwithdigitaltechnology—hasbecome the field on which industry players compete, and the focus ofmuchoftheirR&Defforts.
SmartsportsispartofthebroaderphenomenonoftheInternetofThings(IoT), Internet-enabled objects that connect to a network, gather andsharedata,andinteractwiththeirsurroundings.OtherreportsfromFungGlobalRetail&TechnologyhavecoveredtheuseofIoTtechnologyinthehome(TheConnectedHomeSeries), inautomobiles (ConnectedCars)andinbabyproducts(TheBoominBabyTech).
This report focuses on connected sports equipment, which includeseverythingfromsmartfootballs,baseballs,soccerballsandtennisracketsto smart gym equipment to smart fitness trackers. Connected sportswearableswillbecoveredindepthinourforthcomingreport,Wearables:AMarketinTransition.
The smart sports sector is expected to grow rapidly. WinterGreenResearch, a market intelligence firm, estimates that platforms thatintegrate sports equipment with coaching software will grow at acompoundannualgrowthrate(CAGR)of51%globallyfrom2014to2021,reaching a market value of $864 million. Meanwhile, the total sportsequipmentmarket isexpectedtogrowby just3%from2016to2020, to$83billion,accordingtoresearchfirmTechnavio.
Connected sports wearables are also expected to show strong growth:WinterGreen Research forecasts that category sales will be four timeslargerin2021thantheywerein2014.
Smart sports products range from gym machines to running shoes, butwhat makes them “smart” is their ability to track users’ athleticperformance data and provide information and analytics that can helpusersoptimizetheirtraining.
ATHLETESTRACKPERFORMANCE,MARKETERSTRACKCUSTOMERS
Thedatagatheredthroughsmartsportsequipmentisapreciousresourcefor athletes and trainers, and can also be used by companies to trackconsumerbehavior.Fitnessandathleticdatacanbeusedfor:
Virtualcoaching:Suchdatacanalsobeusedtocreatepersonalizedvirtualcoachingprograms.Smartgymequipmentcanbeintegratedwithcoachingsoftware, for example, to create virtual coaching programs andpersonalizedworkoutschedules.
Marketing purposes: Companies can gain intelligence on consumersthrough the individual fitness data collected by smart sports equipment,and that information can be used to tailor marketing to individualcustomers.Suchdataoftenreveal insightsabouttheuser’shealthstatus,and companies that own the information could share it with third-partyfirms. Insurancecompanies,forexample,coulduse itwhendecidinghowmuch to charge policyholders, or for promotional activities. In the US, anumberof insurancecompanies, includingUnitedHealthGroup,Humana,Cigna and Highmark, already offer discounts to policyholders based onfitnessdatagatheredthroughthepolicyholders’wearabledevices.
DIGITALIZATIONSUSTAINSSPORTSEQUIPMENTGROWTH
Smart sports equipment showsmore dynamism than the broader sportsequipmentcategory,andweexpect thesmartsegmenttodrivecategorygrowth in thenear future as the technologybecomesmoremainstream,andascompetitionamongmanufacturersincreasesandproductsbecomemore affordable. Consumer adoption should accelerate asmore athletesand recreational sports enthusiasts decide to use data to track theirprogressandtocreatepersonalizedvirtualcoachingprograms.
WinterGreen Research estimates that the global market for sportscoaching platforms—which integrate digital sports equipment withcoachingsoftware—willgrowfrom$49million in2014to$864million in2021.Andtheglobalconnectedfitnesstrackermarketisforecasttogrowfrommore than $2 billion in 2014 to $5.4 billion by 2019, according toresearchcompanyParksAssociates.
Meanwhile, the global sports equipment market—which includes bothtraditionalandsmartequipment—isexpectedtogrowfrom$71.6billionin2015to$83billionby2020,accordingtoTechnavio.
Source: National Sporting Goods Association/Association of the German Sport GoodsIndustry/FungGlobalRetail&Technology
INDUSTRYPLAYERSDIGITALIZETHEIRPRODUCTRANGES
Attractedby thegrowthprospectsof thesmart sportscategory, sportinggoods manufacturers are investing in digitalizing their product ranges.Since 2013, sporting goods companies have been in a buyout frenzy,acquiring fitness apps developed by third-party companies, as the apptechnologies can be embedded into the software, equipment andwearables that the manufacturers make. For example, Under Armourspent a total of $560million to acquire EndomondoandMyFitnessPal inFebruary 2015 and Adidas paid €220million (US$239million) to acquireRuntasticinAugust2015.
Below,wepresentsomecasestudiesofhowsportsequipmentcompaniesare integrating digital technology into their product ranges, which wedivideintothreecategories:smallsportsequipment,gymequipmentandconnectedfitnesstrackers.
SmallSportsEquipment
AdidasmiCoachSmartBall
AdidaslauncheditsmiCoachSmartBallinMay2014.Thesmartsoccerballis the result of R&D efforts designed to provide the German nationalsoccerteamwithasystemtohelpthemtrainsmarter,ratherthanharder.The ball has a built-in sensor that detects speed, spin, strike and flightpath,anditcommunicatesthedataviaBluetoothtotheplayer’sorcoach’ssmartphone. Users can see the diagnostics via the Smart Ball app. Thesystem uses the data to analyze the player’s performance and provideadviceonhowtheplayercanimprovehisorhersoccerskills.Forinstance,
Thebuilt-insensorreliesonabatterythatneedstobechargedforaboutone hour; a single charge lasts for about 2,000 kicks (about two hours’worthofpracticetime).Atthetimeofwriting,themiCoachSmartBallwaspricedat$184.79onAmazon.com.
Source:Source:Soccerbible.com
WilsonXConnected
There aremanyother smart balls on themarket for use inother sports.Wilson released a connected smart basketball in September 2015—theWilsonXConnected—andannouncedthereleaseofaconnectedfootballat the CES 2016 trade show in Las Vegas in January. The Wilson XConnectedhasfeaturessimilartotheAdidasmiCoachSmartBall,suchasthe ability to track performance and provide coaching analytics via asmartphone app. The product’s big limitation is that its battery is notrechargeable.So,oncethebatterydies—whichwouldhappenafteraboutayear if theuser tookanaverageof300shotsperday,accordingto thecompany’swebsite—theball ceases tobe smartand turns intoa regularbasketball.TheWilsonXConnectedbasketball currentlysells for$199.99onAmazon.com,whilearegularWilsonNCAAOfficialSizeBasketballsellsfor$68.86.
FWDPowershotandSportscard
FWDPowershotisasensorforhockeysticksthatallowstheusertotrackandanalyzehowthestickhasbeenusedingamesandtraining.Thedeviceinteracts with the FWD Sportscard smartphone app, which compiles thedata and serves as a virtual coaching system, providing the player withadviceonhowtoimprovehisorhertechnique.Thesensorispoweredbyarechargeable battery that lasts four hours. Canadian startup Quattriuumlaunchedthesysteminin2013andthesensorcurrentlysellsfor$149.99onthecompany’swebsite.
GameGolfLiveisasystemthatenablesplayerstotrack,analyzeandsharedata related to their performance during a round of golf. The solutionhelps amateur players improve their skills, compare their performanceagainstotherplayers’ andcompeteagainstopponentsallover theworldbycreatingchallenges.
GameGolf Live consistsof two components, a tag that is appliedon thetop end of the golf club and a tracking device that is mounted on theplayer’sbelt.Beforeeachshot,theplayertapsthetagagainstthetrackingdevice, enabling the system to gather data. The information can betransmitted in real time though Bluetooth to an app installed on theplayer’s smartphone, or it can be transmitted after the game to asmartphone,tabletorcomputer, iftheplayerpreferstoanalyzethestatslater.GameGolfLivecurrentlysellsfor$309.99onAmazon.com.
Source:Gamegolf.com
BabolatPlayPureDriveandZepp
Similar products include the Babolat Play Pure Drive ($199 onAmazon.com) and the Zepp devices ($99.99–$149.99 on Amazon.com).
The Babolat Play Pure Drive is a connected tennis racket that allowsplayers totracktheirperformanceviaasensor in theracket thatcollectsand transfers data to a diagnostic app. The Zepp is a sensor that canbeattached tobaseballandsoftballbats, tennis rackets,andgolf clubs.Thesensor tracks theuser’s swingand strength, andprovidesdiagnostics forvirtualtraining.
Whatwethink:Whilemanyathletesandsportsenthusiastslovetheideaof being able to track and improve their performance, connected sportsequipmentisstillveryexpensivecomparedtotraditionalequipment.Smallsmartsportsequipmentisoftenboughtbyindividualsforpersonaltrainingpurposes;ownersmaybereluctanttousesuchitemsduringgamesduetotheir high cost and limited battery life and the necessity of connectingthemtoanindividualsmartphone.
GymEquipment
TechnogymEcosystem
In April 2016, Technogym, a leadingmanufacturer of fitness equipment,introduced its Technogym Ecosystem, an integrated fitness system thatconnects fitness equipment, apps and wearable devices to a cloud-computing platform called Mywellness. The system allows users tomonitorandmanagetheir fitnessactivitywherever theyare, inoroutofthe gym. Part of Technogym Ecosystem is the Skillmill treadmill, whichenables users to track their performance and store their workoutparametersviaMywellness,andtoaccesstrainingprogramsbyscanningaQRcodewiththeirsmartphone.
Users can also log in by scanning a QR code through a Life Fitness appinstalled on their phone, and then connect the device to the gymequipment via Bluetooth. Or they can log in without a smartphone bysimplytyping inapersonalizedcode.TheLifeFitnessconsolecanalsobeintegratedwith third-party apps, such asMyFitnessPal or Paofit, an iPadapp that lets users race other users from around the world. Owners ofFitbit and Jawbone wearable devices can log into their account on themachine’sconsole,andthenselectthewearable’sapponthescreen.Theconsoleenablesuserstotransferworkoutstatisticsfromtheirwearabletothe gym equipment and vice versa. Life Fitness introduced its firstconnectedconsolesbackinNovember2011.
Source:Lifefitness.com
What we think: Connected gym equipment appears to be a naturalresponse to the needs of modern gym-goers. Global smartphoneownership rates are high, and fitness apps have become very popular;researchfirmNielsenfoundthataboutone-thirdofsmartphoneownersinthe US were using fitness apps in January 2014. Fitness enthusiasts areattractedtothepossibilityofconnectingtheirsmartphoneorwearabletogymmachines in order to track their performance, and they like havingpersonalizedvirtualworkoutschedulesthatallowthemtomaximizetheirtime and effort at the gym. Therefore, we expect gym equipmentcompaniestocontinuetointegratedigitaltechnologyintotheirmachines,andwepredictthatsmartgymequipmentwillgraduallyreplacetraditionalmachines.
ConnectedFitnessTracker
UnderArmourHealthBox
At the January 2016 CES trade show in Las Vegas, Under ArmourintroduceditsHealthBoxconnectedfitnesssystem,atrackerthatconnectswithallotherUnderArmoursmartwearablesanddevices,allowinguserstoaccessalltheirhealthandfitnessdatafromoneplace.
The system integrates wearables such as smart wireless headphones,smartshoes,wristbandsandactivitytrackers,includingtheUAHeartRate,achestbandthatmonitorsthewearer’sheartbeat.TheusercanseeallthedatagatheredbythedevicesontheUARecordsmartphoneapp,andcan
UnderArmourplanstobecometheleadingcompanyinconnectedfitness,and it has invested heavily in fitness technology. Aside from its 2015acquisitionofEndomondoandMyFitnessPal,thecompanyalsopurchasedtheMapMyFitness app in 2013 for $150million. In 2015,Under ArmourintegratedtheseintoadigitalfitnesscommunitycalledUARecord,whichgathersallthedatainoneplace.AtCES2016,thecompanylaunchedsomeother new connected fitness devices, too, including two models ofheadphones, smart shoes and an activity tracker.Under Armour aims tooffer a range of integrated products that all function with each other,makinglifeeasierforusers.
Source:Underarmour.com
Whatwethink:TheHealthBox’srecommendedsellingpriceof$400looksquitehightous,giventhatthesystemisintendedforindividualprivateuseand that there are cheaper solutions on the market, such as Nike+, anactivitytrackerthatreliesonsensorsinwearablesandintegrateswithNikesmartphone fitness apps. Therefore, it is likely that the product will be
relegated,at least initially,toanichemarket. It isalsopossiblethatmorecompanieswilllaunchsimilarproductsinthefuture,whichshoulddrivetheHealthBox’s price down. At a more affordable price, the product maybecomeveryappealingtoconsumers,sinceitenablesthemtointegratealltheirUnderArmoursmartdevicesintoonesystem.
OUTLOOK
• Thesmartsportsequipmentcategory isexpectedtogrowrapidly.Weestimatethatdigitalsportsequipmentwillaccountfor7.5%ofthetotalsports equipmentmarket in 2020—up 4.6 percentage points from its2015 level. Athletes and recreational sports enthusiasts are likely toincreasingly adopt connected fitness systems, and smart sportssolutions should become more affordable as the technology reachesmaturity.
• Manufacturersofgymequipmentare likely to incorporatesome formof digital technology into all their products eventually. For companiessuch as Technogym, outfitting fitness equipment with digitaltechnology that enables gym-goers to access personalized trainingprogramswillbecrucialtomaintainingcompetitiveness.
• Sportsequipmentsuchassoccerballsandtennisracketswilllikelyseeless digital integration. Smart versions of these products have higherpricepointsthanconventionalversionsdo,andtheirlimitedbatterylifeand their need to be connected to a smartphone make them moresuitable for individual training than for use in competition. Thatmaychange, though, as the technology improves, as more competitorsenterthemarketandaspricescomedown.
• Connected fitness systems such as Under Armour’s HealthBox areexpected to remain a niche segment, given their relatively high pricepoints, but they should gain momentum once competition increasesandpricesbecomemoreaffordable.
