Consumers Want Media-Connected Fitness
Over 18 million people have purchased Nintendo's Wii Fit since May 2008.
200 million Americans are overweight or obese, and they want products
that make cardio exercise as addictive as playing a video game.
Over 18 million people have purchased Nintendo's Wii Fit since May 2008.
200 million Americans are overweight or obese, and they want products
that make cardio exercise as addictive as playing a video game.
Market Trends Point to Big Demand for Fitness Games
Two market trends provide unequivocal evidence of pent-up consumer demand for fitness games. In the mass-market Nintendo's Wii Fit balance board product is a runaway best-seller, while Expresso Fitness is rapidly taking a share of the market for gym and high-end home stationary bicycles with its $5,000 game-enabled offering.
The image below outlines the response to consumer demand for fitness games that is emerging in both the video game and cardio fitness machine industries:
Graph: The Intersection of Markets for Cardio Fitness Devices & Games
Cardio Fitness Game Controllers
The success of Nintendo's Wii Fit, with 16 million units sold since May 2008, and Wii Sports (40 million units sold to date) indicates the existence of tremendous market interest in game controllers that replicate the cardio intensity and ergonomics of cardio fitness machines.
Home Cardio Machines
The success of the Nintendo and Expresso Fitness products indicates a market for a new generation of entertainment-enabled home cardio fitness machines.
Prior to the start of the recession, 4 million US consumers were purchasing home cardio fitness machines each year, with an average selling price of about $800. For these consumers, the desire to integrate fitness into their daily routine justifies a significant financial investment and is worth the inconvenience of having a large fitness appliance take up space in their home.
The graphic below suggests how the cardio fitness game market will evolve across existing distribution channels, with cardio devices from the game industry tending to be more entertainment-centric and those from cardio fitness machine makers tending to be fitness-oriented.
Graph: 3 to 5 Year Evolution of Fitness Game Devices, Prices, and Channels
Home Cardio Replacement Market
The current generation of cardio fitness machines generally lacks connectivity to interactive entertainment. Fitness game-enabled products will make existing-generation home cardio machines obsolete, driving a replacement market as owners of these machines seek to upgrade. Assuming that home cardio machines are kept by their owners for five or more years on average, the replacement market will be several times the annual purchase rate, perhaps beyond $20-30 billion including sales of game software and online fitness services.
Beyond-the-Box Sales of Game Software and Online Services
Game-enabled and internet connected cardio fitness machines will open the door to incremental or "beyond-the-box" sales of game software and online services covering nutrition and fitness tracking, fitness communities, and entertainment. The incremental software revenue model will be much like that for the Dance Dance Revolution (DDR) dance pad, which is essentially a fitness game controller and for which users can purchase games from a suite of approximately 20 titles segmented by music type and player age. The online services model will be similar to that established by Expresso Fitness ($10/mo. for premium online fitness tracking and communities features) or Bob Greene, Oprah Winfrey's personal trainer, whose online service The Best Life offers premium features at a $20 signup fee plus $10 per month.
Software and services will make home cardio machines more relevant and fun to use for the entire family, enhancing the value consumers receive from these products.
Beyond-the-box sales of software and services will deliver a massive revenue boost to the market for home cardio machines. Assuming $70 annual beyond-the-box purchases of game software and a $10 per month online service subscription, a home cardio machine user could generate almost $1,000 of incremental revenue over a five-year product lifetime, on top of an $800 stationary bike purchase. This is a market in which the game industry is currently absent.
Graph: Customer Lifetime Revenue Comparison, Home Cardio Machines
Health Club Members
Approximately 40 million US consumers held health club memberships in 2007. As with owners of home cardio machines, these consumers are making a significant investment in physical fitness and represent a large market for online services that provide fitness gaming, multi-player competition, fitness communities, and nutrition and exercise advice. Regardless of whether revenue will flow from the health club member directly to service providers or through health clubs, game consoles are the vehicles through which these services will be delivered.
The image below outlines the response to consumer demand for fitness games that is emerging in both the video game and cardio fitness machine industries:
Graph: The Intersection of Markets for Cardio Fitness Devices & Games
Cardio Fitness Game Controllers
The success of Nintendo's Wii Fit, with 16 million units sold since May 2008, and Wii Sports (40 million units sold to date) indicates the existence of tremendous market interest in game controllers that replicate the cardio intensity and ergonomics of cardio fitness machines.
Home Cardio Machines
The success of the Nintendo and Expresso Fitness products indicates a market for a new generation of entertainment-enabled home cardio fitness machines.
Prior to the start of the recession, 4 million US consumers were purchasing home cardio fitness machines each year, with an average selling price of about $800. For these consumers, the desire to integrate fitness into their daily routine justifies a significant financial investment and is worth the inconvenience of having a large fitness appliance take up space in their home.
The graphic below suggests how the cardio fitness game market will evolve across existing distribution channels, with cardio devices from the game industry tending to be more entertainment-centric and those from cardio fitness machine makers tending to be fitness-oriented.
Graph: 3 to 5 Year Evolution of Fitness Game Devices, Prices, and Channels
Home Cardio Replacement Market
The current generation of cardio fitness machines generally lacks connectivity to interactive entertainment. Fitness game-enabled products will make existing-generation home cardio machines obsolete, driving a replacement market as owners of these machines seek to upgrade. Assuming that home cardio machines are kept by their owners for five or more years on average, the replacement market will be several times the annual purchase rate, perhaps beyond $20-30 billion including sales of game software and online fitness services.
Beyond-the-Box Sales of Game Software and Online Services
Game-enabled and internet connected cardio fitness machines will open the door to incremental or "beyond-the-box" sales of game software and online services covering nutrition and fitness tracking, fitness communities, and entertainment. The incremental software revenue model will be much like that for the Dance Dance Revolution (DDR) dance pad, which is essentially a fitness game controller and for which users can purchase games from a suite of approximately 20 titles segmented by music type and player age. The online services model will be similar to that established by Expresso Fitness ($10/mo. for premium online fitness tracking and communities features) or Bob Greene, Oprah Winfrey's personal trainer, whose online service The Best Life offers premium features at a $20 signup fee plus $10 per month.
Software and services will make home cardio machines more relevant and fun to use for the entire family, enhancing the value consumers receive from these products.
Beyond-the-box sales of software and services will deliver a massive revenue boost to the market for home cardio machines. Assuming $70 annual beyond-the-box purchases of game software and a $10 per month online service subscription, a home cardio machine user could generate almost $1,000 of incremental revenue over a five-year product lifetime, on top of an $800 stationary bike purchase. This is a market in which the game industry is currently absent.
Graph: Customer Lifetime Revenue Comparison, Home Cardio Machines
Health Club Members
Approximately 40 million US consumers held health club memberships in 2007. As with owners of home cardio machines, these consumers are making a significant investment in physical fitness and represent a large market for online services that provide fitness gaming, multi-player competition, fitness communities, and nutrition and exercise advice. Regardless of whether revenue will flow from the health club member directly to service providers or through health clubs, game consoles are the vehicles through which these services will be delivered.
Exercise is Profoundly Beneficial to Human Health
Medical costs related to overweight and obesity account for almost 10% of American healthcare expenses, or about $100 billion annually. Half of these costs are paid for by Medicare or Medicaid.
Exercise is a critical tool for combatting weight gain and it delays onset or reduces the severity of a variety of chronic diseases.
Exercise is a critical tool for combatting weight gain and it delays onset or reduces the severity of a variety of chronic diseases.