Poised for Growth Digital And The Future of a Rapidly Expanding Fitness Industry

Bryan K. O’Rourke @WexerVirtual @FittechcouncilIce Tank, London 2016

poised for growth disruptive forces are driving trends that are reshaping our world and our industry for the better

poised for growth: the better the question. the better the answer. the better our industry works.

WHY ?1 BILLION 2025

SAPERE VEDEREDA VINCI

poised for growth: we must think differently. believing is seeing.

massive change… rising tides will lift some more than others

DISRUPTION

WHAT IS THE NEW NORM ?

RESTAURANTS OFFER A DINNING EXPERIENCE

THIS APP OFFERS A DINING EXPERIENCE

BANKS OFFER FINANCIAL SERVICES

THIS APP OFFERS FINANCIAL SERVICES

THIS CLINIC OFFERS MEDICAL CARE

THIS APP OFFERS MEDICAL CARE

HEALTH CLUBS OFFERHEALTH & FITNESS EXPERIENCES

THIS OFFERSHEALTH & FITNESS EXPERIENCES

THIS OFFERSHEALTH & FITNESS EXPERIENCES

THIS OFFERS FITNESS EXPERIENCES TO

WE MUST RETHINK WHATDEFINES OUR “INDUSTRY”

what are “fitness experiences” becoming ?

how will the “industry” evolve ?

what will “members” want ?

4TH INDUSTRIAL REVOLUTION- CYBER PHYSICAL SYSTEMS

WE MUST APPLY FRESH THINKING TO SUCCEED AND REACH OUR POTENTIAL

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

WHY DISRUPTION ?4 CONVERGENCE DRIVERS

PEOPLE

HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

old school definitions don’t apply - dizzying diversity

bifurcation : mass affluence driving niche luxury models and middle class driving utility businesses.

urbanization : cities are driving global growth and represent the majority of health club operations.

power has shifted to fitness consumers convenience, authenticity, choice rule decision making

exane : 10% luxury is digital now 40% by 2020

fitness experiences are user experiences (ux)

3 key “people” or “consumer” trends

G R E AT E R U T I L I T Y A N D C O N V E N I E N C E & R E L E VA N C E

F O R U S E R S

PERSONALIZATIONA C K N O W L E D G E M E N T A N D

R E C O G N I T I O N E M B R A C I N GA M I S S I O N

ENGAGEMENT

FLAUNT CULTURE

NOT JUST FITNESS

BENEFICIAL INTELLIGENCE

N E W WAY S O F D E L I V E RYT H AT I N C R E A S E U S E

A N D R E L E VA N C E

SERVICE REDEFINITION

OMNI-PRESENCE

TRENDS + VISION = REINVENTING MODELS

3 KEY CONSUMER TRENDS

PERSPECTIVE SHIFT

STATUS

personalization: greater utility, convenience & relevance

VALUE

BENEFICIAL INTELLIGENCEEnhancing User Experience ThroughBuilt In Intelligence

OMNIPRESENCENew Channels, Nuanced With Context In The Right Place At The Right Time

engagement: acknowledgement recognition mission

EMOTION

STATUS:Experiences Via Design, Gamifying, UX, Community

FLAUNT CULTUREAllow Users To Remove Barriers And Celebrate And Flaunt An Authentic Transparent Experience

service redefinition : delivering new and different

MODEL

PERSPECTIVESHIFT:Reposition Renew, and Refresh Service Offerings In New Ways

NOT JUST FITNESS:Lifestyle, Mindset, Nutrition, Holistic, Longevity

G R E AT E R U T I L I T Y A N D C O N V E N I E N C E F O R

U S E R S

PERSONALIZATIONA C K N O W L E D G E M E N T A N D

R E C O G N I T I O N E M B R A C I N GA M I S S I O N

ENGAGEMENT

FLAUNT CULTURE

NOT JUST FITNESS

BENEFICIAL INTELLIGENCE

N E W WAY S O F D E L I V E RYT H AT I N C R E A S E U S E

A N D R E L E VA N C E

SERVICE DEFINITIONS

OMNI-PRESENCE

TRENDS + VISION + TECH REINVENTING MODELS

3 KEY CONSUMER TRENDS

PERSPECTIVE SHIFT

STATUS

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

WHY DISRUPTION ?4 CONVERGENCE DRIVERS

HEALTH CLUB INDUSTRYCONVERGENCE DRIVERS

TECHNOLOGY

@Bryankorourke@WexerVirtual

the greatest products of the next 20 years have not been created yet. Kevin Kelly

Kevin Kelly’s View Of What Will Happen With Technology12 Inevitable Forces

51

01 Becoming 02 Cognifying 03 Flowing

04 Screening 05 Accessing 06 Sharing

Move from fixed products to constant upgraded services and

subscriptions.

Make everything smarter via cheap AI from the cloud.

Unstoppable streaming. You are certainly now in the data

business.

Turning all surfaces into screen experiences.

Access to services at all times move away from owning assets.

Mass-scale collaboration. Key innovations built on sharing.

BE CO FL

SC AC SH

SCREEN

SCREEN

AC & CO

12 Inevitable Forces

57

07 Filtering 08 Remixing 09 Interacting

10 Tracking 11 Questioning 12 Beginning

Harnessing intense personalization to anticipate

desires.

Unbundling products and basic parts and recombining them in all

possible ways.

Immersing ourselves inside computers to maximize

engagement.

Total surveillance for consumer and citizens benefit.

Promoting good questions is far more valuable than good

answers.

A system connecting all humans and machines in a global mix.

Kevin Kelly’s View Of What Will Happen With Technology

FI RE IN

TR QU BG

4TH INDUSTRIAL REVOLUTION- CYBER PHYSICAL SYSTEMS

THE HOLOS CHOICE

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

WHYT DISRUPTION ?4 CONVERGENCE DRIVERS

HEALTH CLUB INDUSTRYCONVERGENCE DRIVERS

ECONOMICS

CONVERGENCE DRIVERSRESULT IN DIVERGENT

MODELS

divergence means new delivery systems to meet consumer needs in new ways (workout drone).

breaks down return on equity into 3 parts. Donaldson Brown invented formula in 1912

ROE Explains Industry Landscape

Profit Margin

Dupont Formula : Return On Equity

66

EBITDA

SALES ASSETS EQUITY

SALES ASSETS

Asset Turnover Equity Multiplier

X X

Profit Margin

Dupont: Return On Assets Where the Growth Is

67

EBITDA

SALES $3M AVG

SALES $3M AVG

Asset Turnover

X =53% 100% 53%

Profit Margin

68

EBITDA

SALES ASSETS $1.6M AVG

SALES $1.6M AVG

Asset Turnover

X =34% 100% 34%

Dupont: Return On Assets Where the Growth Is

key economic drivers: lower operating costs and increasing revenue per member and lifetime value of member

8 Distinct Fitness Delivery ChannelsHealth Club Models

70

High End Full Service

Middle Market

Low Price HV Boutique

Full Service, Full Amenities, Higher

Prices, Digital Integration

Financially Challenged, Low

Pricing Power, Legacy Burden

Hi-Growth Space, Low-Cost, Low-

Service, Upcoming Digital, Lower

Markets

Program Focused, Cross Over Lifestyle,

Multiple Monetization, Omni-Channel

Health Club Models

71

Fitness Community

Pure Digital

Medically Integrated

Alternative Models

Outdoors, Indoors, Lifestyle. Connection,

Data Driven, Streaming Content,

Anywhere Anytime,Home

Market and More

Outcomes Based, Integrated, Population

Health

Corporate, Multi-Family, Alternative

Models

8 Distinct Fitness Delivery Channels

CONSOLIDATION AND REENGINEERING - S CURVE

72Bricks & Mortar Biz ModelsKey Driver Is Profitability

DIGITAL OMNICHANNEL MEDICAL BOUTIQUE LIFESTYLE COMMUNITY

Business Models Will Merge Different Aspects Of Each Of These With ALL INCLUDING DIGITAL COMPONENTS

Merging Of Offerings - Key Digital

73

High End Full Service

Community Digital Medically Integrated

Middle Market Low Price High Value Boutique

Alternative

digital creates new economics by being able to deliver experience without variable costs and more.

growing market: sick care is not sustainable and public primary prevention is the answer. technology will help.

Personalized Primary Prevention Is Here - DNA

S CURVE: THE WAY WE SEE THE INDUSTRY MUST SHIFT

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

WHY DISRUPTION ?4 CONVERGENCE DRIVERS

HEALTH & FITNESS INDUSTRYCONVERGENCE DRIVERS

GLOBALISM

how we operate and invest must be mindful of sustainability

we must cooperate globally to impact policies that address the huge risk and opportunity of global health

we must globally share our insights and cultural diversity to drive innovation and success

poised for growth disruptive forces are driving trends that are reshaping our world and our industry for the better

SAPERE VEDEREDA VINCI

poised for growth: we must think differently. believing is seeing.

PEOPLE TECHNOLOGY

GLOBALISM ECONOMICS

WHY DISRUPTION ?4 CONVERGENCE DRIVERS

the greatest products of the next 20 years have not been created yet. Kevin Kelly

ASK THE RIGHT QUESTIONS

SEIZE THE UPSIDE OF DISRUPTION

Poised for Growth Digital And The Future of a Rapidly Expanding Fitness Industry

Bryan K. O’Rourke @WexerVirtual @FittechcouncilIce Tank, London 2016