Runners in America have likely never heard of fitness app-maker Runtastic, but there are some big reasons Adidas Group just bought it up in a deal valued at $240 million. Runtastic, which is headquartered in Austria, has offices in San Francisco and some 70 million users. Owning it will allow Adidas to better compete with Nike in running technology and to better compete in the larger space of fitness-tracking tech.
In a press release announcing the deal, Adidas boasts that Runtastic, “is already one of the most diverse global players in the health and fitness app market, operating a multi-app strategy with over 20 apps covering a wide variety of endurance, health and fitness activities… With high user satisfaction, an impressive pipeline of innovative concepts and relentless speed to market, momentum is expected to remain robust in the coming years.” The company was private and majority-owned by German media company Axel Springer (owner of Germany’s largest tabloid, Bild). Adidas bought out Axel Springer’s shares and will be sole owner of the app-maker.
It is an especially crucial move as Adidas looks to claw back market share in the U.S. from Nike. Thus, buying Runtastic is a smart play by Adidas to try and break into an area that Nike has been leading.
Beyond just the sports apparel industry, Adidas is dipping its toes into the larger market for fitness tech, which continues to grow. Fitness tracking and faster payments are considered by consumers to be the most important uses for wearable technology, according to new research from WPP media agency Mindshare and Goldsmiths, University of London. There’s big money in wearable technology. Wearable technology, both consumer and medical, provides a unique opportunity to track fitness and lifestyle choices, such as increasing physical activity. Global revenues for sports, fitness and activity monitors are expected to grow from $1.9bn in 2013 to $2.8 bn in 2019, according to technology industry analysis firm IHS Technology.
Adidas says Runtastic’s four original founders will stay on and operate Runtastic within the larger corporation—for now. But look for the German giant to ultimately rebrand Runtastic apps as Adidas apps, perhaps under the Boost name.
Nike has earned plaudits for its digital innovations; Adidas would like to see some of that same buzz. If it can successfully turn Runtastic’s apps into an Adidas+ type of fitness-lifestyle-tech brand, then $240 million will look downright cheap.