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Venture Capital

Why Fitness Brands Are Spending More Than $1 Billion on Running Apps

Asics is the latest to join the fitness app fad with its $85 million acquisition of Runkeeper.

Alongside sneakers, gym shorts, and yoga pants, sportswear brands are adding one more must-have to their list of products: workout apps.

Unlike Nike Inc., which has been developing its own running and sports apps for years, rivals have taken to acquiring startups to stay relevant among gym rats who want to quantify their every step, jump, and calorie burned. The latest is Asics Corp., the Japanese apparel maker that said it acquired Runkeeper last week for $85 million.

Under Armour Inc. kicked off the buyout frenzy in 2013, when it spent $150 million for MapMyFitness. Then in February 2015, Under Armour said it bought Endomondo for $85 million and MyFitnessPal for $475 million. Adidas AG snapped up Runtastic in August, giving the software company an enterprise value of 220 million euros ($239 million).

Jason Jacobs, the co-founder of Runkeeper, said sports brands recognize that apps can help them connect with their customers on their daily runs, not just when they walk into a store. "The fitness brands have been aspiring to have a relationship with the consumers early and establish an ongoing relationship with consumers," he said.

That strategy can build more loyalty with customers, and buying an established app offers clothing and footwear companies a quicker way onto the market than building from scratch. "People want to be connected, track their stats, update their records," said Roger Entner, a technology analyst at Recon Analytics. "Runners will be more loyal to the shoe brand if it also has all your stats. Imagine the hassle to switch the data from one app to the next."

Roger Kay, an analyst at Endpoint Technologies Associates, said the shopping spree for fitness likely isn't over. There are still plenty of apps out there without a brand allegiance, including Fitness Buddy, Lose It!, Couch to 5K, LogYourRun, and Map My Tracks. "There will be a lot of consolidation," Kay said.

(Update to correct spelling of Under Armour in third paragraph)
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