For the last several years, Fitbit has created hardware and software designed to help consumers keep track of their activity levels. But we’ve heard the wearable maker could soon acquire FitStar, a startup which makes apps that might help motivate Fitbit customers to actually be more active.
According to a source close to the matter, Fitbit is evaluating a purchase of FitStar for upwards of $25 to $40 million in a mix of cash and stock. A deal like this could always fall apart, of course, but if it goes through our source says the acquisition could close as early as next week.
Fitbit is one of the oldest and has some of the most popular activity trackers on the market. Founded in 2007, its devices accounted for approximately 50 percent of all wearable bands sold in 2013, according to one research report.
That said, the market has been flooded with a ton of new fitness tracking gadgets in the last year or two. Jawbone, Misfit, Mio, Basis, Garmin, and even Microsoft have released competing products. And that’s not even counting the upcoming Apple Watch, which the company reportedly expects to sell 5 million of during its initial run.
Fitbit’s hardware includes a variety of wristbands, clip-on activity trackers, and a connected scale. It also has mobile apps and an online dashboard through which customers can log their steps, weight, food intake, and other workout activities.
While Fitbit’s software provides an all-in-one platform for tracking all that data, it also recognizes not everyone will want to use its apps for all those functions. As a result, it’s partnered to share data with a number of third-party app makers, such as LoseIt!, MyFitnessPal, MapMyRun, Endomondo, and also FitStar.
Fitbit’s decision to pursue an acquisition of FitStar makes sense as the activity tracker market matures and more consumers are looking for practical applications that could help them get fit. That is, now that they have they data, what can they actually do with it?
FitStar makes a series of fitness and yoga apps that provide personalized workout programs for users. Those apps include high-quality video workouts led by celebrity fitness trainers to help motivate users to get in shape. Over time, its apps track the exercises users take part in and adapts to their strengths (and weaknesses).
The purchase has a number of benefits for each company. Beyond the obvious cross-pollination between Fitbit and FitStar user bases — i.e. Fitbit pushing its users to join FitStar and vice versa — an acquisition would give Fitbit an entree into the growing online fitness instruction market, while providing more resources for FitStar to continue producing instructional videos.
All of that is important as Fitbit pursues an IPO, which is reportedly planned for later this year. It would also make Fitbit’s platform a bit more defensible against “dumb trackers” that only provide analytics without actually helping users to get off the couch.
A small side benefit to this is an incremental revenue stream that would come from FitStar’s premium subscription user base and sales of individual workout programs on its apps.
Finally, the acquisition could be an integral part of Fitbit’s defense against the Apple Watch — a device which any number of fitness startups will soon begin making workout apps for. Fitbit is one of the few wearable manufacturers not to integrate with Apple’s HealthKit, due to competitive concerns around the release of the Apple Watch. We’ve heard that’s one reason why Fitbit devices were pulled from the Apple store late last year.