Animoca Brands looks to diversify into lucrative health and fitness market

Not content with its games-only niche, Animoca Brands Corp. (ASX: AB1) has announced its intention to develop applications aimed at health and fitness, with company CEO Robby Yung praising the move that “provides us with an entry point into lucrative markets”.

To carry out its horizontal expansion into the health niche, Animoca has launched dedicated subsidiary OliveX, which will focus exclusively on wearable technology and designing applications that take advantage of the Internet of Things (IoT), a concept whereby all digital devices are now made with the capability of being compatible with all other devices, thereby widening the scope for useful functionality in society.

According to Animoca, OliveX will focus on developing a range of mobile apps that focus on movement, fitness and health, including apps powered by artificial intelligence (AI).

OliveX is likely to maintain a gaming mechanic for all its applications to maintain the attractiveness of games as well as promoting healthy practices.

The launch product line-up of OliveX includes a range of mobile products that leverage Animoca’s technologies and relationships, including:
– Garfield Fit, a pedometer and running game based on the famous cartoon cat;
– 22 Pushups, a voice-based virtual coaching app;
– KAT Squat Trainer, an app that utilises machine learning to recognise and provide guidance on the proper execution of squat exercises;
– Coachbase, a top-ranked basketball coaching paid app.

According to Statista, the global fitness market is expected to generate around US$9.3 billion and to register a CAGR of 6.6% this year.

In parallel, the global mobile health market was worth US$23 billion in 2017 and is projected to grow at a CAGR of more than 35% over the next three years, according to a report published by SNS Research last year.

Animoca intends to combine these two different market niches and capture a wider audience through OliveX’s work and brand. According to Animoca, the company intends to retain 85% ownership of OliveX with several key management figures holding the remaining 15%.

Personnel insurance

Animoca plans to spin-off OliveX and to hire several leading figures in the mobile gaming space to flesh out the new business unit.

First on the list was Keith Rumjahn, founder and former CEO of Coachbase, a top-ranked paid app that was acquired by Animoca Brands in 2017.

Sonny Vu, founder of MisFit, a wearable tech company acquired by Fossil Group for US$260 million in November 2015, will join as a board director and has already invested in the new company.

“OliveX launches with a number of products that will contribute to the Company’s broader revenue profile, and we are pursuing opportunities to grow these offerings in the near term as part of our strategy to diversify and expand,” said Robby Yung, CEO of Animoca Brands.

“We have assembled an experienced management team that will leverage our existing relationships – including our partnership with AI accelerator Zeroth.ai – to produce AI-based mobile fitness products while increasing shareholder value,” added Mr Yung.