When gyms and fitness stores closed in early 2020, it was time for fitness technology to shine. Stuck at home, people needed new ways to stay active – and for many that meant stepping into the world of connected fitness. Nintendo Ring Fit Adventure was impossible to find. Fitness influencers have taken to Instagram to stream workouts live. Even big tech companies have started to branch out into wearables or launch their own on-demand fitness services. But no one has had a year quite like Peloton.
Ironically, Peloton started 2020 as the butt of everyone’s jokes thanks to a terrible holiday ad that went viral. No one was laughing a few months later. When the lockdowns started, Peloton began by offering a 90-day free trial of its app – no bike purchase necessary. In mid-2020, Peloton said it had 1.1 million subscribers and posted its first-ever profit. Amid significant shipping delays caused by skyrocketing demand, Peloton lowered the price of its original bike and introduced two new products: the Bike Plus and a lower cost treadmill. At the end of the year, he spent $ 420 million to buy Precor, one of the world’s largest manufacturers of commercial fitness equipment. It kicked off 2021 by giving up an additional $ 100 million to correct shipping delays and another $ 400 million more to build a factory in Ohio. The millions of dollars invested then bolstered rumors that the company was working on new products ranging from wearable clothing to rowers.
Peloton was signaling that it foresaw a robust post-pandemic future. It seemed like nothing could stop this momentum – at least until a few months ago. Over the summer, Peloton recalled its two treadmills following reports of multiple injuries and, in one case, the death of a child. With the COVID-19 vaccines, restrictions were relaxed and people began to return in droves to brick-and-mortar gyms. Sales stagnated, although Peloton lowered the price of its original bike to $ 1,495. In a turnaround, Peloton recently reported a net loss of $ 376 million for the first quarter of 2022, sending its shares plummeting the same day Planet Fitness announced it had exceeded expectations. Peloton CEO John Foley admitted on an investor call that the company misjudged how things might change after people started to return to normal lives.
Over the past year, the Peloton brand has become a household name. It often acts as a substitute for the entire connected fitness category – much like how some people use Fitbit to describe all fitness trackers. For better or worse, Peloton’s products and business model have served as a role model for everyone else to follow.
As an example, the influx of Peloton copiers. You have seen them before. Those described as “Their Sport’s Peloton” because they target other gym equipment, apply a 20-inch touchscreen to it, and launch an on-demand service in competition with dynamic leaderboards and coaches. There are dozens of them, from more established home fitness brands like Mirror, Tonal, and Hydrow to more niche startups you’ve probably never heard of.
Each has tweaked Peloton’s formula for a different type of gym equipment and comes with their own celebrity investors and backers. Mirror has been featured in the social media feeds of several actresses including Lady Gaga, Olivia Wilde and Courtney Cox. Tonal has Amazon, Maria Sharapova and Steph Curry. Hydrow is supported by Lizzo and Justin Timberlake. There are also more obvious imitators, like Equinox’s SoulCycle Bike, iFit’s NordicTrack Commercial S22i Studio Cycle, and Echelon’s full catalog of inexpensive bikes and treadmills.
But if everyone is copying Peloton’s playbook, that means they also share the same pitfalls. Beyond the obvious issues like cost, limited living space, and inconsistent motivation, connected fitness has an ecosystem issue. Many of these companies severely handicap their expensive hardware if you do not purchase a subscription while limiting their digital content to that hardware. For example, the Hydrow FAQ explicitly states that “[membership] is an integral part of the Hydrow experience and should not be considered an optional part of the purchase. If you choose to subscribe only to the Hydrow app, it will not allow you to record metrics from another rower. You cannot even connect to another Hydrow rower even if you are a paying customer. Likewise, Mirror won’t even let you use its app unless you’ve purchased the hardware.
Linking hardware and software like this is meant to lock customers into a fitness ecosystem to the exclusion of all others. While most allow you to integrate your workout data with Strava, the hardware usually lets you do one thing: stream a company’s workouts. You cannot download different entertainment apps or stream other workouts on a Peloton bike unless you are willing to jailbreak it and void the warranty. The SoulCycle Bike is the rare exception that includes Netflix and Disney Plus in addition to its own content. The only problem is that the Netflix and Disney Plus apps are locked behind the Equinox Plus paywall. You end up paying a premium for equipment that can only do one thing.
With smaller players, you run the risk of losing a ton of money if the business goes out of business. This is what happened last year when Flywheel lost a patent dispute with Peloton over its grading function. One day, Flywheel owners discovered that their $ 1,999 bikes were stuck with no recourse but to eat the loss or switch to Peloton. The flywheel may not be the only victim, either. Peloton is not afraid of the courtroom. This was already the case with iFit. It also recently filed two lawsuits against iFit and Echelon, alleging that the two companies’ products riddled its content on demand. In addition to calculating premiums, evaluating digital content, and making sure your home meets installation requirements, consumers also have the headache of researching whether a business’s fitness ecosystem is designed for the long haul.
Most of these issues are not new. Single-use fitness equipment has been around for decades, taking up space in your home as expensive and glorified coat racks once your New Years resolutions run out. The difference with connected fitness is that these locked in ecosystems exacerbate old problems and create new ones. Selling a Peloton is more difficult than selling a regular stationary bike. (Forget Tonal, which must be installed in your home’s wall studs by a professional crew.) Warranties, prepaid subscriptions, and financing plans may not be transferable or refundable. Moving devices to another location is even more complicated, thanks to the giant and fragile touch screens. You may not even be able to place the device where you want it due to the Wi-Fi and other installation requirements. Worse yet, even if you understand all of this, you will have to pay a monthly fee for as long as you have the device.
Right now, experts seem to think connected fitness is heading down the same post-pandemic path as remote working. As life returns to normal, consumers will likely adopt a hybrid of going to the gym and exercise at home when it is most convenient. But while investors have rightly deduced that increased competition has led Peloton, Hydrow, Mirror and Tonal to increase their marketing spend, no one has explained why single-use equipment, limited ecosystems, and expensive subscriptions are worth it. worth the risk for untested fitness startups. Even Peloton stumbles despite its dedicated community base, impressive 92% annual retention rate, and strong ecosystem of products and services. As a leader in the field, Peloton can endure some short-term setbacks. But if its competitors fail to tackle this ecosystem problem, it doesn’t bode well for its army of copiers.