{"id":6463,"date":"2018-02-01T15:47:24","date_gmt":"2018-02-01T20:47:24","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/peloton-bringing-the-studio-to-you\/"},"modified":"2018-02-01T15:47:24","modified_gmt":"2018-02-01T20:47:24","slug":"peloton-bringing-the-studio-to-you","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/peloton-bringing-the-studio-to-you\/","title":{"rendered":"Peloton: Bringing the Studio to You"},"content":{"rendered":"

The $28B American fitness industry is no stranger to a passing trend. Through the decades, consumers have flocked to gyms, classes, and increasingly, to boutique fitness studios like Soul Cycle, Fly Wheel, and Berry\u2019s Bootcamp. But as consumers lives have gotten busier, and free time shortened, a new space has opened for fitness that fits within our crowded lives.<\/p>\n

As technology has made other parts of our lives more convenient and on demand, Peloton has sought to do the same for fitness. Peloton offers consumers fitness equipment \u2013 bikes and, recently, treadmills \u2013 \u00a0that are digitally connected to broadcast Peloton\u2019s live and on-demand fitness classes directly onto a connected screen, bringing the boutique fitness experience to the home. In addition to the on-machine interface, Peloton developed an app to allow subscribers to access Peloton workouts even when they\u2019re not at home.<\/p>\n

\"\"<\/a>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \"\"<\/a>\u00a0 \u00a0 \u00a0 \u00a0\u00a0\"\"<\/a><\/p>\n

For $1,995, consumers can purchase a connected Peloton bike and pay a $39 monthly subscription for access to live and on demand classes filmed in Peloton\u2019s NYC studio. Peloton\u2019s found John Foley (HBS 01\u2019), views Peloton\u2019s model as \u201cfitness as a service\u201d and an alternative to the prices paid for comparable workouts in boutique studios (SoulCycle NYC – $34\/class, FLYwheel NYC – $36\/class). Peloton\u2019s newest launch, a $3,995 treadmill, showcased at the Consumer Electronics Show this year, takes aim at boot camp style workouts with the same model (Berry\u2019s Bootcamp NYC – $36\/class). The high initial cost of the bikes and treadmills may be a barrier to entry for some consumers, but those who do buy in have a very low churn rate (reported at 0.3%), thus the company is able to earn recurring revenue on the subscription services.<\/p>\n

Peloton\u2019s strategy to become the at home fitness platform owner allows them to fully control their product ecosystem. They manufacture and sell the hardware, update and maintain the software to deliver the programming, design, produce, and own the content, and sell the subscriptions to customers. By developing their own product ecosystem, they\u2019re able to capture the maximum value from customers (no one to split it with!). In addition, with the development of new products (treadmills), they have a greater ability to attract and capture additional value from customers. By owning the ecosystem, Peloton can also control which partners to allow access. They\u2019ve recently announced a partnership with FitBit to allow consumers to sync data from their Peloton workouts to their FitBit devices \u2013 which will likely drive even more stickiness for users.<\/p>\n

Peloton has reportedly has about ~75,000 bike users and service subscribers (as of January 2017) thus far, and is beginning to ramp up international expansion. 2017 sales clocked in at $400M, more than double the 2016 sales of $170M. While it may be way too early to say that Peloton has won the high-end fitness market, it is safe to say that competitors are scared. FLYwheel, a popular national boutique spinning studio, has launched their own me-too product called FLY Anywere. FLYwheel\u2019s bike decouples the bike ($1,699) from the built-in screen ($400 add on), to allow users to utilize a television set, mobile device, or tablet, and offers the same $39\/month subscription fee. While the offering is comparable, Peloton\u2019s in-market time advantage means they have a much larger library of on-demand content (>8,000 classes) to offer consumers, and given their investment in the technology platform, they have a greater ability to expand into new offerings like the treadmill and potentially other equipment in the future (ex: rowing machines, weight machines). Investors have also affirmed their confidence in Peloton, which has reached the \u201cunicorn\u201d level of valuation in their latest rounds of funding ($325M for a $1.25B valuation).<\/p>\n

 <\/p>\n

 <\/p>\n

Sources:<\/p>\n

https:\/\/www.entrepreneur.com\/article\/306545<\/a><\/p>\n

https:\/\/www.flywheelsports.com\/packages<\/a><\/p>\n

https:\/\/www.soul-cycle.com\/series\/<\/a><\/p>\n

https:\/\/www.barrysbootcamp.com\/pricing\/noho\/<\/a><\/p>\n

https:\/\/www.cbsnews.com\/news\/peloton-launches-a-4000-treadmill-at-ces\/<\/a><\/p>\n

https:\/\/techcrunch.com\/2017\/01\/06\/peloton-commercial-at-ces\/<\/a><\/p>\n

https:\/\/www.cbsnews.com\/news\/peloton-launches-a-4000-treadmill-at-ces\/<\/a><\/p>\n

https:\/\/techcrunch.com\/2017\/05\/24\/peloton-is-now-a-unicorn-because-of-the-spinning-class-craze\/<\/a><\/p>\n

https:\/\/www.onepeloton.com\/bike<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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