![\"Peloton's](\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/bike_screen_desktop_2x.jpg\")
<\/a>Peloton\u2019s value proposition to customers is straightforward: enable in-home access to immersive, high energy indoor cycling classes while saving customers time and money.\u00a0 Many customers are introduced to spinning by learning about or experiencing first-hand the energy of a spin studio such as Soulcycle, which in its IPO prospectus describes each class as \u201ctribal,\u201d \u201cprimal,\u201d and an \u201cemotional journey.\u201d\u00a0 Riders care about the perceived intensity of the workout as well as the verbal motivation and music playlist provided by the instructor.\u00a0 But for the most extreme users, spinning studios can be expensive and difficult to access.\u00a0 Soulcycle, for example, charges an average of $32 per class \u2013 nearly $130\/month for those who ride once per week, and that\u2019s before factoring in the value of time required to travel to the studios.<\/p>\n
By focusing on technology and digital content, Peloton has reduced the cost and increased the accessibility of spinning without sacrificing the unique energy present in in-person classes.\u00a0 After purchasing a $1,995 state-of-the-art spin bike and $39\/month subscription, Peloton customers can enjoy unlimited rides (for the buyer and his\/her family), delivered live and on-demand via a massive tablet mounted on the front of the bike.<\/p>\n
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Operating Model<\/strong><\/p>\n Peloton\u2019s 20,000+ subscribers are all served out of one studio in the Chelsea neighborhood of Manhattan. \u00a0On the surface, the studio appears similar to many others: a lounge with upscale coffee, juices and snacks, luxurious locker rooms, and a small clothing store.\u00a0 But behind the scenes is where the magic happens; the real purpose of the studio is to provide a \u201cset\u201d for the broadcasting of live classes.<\/p>\n Each class features an instructor (for motivational speech and instruction), a live DJ, and a cast of riders populated by walk-in, paying customers.\u00a0 A film crew manages the broadcast, which is distributed to hundreds of other concurrent\u00a0riders via bike-mounted tablets.\u00a0 The tablets provide an immersive high-definition view into the studio, which could be tens, hundreds, or thousands of miles away.\u00a0 Camera positioning and angles are dynamically managed by the film crew.<\/p>\n Peloton\u2019s 17 software engineers likely comprise the most sophisticated software engineering team in the at-home exercise equipment industry.\u00a0 To enable the at-home immersive experience, Peloton had to develop infrastructure to broadcast high definition video and audio, a custom Android variant with Peloton\u2019s application, and technology to manage a competitive leaderboard and save statistics to user profiles.\u00a0 Riders can measure themselves against others in the same class and video-chat with Peloton friends.\u00a0 In addition, the product works seamlessly with third-party heartrate monitoring devices.<\/p>\n Peloton from time to time will feature unique programming such as holiday-focused rides (to burn off unwanted calories, or \u201chaunted\u201d and \u201casylum\u201d rides around Thanksgiving, for example) and rides with professional cyclists.<\/p>\n https:\/\/vimeo.com\/112531429<\/a><\/p>\n Operating Model \/ Business Model Alignment<\/strong><\/p>\n Peloton is an example of effective alignment between operating and business models.\u00a0 Peloton\u2019s assets – coaches, DJ\u2019s, software, video producers, and its studio \u2013 form the basis for production of engaging digital content which is in turn distributed to Peloton bikes (purchased by the customer).\u00a0 Customers pay a monthly fee for access to the live classes, streamed 12 times a day and stored in a library for later on-demand use. \u00a0Customers respond to the sense\u00a0of community, even if they may be\u00a0pedaling remotely.<\/p>\n As Peloton scales, the firm will benefit from economics typical in digital content and software businesses.\u00a0 Whereas most firms in the home exercise equipment market maintain little to no contact with the customer beyond initial equipment purchase, Peloton receives recurring revenue and is able to measure user activity and engagement and use data to inform programming decisions. \u00a0Peloton could theoretically scale from 20,000 to 100,000 users with minimal additional cost, as the marginal cost to distribute video content to one additional rider is low (save for customer support and minor overhead expenses).<\/p>\n It\u2019s easy to imagine the potential to bring other interactive, immersive exercise experiences into the home, especially with the rapid progress being made in virtual reality, augmented reality and motion sensing technologies.<\/p>\n <\/p>\n Sources<\/p>\n \u201cWe feel like we\u2019re more akin to a Facebook or an Apple than a Soulcycle”<\/p>\n","protected":false},"author":536,"featured_media":6863,"comment_status":"open","ping_status":"closed","template":"","categories":[631,227],"class_list":["post-6751","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-peloton","category-soulcycle"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\n<\/a>\n