What Peloton’s rising pains imply for at-home health

When fitness studios and fitness boutiques closed their doors in early 2020, it was the moment when fitness technology could shine. Stuck at home, people needed new ways to stay active – and for many that meant entering the world of connected fitness. Nintendo Ring Fit Adventure was nowhere to be found. Fitness influencers turned to Instagram to broadcast live workouts. Even big tech companies started digging into wearables or launching their own on-demand fitness services. But nobody had a year like Peloton.

Ironically, Peloton kicked off 2020 thanks to a terrible vacation commercial that went viral as the target of all jokes. A few months later, no one was laughing anymore. When the lockdown began, Peloton initially offered a free 90-day trial of its app – no bike purchase required. By mid-2020, Peloton said it had 1.1 million subscribers and was posting its first profit. Amid severe delivery delays due to skyrocketing demand, Peloton lowered the price of its original bike and launched two new products: the Bike Plus and a cheaper treadmill. By the end of the year, the company had spent $ 420 million to buy Precor, one of the world’s largest commercial fitness equipment manufacturers. It started in 2021 with another $ 100 million to fix shipping delays and another $ 400 million to build a factory in Ohio. The millions cut in investment then fueled rumors that the company was working on new products ranging from wearables to rowing machines.

Peloton signaled it was slated for a resilient future after the pandemic. It seemed like nothing could stop this dynamic – at least until a few months ago. Over the summer, Peloton recalled its two treadmills after reports of multiple injuries and, in one case, the death of a child. With the COVID-19 vaccines, restrictions were relaxed and people were returning to the stationary gyms in droves. Sales stalled despite Peloton cutting the price of its original bike to $ 1,495. In a reversal of fortune, Peloton recently reported a net loss of $ 376 million for the first quarter of 2022 and sent its stock into free fall the same day Planet Fitness exceeded expectations. Peloton CEO John Foley admitted in a call to investors that the company misjudged how things could change after people returned to normal lives.

The Peloton brand made a name for itself last year. 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 template for everyone else.

But if everyone copies Peloton’s playbook, it means they have the same pitfalls too

A case in point is the influx of peloton imitators. You have seen it before. Those dubbed the “peloton of their sport” because they aim at another fitness machine, slap a 20-inch touchscreen on it, and start a competitive on-demand service with leaderboards and upbeat coaches. There are dozen of these, from more established home fitness brands like Mirror, Tonal, and Hydrow, to niche startups that you’ve probably never heard of.

Each has adapted Peloton’s formula to suit a different type of fitness equipment and comes with their own prominent investors and financiers. Mirror has been featured on 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 assisted by Lizzo and Justin Timberlake. There are more obvious copycats out there too, like Equinox’s SoulCycle bike, iFit’s NordicTrack Commercial S22i Studio Cycle, and Echelon’s entire catalog of cheap bikes and treadmills.

Tonal requires a 12 month commitment and a professional installation team. Photo by Amelia Holowaty Krales / The Verge

But if everyone copies Peloton’s playbook, it means they have the same pitfalls too. Aside from obvious issues like cost, limited housing, and inconsistent motivation, connected fitness has an ecosystem problem. Many of these companies severely limit their expensive hardware if you do not subscribe to a membership and at the same time limit their digital content to this hardware. In Hydrow’s FAQ, it is expressly stated, for example, that “[membership] is an integral part of the Hydrow experience and should not be considered an optional part of shopping. ”If you choose to only subscribe to the Hydrow app, you will not be able to record readings from another rower. While you can log into a friend’s Hydrow with the app-only subscription, you cannot activate a new one if you decide to buy your own Hydrow even though you are already a paying customer. Likewise, Mirror won’t even let you use its app unless you’ve bought the hardware.

Linking hardware and software like this is intended to integrate customers into a fitness ecosystem and exclude everyone else. While most allow you to integrate your training data with Strava, the hardware generally only allows you to do one thing: stream a company’s workouts. You can’t download various entertainment apps or stream other workouts to a Peloton bike unless you’re willing to jailbreak it and void your warranty. The SoulCycle Bike is the rare exception that contains 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. In the end, you pay a premium for a device that can do only one thing.

It differs from connected fitness in that these closed ecosystems exacerbate old problems and create new ones

With smaller players, you run the risk of losing a ton of money if the company closes. That’s what happened last year when Flywheel lost a patent dispute with Peloton over its leaderboard feature. One day, Flywheel owners found out their $ 1,999 bikes were bricked with no other means than to eat up the loss or switch to Peloton. Flywheel must not end up as the only victim either. Peloton isn’t afraid of the courtroom. It’s been head to toe with iFit. The company also recently filed two lawsuits against iFit and Echelon alleging that the two companies’ products adulterated their on-demand content. In addition to calculating the rewards, evaluating the digital content, and making sure your home meets the installation requirements, consumers also need to research whether a company’s fitness ecosystem is designed for the long term.

Most of these problems are not new. Disposable exercise machines have been around for decades, taking up space in your home as expensive, glorified clothes racks when your New Year’s resolutions fizzle out. It differs from connected fitness in that these closed ecosystems exacerbate old problems and create new ones. Selling a peloton is more difficult than selling a regular exercise bike. (Forget about tonal, which must be built into the studs of your home by a professional team.) Warranties, prepaid subscriptions, and funding plans may be non-transferable or refundable. Moving the devices to another location is even more difficult thanks to the huge, fragile touchscreens. You may not even be able to place the device where you want it due to Wi-Fi and other installation requirements. Worst of all, even if you get all of this out, you’re still stuck with the monthly fees for as long as you have the device.

At the moment, experts seem to agree that connected fitness is following the same path as remote work is following the pandemic. With life back to normal, consumers will likely find a mix of the gym and home exercising when it is most convenient. But while investors rightly concluded that increased competition has caused Peloton, Hydrow, Mirror, and Tonal to increase their marketing spend, no one has answered why single-use devices, limited ecosystems, and expensive subscriptions are worth it for untested fitness startups to risk. Even Peloton stumbles, despite its dedicated community base, impressive 92 percent annual retention rate, and strong ecosystem of products and services. As the front runner in the field, Peloton can cope with some short-term setbacks. But if its competitors fail to solve this ecosystem problem, it bodes ill for its army of imitators.

Correction, 10:30 a.m. ET November 29, 2021: This article was edited to clarify that Hydrow’s app-only subscription doesn’t allow activation of a new device, but does allow signing in with a friend. We regret the mistake.