Peloton
Rethinking its strategy, Peloton is piloting a new pricing model.
Shifting gears. Replacing founder John Foley after the company cut 2,800 jobs, Peloton’s new chief executive Barry McCarthy is attempting to engineer a turnaround.
Step one: testing a new kind of connected fitness bundle.
Members only. From its inception, Peloton paired hardware and content, charging a premium for its smart bike, plus a $39/month subscription for classes.
In search of profitability, McCarthy is shaking things up, unveiling One Peloton Club. For a $60–100 monthly subscription, members receive their workout equipment and access to Peloton’s fitness content.
If a customer cancels their subscription, Peloton takes the bike back free of charge. Members also have the option to purchase the bike outright.
Peloton-as-a-service. Likening it to the “Apple of fitness,” equipment was central to Foley’s vision for Peloton, generating twice as much revenue as content subscriptions.
But, during the pandemic, hardware margins sank as the company struggled with production and logistics costs.
Now, according to the WSJ, the role of hardware is up for debate: “Mr. McCarthy said it isn’t yet clear the role Peloton machines will play in the company’s future.”
Instead, McCarthy is emphasizing content and software in an effort to reach new customers and maximize subscription revenue.
Between the lines. As the pricing pilot plays out, it will be interesting to see how companies running the Peloton of ‘X’ playbook are impacted.
Punchline: As the future of fitness takes shape, the bundling and unbundling of exercise has only just begun.
