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During Apple’s fall event, the company announced Fitness+, a new subscription service with deep integration with Apple Watch that will be available later year this on iPhone, iPad, and Apple TV for $9.99/month or $79.99/year.
Immediately after the announcement, I saw snarky tweets saying RIP Peloton, and they all came from people who don’t understand the appeal of Peloton or what makes it special. Peloton’s video content is just one part of the appeal of the company. The hardware (Bike/Tread), software, and video content combined are what makes a Peloton magical for its customer. It’s certainly cheaper to buy your own bike, sign up for Peloton Digital, and just watch the classes while you ride. People who choose Peloton are buying the entire experience with deep integration of all the pieces working together, though.
It should sound very familiar if you’re an Apple fan. There are less expensive computers that often have more powerful hardware than the Mac. There are often phones that have similar functionality to the iPhone for less money. Apple fans pay a premium for the tightly integrated experience with Apple devices, just like Peloton customers do with Peloton hardware.
With Fitness+, Apple is offering on-demand classes with a variety of workouts with a team of trainers. It’ll have workouts in the Activity app show the watch metrics on the screen, and offer Apple Music integration (similar to Peloton), but outside of that, it’s really just video-based workout content. It also lacks the live classes that are very popular with Peloton fans.
One could make the argument that Fitness+ is a competitor to Peloton Digital, and that is true. Peloton Digital isn’t a profit center for Peloton, though. During their investor and analyst event from yesterday, John Foley confirmed as much when he said, “It isn’t really a business.”
‘They’re not coming into that [hardware] category,’ Foley said about Apple. ‘They’re just going to be the content. And we think the special sauce, the magic, is our connected platforms and in order to work out at home you need a stationary bike if you’re going to be biking, you need a treadmill if you’re going to be running.’
Peloton Digital is a loss leader/marketing tool. It’s a way to get people used to working out at home, and the goal is to move someone to Peloton hardware with a higher monthly subscription.
I would argue that Fitness+ could be a beneficial product in the end for Peloton. If more people get used to working out at home, they’ll be more likely to buy a Peloton hardware product. Until Apple moves into exercise hardware, they’re really more of a competitor to someone like DailyBurn and the countless other fitness content apps on the App Store. People who love their Peloton bikes and treadmills love them for reasons Fitness+ doesn’t even begin to touch.