A stationary bike inside a Peloton store is pictured in the Manhattan borough of New York, the United States, January 25, 2022.
Carlo Allegri | Reuters
Platoon quietly removed its free, unlimited subscription tier on its fitness app less than a year after launch because the initiative was failing to convert users into paying subscribers, the company said.
Peloton abandoned the free option for new users, once a key part of the company’s growth strategy, in recent weeks. People who signed up for the company’s free, unlimited membership before it was removed will continue to have access, Peloton said.
New users who want to workout with the company’s app now only have access to two tiers that cost $12.99 per month or $24 per month, with the option of a seven-year free trial. days.
Last May, Peloton launched a splashy new image that presented the company as a fitness company for everyone and placed its digital app at the center of its marketing campaign. The rebranding brought a new tiered app strategy that included the unlimited free subscription option and two other paid tiers all having different levels of content.
The rebranding came as CEO Barry McCarthy sought to transform Peloton from a company focused on its hardware to one just as invested in its app. As the company’s sales steadily declined, he worked to win over new customers who might have been intrigued by the brand but weren’t willing to shell out thousands of dollars for his equipment.
McCarthy, a former Netflix And Spotify executive, has long wanted a free tier on the company’s application. He had bet that free users would fall in love with Peloton’s content and then turn to a paid membership, which includes a much wider variety of classes, after trying the app and deciding they wanted more.
The bet appears to have been a failure.
McCarthy told investors in November that the relaunch had been “less effective in engaging and retaining free users and converting them to paid subscriptions” than the company had expected.
Shortly after, the unlimited free tier was no longer available.
During Morgan Stanley At a conference in March, CFO Liz Coddington said the company “quickly” learned that the free tier was “cannibalizing” efforts to convert free trial members into paying subscribers. , leading the company to move to a free trial model.
“It’s important to know that our app is still a work in progress. We still have many opportunities to improve it,” Coddington said. “What we found is that we need to find ways to better engage them during the trial period, get them to convert to paying, and then keep them engaged over time, so that they keep a higher rate. …When we do this, we believe our marketing effectiveness will improve, both because we will have better retention and better conversion rates.
While app subscribers declined during Peloton’s fiscal second quarter ended Dec. 31, Coddington said the company “still believes” in its apps strategy and remains “an important part of the company”.
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