So often in the world of subscriptions we talk about “the Netflix of…”. We refer to the Netflix of gaming or the Netflix of transport or the Netflix of banking.
I’m not criticising the practice; it’s a handy shortcut – a convenient explanatory device.
What it doesn’t do, however is give any sense of what the company in question is and whether its unique characteristics give it a chance of success (let alone Netflix-like ascendancy).
Peloton has launched in Australia and I think it has a strong chance of doing well in Australia.
But not just because it’s like Netflix. Actually, I think some of the reasons it will succeed are precisely because it differs from Netflix in meaningful ways.
But more important is how Peloton can address three pillars essential to the success of any subscription business: acquisition, growth and retention.
Acquisition
It goes without saying that it all starts with new customers, and Peloton is well placed to lure them. I use the term ‘lure’ advisedly: I don’t think their target market is predominantly people who’ve never taken an interest in fitness.
Those who already have gym memberships, use fitness apps and attend yoga classes need to be persuaded to make a switch or add another fitness subscription into the mix.
Peloton offers multiple features – bikes, training programs, music and merchandise. They also don’t specialise: they do cycling, walking, running, yoga, strength and meditation.
That variety is a good start, but on its own it won’t sway everyone. Those who have a gym membership will need further convincing, I imagine, and it will come down to cost.
Peloton has developed a reputation as something of an expensive option for fitness lovers. But how does it compare to a typical gym membership? Well it depends what you go for.
Peloton subscribers in Australia can choose the Digital Membership, which costs $16.99 with access to live and on-demand fitness classes, fitness tracking and playlists.
For a Peloton exercise bike, there are two choices: one at $2,895 dollars, and another for $3,695. At that point you’re eligible for the All-Access Membership, at $39 per month.
It has everything in the Digital Membership but is advertised as membership for your house hold. Family members can create individual profiles. It also offers features specific to the bike.
How do you calculate how the top-level membership and equipment purchase compares with your gym membership? Well, to coin a phrase, Peloton has an app for that.
Their online comparison tool lets you detail how much money and time you spend on fitness now and then gives you a look at your potential Peloton future.
It even gives an estimate of how quickly the bike “pays for itself”.
Growth
Once they’ve established a base of users, they’ll need to grow, and for Peloton I can see that happening through features such as their upgrade service.
It’s exceptionally easy to upgrade your bike through Peloton; they replace your old one so that you don’t need to do any lifting or organise the logistics.
This also allows them to keep their pricing simple, which I concede is very Netflix-esque. They don’t need to add new and potentially confusing ‘premium’ plans because they can be confident growth will come in great part from the equipment.
Retention
No subscription remains viable for long unless it can churn down and I foresee Peloton doing that by offering an excellent, and (they would assert) ever-improving experience.
The Peloton community is one of the company’s biggest, but perhaps least discussed, assets.
Users talk about connecting with like-minded people of a similar level of fitness. The whole system supports encouragement and development of friendly rivalries.
That puts the offer in stark contrast to a lot of competitors, and certainly to gyms, many of which aren’t renowned for the solidarity or fellowship among members.
Peloton allows subscribers to freeze subscriptions for up to three months in the first year.
That’s sensible for just about any subscription business, but particularly so in home fitness, where an injury or illness can render a membership temporarily but completely worthless.
I don’t think Peloton is the Netflix of fitness. I don’t think it will succeed in Australia simply because it streams fitness classes for under $20 a month.
But I do know that its founders were heavily influenced by Netflix as they created their company. And by Apple. And by Amazon.
And what these companies all do well is give people what they want when they want it. If what Australians want is a multifaceted, anytime, at-home fitness service to replace (or complement) their gym memberships, Peloton will go just as well here as it has elsewhere.
Nick is Zuora’s Subscription Strategist for ANZ – helping businesses make the shift to the Subscription Economy. He specialises in revenue growth and marketing strategies across a range of sectors including digital media.
