Peloton Axes Unlimited Free App Membership in Short-Lived Experiment
The connected fitness company hasn’t converted enough free subscribers into paid ones to make its free app tier a success
Peloton has quietly discontinued access to its unlimited free-membership app tier after failing to convert paid subscribers, marking a new setback in the brand’s push to conquer the digital fitness content space.
The change, which doesn’t affect Peloton’s current free membership users and comes less than a year after its launch, was first reported by CNBC.
Peloton introduced three app tiers during its massive ‘more than a Bike company’ rebrand in May 2023: the free app, a $12.99/month Peloton App One and a $24/month Peloton App+ level for all of App One’s offerings and more.
As CNBC reports, Peloton CFO Liz Coddington stated that the connected fitness brand quickly learned that the free tier was “cannibalizing” its efforts to gain paid subscribers but indicated that Peloton hasn’t thrown in the towel just yet.
“It’s important to know that our app is still a work in progress. We still have a lot of opportunities to improve it,” Coddington said at the Morgan Stanley Technology, Media & Telecom Conference last month. “What we found is that we need to figure out ways to better engage (members) during the trial period, (so) that they convert to paid and then also keep them engaged over time so that they will retain at a higher rate.”
Peloton CEO Barry McCarthy had noted the challenges the brand faced converting free users into fully paying subscribers, ending fiscal Q2 of 2024 with 718,000 paid app subscribers, a net reduction of 44,000.
Peloton Tries New Things
Peloton’s various strategies for seeing what sticks post-pandemic have resulted in some quick exits. The company has already scrapped its collegiate hardware initiative of co-branded bikes. McCarthy also took aim at what he called a “particularly taxing” holiday season for members, including a Thanksgiving Day ride mishap, promising positive changes ahead.
“The member support experience has tarnished our brand, and we simply must do better,” McCarthy penned in a Q2 2024 letter to shareholders. “The team is currently in the middle of a reboot. New leadership. New systems. New third-party vendors. New training. New staff. I’m confident we’re on the right path this time.”
Peloton also welcomed a new chief marketing officer, Lauren Weinberg, succeeding Leslie Berland, who led the connected fitness company’s rebrand.
At the start of 2024, Peloton announced a unique deal with TikTok, delivering its fitness content on the app most used by Gen Z, leading to shares of PTON to surge around 14%. The collaboration gives Peloton a dedicated, co-branded space to target TikTok users, 60% of whom are Gen Z.
So far, the deal appears to be a success, with a Peloton spokesperson recently telling Athletech News that the collaboration has helped the brand new audiences and see a “significant growth in the viewership of the hashtag #TikTokFitness.”
Aside from its social media push, Peloton appears to be zeroing in on the minds of fitness consumers, releasing reports surveying the workout preferences of key demographics. One recent report highlighted the power of technology as a fitness motivational tool.
Do All Roads Lead Back to Hardware?
Ironically (and despite its intentions to shift from its reputation as a hardware-first fitness brand), Peloton has seen strong sales with its third-party retail deal with Dick’s and Amazon and its Bike rental model, which McCarthy says has attracted more diverse and younger consumers. Demand has also been “significantly stronger” than expected for Peloton’s Tread+, as treadmills appear to be undergoing a renaissance.
Peloton is anticipated to release its Q3 earnings next month.
