Commentary

Peloton Users Are Like Other Video Streamers - Where Is The Long-Term Deal?

In Tour de France parlance, Peloton Interactive has been dropped on the climb. The stock price has fallen dramatically over the past year -- around 80%. And the company -- no surprise -- is seeking changes.

How out of shape is it?

CNBC says internal documents show the company has temporarily halted production on its high-priced bikes and treadmills. Peloton CEO John Foley says this report isn’t accurate; however, it is considering layoffs.

That aside, what about Peloton's streaming video business -- the connective tissue to long-term growth for everything fitness connected on Peloton?

Streaming of its fitness content is 33% of Peloton’s overall revenue. Over the past 12 months, it has generated over $1 billion in subscription revenues, according to Bernie McTernan, media analyst of Needham, where it was estimating 20% to 30% growth, speaking on CNBC on Friday.

Peloton had over 5.9 million members on its platform. 2.33 million people subscribe to Peloton's connected-fitness membership, according to the company.

For sure, Peloton bikes and treadmills can be a major investment for fitness-inclined consumers, with a mighty price tag of anywhere from $2,200 to $3,000, depending on the model. That can bring in big revenues. Paying for this equipment can be typically worked into monthly installments, packaged in with streaming subscriptions.

The analysis here is that fitness during the pandemic has resulted in a boom-and-bust trend. Pandemic aside, this can be the territory of fitness/sports related companies with a digital media bent. Fitbit, GoPro and others have had to adjust to the sharp up-and-down churn demand from wannabe-fit, sports-centric consumers.

Proponents might say all is not lost. Consumers are increasingly seeking more convenient ways to stay active -- now believing they don’t need an out-of-home health club.

Overall, video streaming has given consumers/workers/students the belief they can get much done, efficiently, without leaving home -- along with a few pieces of equipment. Perhaps much of this has been oversold. Still, people want to do more stuff at home -- work, education, fitness, and entertainment -- virtually by a video/TV screen.

Back to Peloton’s slowdown -- and maybe a shift to other fitness ways: Cycling equipment revenue was up 15% to $8.5 billion in the 12 months ending July 2021, compared to the previous year, says The NPD Group.

Maybe prospective or existing consumers really just want to ride a bike -- outdoors -- some time.

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