10 October 2017

The search for a digital fitness business model that sticks

It's easy to get people pumped. It seems harder to get people to pay for it.

It’s impossible to ignore the scaling problem fitness businesses run into. The need to have a great big building full of equipment, located close to where lots of people live or work, is expensive. To build several is even harder.

Facing this conundrum, many startups are experimenting with digital fitness.

There’s certainly a lot to play with today. The latest iPhone can track running routes, store accurate data, quickly load videos on techniques and have someone bark motivational phrases, all the while boasting about the results on Facebook.

Weak engagement

The attraction of a product based on a digital coach model is also clear: smartphones are now ubiquitous and, like anything digital, an enormous audience can be accessed without adding any major costs as it grows. That said, like anything digital, people are reluctant to pay, have a weak engagement and – in the case of fitness – they require a high level of self-motivation and discipline, which can be hard for a person, let alone a phone, to muster.

Among those having a go is Munich-based Freeletics. This hotly tipped tech business features a slickly designed app offering a fiercely demanding fitness programme through instruction videos that are low on fun but big on getting its users muscular physiques in an intensely short timeframe. It recently merged its running, bodyweight, nutrition and gym apps and added a clothing range.

Freeletics is only three years old but it claims to have reached 10 million users in June this year, although it won’t share how many keep using it, or how many have upgraded to the paid-for online coaches (£26 for three months or £60 for a year).

Crucially Freeletics doesn’t require users to have any equipment. The US firm Pelaton runs a similar business but requires its users to buy a spinning bike with a mounted screen to link up with live coaches, amp up the user peddling away in their spare room for £30 a month.

Investor belief

There remains considerable investor belief in digital fitness and tracking. The digital cycling app Strava has racked up more than £25m in funding, while Runtastic was snapped up by Adidas last year for a whopping £185m just six years after launching.

Elsewhere, fitness ‘personalities’ who have built extraordinary followings on YouTube and Instagram appear to be successfully finding a means to make money from their fame. Joe Wicks branded himself as ‘The Body Coach’, posting 20-minute workouts and nutritious meals. He claims to be making £1m in sales every month, having created a £147 fitness programme and even landing a Channel 4 show.

The fitness industry talks about a future around ‘gamifying fitness’, using social feeds and data with a vision that sounds like a grown-up version of Pokémon Go. But as with digital fitness so far, the underlying questions are whether people will pay for digital services, and – even more importantly – whether they treat the services as anything more than a novelty.

This story is taken from Courier Oct/Nov 2016.