12 October 2018

Eat, sleep, spin, repeat: the rise of at-home fitness

A new type of high-end gym class is coming to a home near you. Courier investigates the status of the at-home fitness market.

Two years after setting up a fitness studio in Texas, Denis Morton was headhunted by a young competitor looking for new instructors. He was invited to New York to do a taped audition for the company. He was intrigued: in all his time as a spin instructor, he’d never done a class on camera.

The company in question was Peloton, a US-based at-home-fitness brand. Its £1,995 high-tech bikes come equipped with touchscreens that Peloton subscribers – of which there are now more than a million – use to stream classes from the comfort of their own homes.

Each of the 100 weekly live classes, ranging from intense 30-minute interval-training rides to endurance classes accompanied by live DJs, is broadcast to roughly 500 spinners across the US, while there are over 10,000 archived classes on the platform that can be played on-demand. 

The brand’s high-energy instructors are a big part of what keeps customers paying the £39-a-month subscription fee on top of the cost of the bike; Morton is one of the most popular Peloton instructors, with 18,500 followers on Instagram and his own clothing line with the company. To get the job, he had to convince the Peloton management that he was worthy of the air time. 

‘They let me in the studio, showed me where the cameras were, and told me the cues. I had two of the production staff in the front row on bikes,’ he explains. ‘I had three or four songs to show them who I was and what I did on a bike, then we jumped off, wiped down, shook hands and left.’

He’s since been given feedback and coaching on how to perfect his teaching style for at-home audiences. ‘It’s like a small town preacher becoming a televangelist,’ says Morton of his transition to the big screen.

Now, instructors in the UK are going through the same process as Morton. Across September and October, Peloton will officially launch in the UK and Canada, its first international markets, and it wants instructors with British accents that can help encourage the sense of community that it’s already built in the US. If all goes well, Peloton will roll-out across Europe and, eventually, Asia. For a company that started just six years ago it’s been a rapid growth trajectory. Peloton is now worth £4bn – a valuation which has quadrupled in the last year.

The at-home-fitness formula

Exercise bikes and at-home fitness tapes are nothing new (see box, p45). So what makes Peloton so popular? In part, increased interest in health and wellness has created an environment for Peloton to take advantage of. 

The rise of boutique gyms and expensive classes in big cities has been hard to ignore, too, from spinning studio Soul Cycle in the US to fitness studio 1Rebel in the UK. Health clubs generate £84bn each year globally, and subscription businesses such as New York-based Class Pass and Singapore’s Guava Pass have launched with the sole purpose of giving people unlimited access to these boutique classes across multiple venues, with a single membership. 

But these new entrants are still struggling with the same problems as incumbent gym groups: getting people to keep coming back. Most gyms lose around 50% of their customers annually, making customer acquisition an urgent and ongoing task, and encouraging companies to keep charging customers that aren’t using their gym memberships (11% of UK gym members say they haven’t visited their gym for over a year). ClassPass, meanwhile, has confused customers with its ever-changing pricing model as it tries to make the numbers work: when the US firm launched in London in 2015, customers received unlimited classes for £79 per month. Now it’s moved to a credit-based system, where £65 per month buys around five or seven classes. Even the fitness wearables market has struggled to hold interest. After pivoting from headphones to healthtech in 2011, with a bracelet-style fitness tracker, Jawbone was eventually forced to shutter its business in 2017. 

Frederic Court, an investor at Felix Capital and Peloton backer, says there are two major differences between going to the gym and hopping on a Peloton bike. First, the convenience of being able to work out at home – particularly for customers that don’t live in big cities, near a Barry’s Bootcamp fitness franchise or even a more traditional gym – can’t be beaten. Second, Peloton has built a community of fans which is far more important than the bike itself. 

‘Peloton has done something that’s very hard to do: combine hardware, software, content and community,’ he explains. A search for #Peloton on Instagram comes up with over 160,000 posts of people sharing their ride stats and photos of their bikes. Other brands are following Peloton’s lead, creating high-tech fitness equipment that’s designed for use in the home, with the global fitness equipment market expected to be worth more than £9bn by 2022. 

By positioning fitness equipment as something which provides a connection to a wider community at a time and location that’s truly of the user’s choosing, they are providing something that wearables (which are convenient but designed for solo training) and the gym experience (which provides personal connections in exchange for travel time) have never been able to do.  

Virtual fitness company Mirror, founded in New York in 2016 by former professional ballet dancer Brynn Putnam, has launched a £1,150 smart mirror, coupled with a £30-a-month fitness class streaming service. It’s essentially a giant, wall-mounted iPad featuring speakers, a camera and microphone. Users can watch classes from a variety of fitness disciplines – pilates, boxing, ballet-inspired barre – and compare their reflection to that of the on-screen instructor to ensure their form is on point. The business, which came out of stealth mode in September, has raised £29m in funding to date.

There’s also San Francisco-based fitness startup Tonal, which launched in the US in August and focuses on exercises using weights. Its ‘strength system’ – a weightlifting machine and wall-mounted screen – costs £2,307, with a £38-a-month add-on for users that want access to a personal trainer and recommended workouts via the platform. 

The weights on the Tonal machine aren’t heavy until you switch it on; the ‘digital weight’ is controlled using electromagnets and can be adjusted depending on what exercise is being performed. It’s expensive, but it’s a lot more compact than a full set of kettlebells. 

Gym class in the bedroom

At the opposite end of the price spectrum, other young businesses across the UK and US are experimenting with streaming apps and services, creating ‘Netflix for fitness’ offerings. The advantage for these businesses is that it’s cheaper to get customers on board – after all, it’s not only the luxury end of the fitness market that’s been booming. Five of Europe’s top 10 revenue-generating gym groups are low-cost operators.

Yogaia, which streams live yoga classes (filmed in its studio in London) to over 15,000 paying users, costs £90 per year and has no upfront equipment costs. Our Body Electric streams a range of classes filmed in its softly-glowing New York studio – from HIIT to dance workouts – for £21 per month. 

Others are creating small, lower-cost wearables that can be used instead of a full-sized spin bike. Fiit, launched in the UK in April, sends users a wearable device to track just how hard they’re working out while streaming some of its prerecorded classes to their TVs or phones. A subscription membership comes in at £20 per month, and includes a free device, worth £65.

‘It’s all a bit Black Mirror,’ says Fiit founder Ian McCraig, referring to the British TV show’s vision of a future where hoards of lycra-clad, Fitbit-wearing people exercise together, but alone, in front of a screen in their bedrooms. ‘I do believe that if we look forward five-to-10 years, at-home fitness will become the norm.’ The numbers back him up: while gym membership is growing 3-4% per year, digital fitness is growing 40-50%.

McCraig, who spent four years living in the US and watching companies like cycling app Strava and workout app Freeletics take off, says what sets these – and streaming apps like Fiit apart – are the same key characteristics that their high-end competitors rely on: they’re all convenient (no 45-minute round trip to the gym) and they’re all building a sense of community among customers.

‘For most people, fitness is like doing the cleaning,’ says McCraig. ‘Strava gamified cycling and running, and added a community aspect to it.’ Users of the app see their workouts ranked against others, and can follow friends; there’s added motivation to keep working out. 

‘We’re trying to make fitness a bit more like a computer game,’ adds McCraig – users can earn points, hit personal bests, challenge friends. ‘Gamified fitness is going to be so critical in making fitness stickier and more addictive at home.’ 

Similarly, Peloton users can see how many people are doing a particular class at the same time as them, how they rank against one another, and can also send motivational ‘high-fives’ through the touch screen.

US virtual reality fitness company VirZoom makes fitness even more futuristic: it’s building a marketplace of VR workouts. Customers can pick a location or activity – flying Pegasus, cowboy lassoing, a cycle tour – to load onto their personal VR headset, fit their usual bike to training blocks or use a standard stationary bike, attach VirZoom’s sensors and take a fantasy ride. In January, the three-year-old company raised £3.9m to expand into gyms worldwide.

Beyond wearables and headsets, smart sports clothing could also add to the at-home fitness boom. While instructors may not be able to physically correct a student’s downward facing dog or dead-lift technique, there are now smart leggings that can, for example, measure whether someone is in the right position. Wearable X, a US-based fashion tech company which launched in 2013, has created a range of leggings which use vibrations to help the wearer get into the right yoga position.

At home with the old bike and chain

Fortunately for the smaller players, having a flush business like Peloton leading the charge – it raised £422m in funding in August, and is rumoured to be planning to IPO next year – is going to help customers get on board with the idea of at-home fitness. ‘Peloton is going to educate people on how easy it is to do fitness at home,’ says McCraig.

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