By Gene Munster of Loup Ventures
We’ve said it before, but it’s worth repeating: Apple + Peloton would be a match made in heaven. After testing Peloton’s new Peloton Digital offering ($19.49 per month), we think Peloton and it’s growing content library would fit nicely in the Apple ecosystem.
Peloton elegantly combines hardware (bikes, treadmills), software (the Peloton app), and services (Peloton Digital) — all based on innovative workout content – in the personal fitness space, an area of intense interest for Apple. Within Apple’s new Apple as a Service paradigm, including their concerted effort in original content, acquiring Peloton would make a lot of sense.
Testing Peloton Digital. Like its close competitor, Aaptiv, Peloton Digital offers a deep library of original workout content. And with video, in particular, Peloton is writing the playbook for innovative entertainment content across new viewing categories. The service offers more than 10,000 live and on-demand classes for cycling, running, bootcamp exercises, outdoor exercises, and strength training. Peloton Digital is a broader, higher quality, lower cost workout solution compared to a typical gym membership.
Among the team at Loup Ventures, one of us has a Peloton bike and loves it. One of us has been a Peloton subscriber for a few months hacking the cycling classes for use on an elliptical — a jerry-rigged Peloton Digital approach before it was launched. The addition of running and outdoor (audio) classes adds meaningfully to the user experience and the opportunity for Peloton.
We tested the ’30 min 5K Race Prep’ class led by Matt Wilpers, an audio-only on-demand running class. It was a great workout. The coaching talent, music, production quality, motivation, and overall experience seems hard to improve upon.
Creating empathic experiences. Our thesis on empathic retail extends to the fitness space and applies to Peloton. In short, Peloton is leveraging technology to create a personalized yet communal workout experience. The live and on-demand classes are intentionally relational, taking the experience to the next level. Peloton will succeed if they can continue to build a community to provide an empowering experience across as many use cases as possible.
Apple’s interest in fitness and content. The Peloton Digital experience was seamless with an iPhone, Apple Watch, and AirPods. Apple Watch is now the most popular watch in the world; we estimate it will generate nearly $11B in revenue in 2018. We think the success of Apple Watch is borne partially out of Tim Cook’s personal motivation to improve global health and wellbeing, which is an important factor here. Apple’s fitness ecosystem includes hardware (Apple Watch, AirPods, and Beats headphones) along with software (watchOS, iOS, App Store apps, and health-focused tools like GymKit, HealthKit, and ResearchKit) — but the company doesn’t own the content.
Apple is betting billions on original content (see more here). While the company may just have third parties like Aaptiv, Nike, Peloton, and others continue building the Apple fitness content ecosystem outside of its control, acquiring Peloton would also make sense. Just as Apple is investing in original entertainment content, acquiring Peloton would seriously bulk up its fitness content and services.
Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.