Despite its status as a whimsical world phenomenon

Despite its status as a whimsical world phenomenon

Spoiler alert! Yes, John James Preston, aka Mr. Big, is now dead and buried, since the first episode of the miniseries “And Just Like That”, released late last year by HBO as a continuation of the television success of the late ’90s “All About Sex”. On the fateful day of the broadcast, the shares of the American fitness equipment manufacturer Peloton fell by 11.3%, to their lowest value in the last 19 months. The disaster continued the next day, with a decrease of another 5.4 percent. And all this just because the character played by actor Chris Noth suffered a fatal heart attack immediately after finishing an indoor cycling session led by a Peloton coach.

The wheel spins

When it comes to home cycling, Peloton’s $ 1,500 stationary bike is not necessarily special. Not even at a glance. It has a sleek frame, a big screen, a wi-fi connection and so on. But even so, a combination of inspirational advertising and online courses taught by charismatic instructors have helped the company sell nearly 600,000 bikes and treadmills in just five years.

Richard Branson is an avowed fan. So are Jimmy Fallon, Kate Hudson and the Obama family. And with them, 2.33 million paying users of online services, at an annual retention rate of over 92%.

However, while the company – and implicitly the price of its shares – has seen a sharp rise in the first year of the pandemic, the initial momentum is fading as the world begins to return to gyms. Chris Rondeau, chief executive officer (CEO) of Planet Fitness – one of the largest fitness club franchises in the world – revealed in late November 2021 that its membership had reached an “incredible total of 15 million people.” , given that the company’s halls were closed for months on end, and when they reopened many people hesitated for a long time to cross their threshold.

“In the run-up to the pandemic, our peak was 15.5 million. We recovered 97%. We had the largest quarterly increase in customer base in the company’s history. People choose “bricks and mortar” and join our clubs faster than ever. The wind is blowing in the right direction, and the sails are wide open, “said Rondeau, and his comment led to an 11% increase in the company’s stock portfolio to a maximum of $ 92.25 / piece.

In the world of virtual cycling, competitors and imitators are moving aggressively, and the madness of “boutique spinning” has begun to wane. Peloton started 2021 with a market capitalization of $ 45 billion, after a 440% increase in 2020, and then ended it at a value of around $ 15 billion. “It’s clear that we underestimated the impact of reopening gyms on our company and the industry as a whole,” said Jill Woodworth, the company’s chief financial officer (CFO), late last year.

Mandatory status

The idea of ​​Peloton naturally came from a fan of indoor cycling. John Foley, a technology director who previously ran Barnes & Noble’s e-commerce business, founded Peloton in 2012 and became its CEO. He was a fan of spinning studios like SoulCycle and Flywheel, which became popular for their training on catchy music supported by overflowing energy instructors. But as a parent of two children, it became increasingly difficult for him to get to the gym. So he created Peloton to bring the SoulCycle atmosphere straight into people’s homes.

In 2014, Peloton began delivering the first stationary bicycles connected to the Internet and with an attached screen, charging $ 39 per month for access to online courses. Foley also opened showrooms in malls across America, where people could test their bikes and training programs.

Sales grew rapidly, and Peloton’s spinning instructors became celebrities, with hundreds of thousands of followers on social media. Online communities of Peloton cyclists have sprung up, with people applauding their workouts, gossiping about instructors and sharing fitness tips.

Jed Katz, a partner at investment firm Javelin Venture Partners, which has personally invested in Peloton since 2012, once said he was surprised to find that a stationary bike could “go viral so quickly.” “Peloton has become a must-have product,” he said.

Since then, at least a dozen rivals have been selling Peloton-style “studio” bikes. Echelon, for example, a company funded by the investment firm of Jay Galluzzo, one of the co-founders of Flywheel, started with a blatant imitation of Peloton bikes, which it launched on the market at a price of $ 899.99. Lou Lentine, president of Echelon Fitness Multimedia, openly acknowledged the similarities with Peloton, but stressed that his company’s models are more affordable.

With an estimated market value of over seven billion dollars and more than five million users in 120 countries, iFIT Health & Fitness Inc. it also sells internet-connected bicycles at prices of about half that of the Platoon. Its online courses are available in English, French, Spanish and Mandarin, with annual family or individual subscriptions priced between $ 180 and $ 396. Colleen Logan, vice president of marketing, says she incorporates more technology than Peloton, which she did not hesitate to describe as “” old fashioned”.

And here it is…

Other startups have taken the Peloton model to combine different types of fitness equipment with a monthly subscription to high-speed streaming courses and applied it to other sports. Hydrow, formerly known as Crew, is the “Rowing Squad”, while the FightCamp is the “Boxing Squad”. And statistics show that such offspring have so far attracted investments of over $ 200 million. “Call it a sport and you’ll see that someone is trying to be their Platoon,” says Javelin Venture Partners, Jed Katz.

One (other) indoor cycling platoon also wanted to be Flywheel at one point, which launched a stationary bike and a streaming service in 2018. Peloton accused the spinning studio chain of violating several of his patents and went to court. At the end of February 2020, Flywheel announced in an email to its customers that it would stop offering online cycling lessons and that they would be able to replace their Flywheel Home Bike bikes with reconditioned Peloton bikes at no additional cost than his rival’s monthly subscriptions.

Becoming a mandatory pandemic symbol of social status, with waiting periods of more than two months to be delivered to buyers, Peloton bikes now risk the fate of NordicTrack in the 1990s: high-priced training equipment that it suddenly turns into a piece of clothing, so that it is eventually abandoned in a storage space or sold for little money to the first interested buyer.

The signs of Peloton’s post-lockdown cultural decline are hard to ignore. The company’s revenue fell by almost $ 1 billion in 2021, and the second-hand online sales market is now oversaturated with its bicycles.

And the recent appearance of a flagship product of the company as a key element in a plot with a tragic ending certainly does not help either. On the weekend after the broadcast of the infamous episode of the miniseries “And look like this”, a user of the equipment shared on Instagram a movie in which he appeared taking his Peloton stationary bike out of the house, with the message “And look like this”.

The movie comes to life

After the death of Mr. Big, described by Vulture as the worst advertisement for the Platoon ever made, the company quickly released a video with nuances of parody in which it focused on the health benefits of its bicycles. In the 38-second video, titled “Mr. Big is alive! ”Chris Noth flirts with real-life Peloton instructor Jess King, whose virtual incarnation led Big’s fatal training. Against the romantic backdrop of a Christmas fireplace and a Beethoven sonata, Noth suggestively raised an eyebrow, seeming to glance at the bedroom, and asked, “Shall we do it again? Life is too short for us to take another turn. ” A different angle of the camera then reveals two Peloton bikes, and actor Ryan Reynolds starts talking in the background about the health benefits of cycling.

Very well received by internet users, the production did not have a long life either. Actor Chris Noth has been publicly accused of sexual assault, and Peloton has removed any association with him from his media accounts.

Big brands have been using the power of product placement on television for years (an advertising segment estimated at the end of last year at $ 20 billion). And some of them clearly take it more seriously than others. Apple, for example, is known for not allowing negative characters to use iPhones, regardless of the size of the production. See the latest example, “Don’t Look Up”.

In the case of Peloton, the company only knew that one of its bikes would appear in the new HBO series and that Jess King would play a fictional instructor, but without any other details regarding the script. “For reasons of confidentiality, HBO has not previously disclosed the broader context surrounding the Peloton scene,” said Denise Kelly, the company’s spokeswoman.

Left with the “unrecovered” honor, Peloton now has at hand the theoretical solution to a dispute. However, in such cases, “TV producers usually claim it’s fiction, and it’s obvious to viewers that what they see isn’t real,” said Beth L. Fossen, a marketing professor at Indiana University in Bloomington. US).

However, given that one of Peloton’s treadmills caused the death of a child last year, the resemblances to reality no longer seem exactly coincidental, and the fictional argument may not work as well, according to David Schweidel. , professor of marketing at Emory University Goizueta Business School, Atlanta (USA). So far, Peloton has not made any official announcement in this regard. And so, his actions continue to get out of hand.

PHOTO: Getty