Peloton cancels free app membership | Wilnesh News

Peloton The company has quietly removed unlimited free memberships to its fitness app less than a year after its launch because the program failed to convert users into paying subscribers, the company said.

Peloton has dropped its free option for new users over the past few weeks, which was once a key part of its business growth strategy. Peloton said users who signed up before the company’s unlimited free membership was canceled will continue to have access to it.

New users looking to work out with the company’s app can now only access two tiers, which cost $12.99 per month or $24 per month, with the option of a seven-day free trial.

Last May, Peloton debuted a dramatic rebranding that positioned the company as a national fitness company and put its digital apps at the center of its marketing efforts. The rebrand brings a new tiered app strategy that includes an unlimited free membership option and two additional paid tiers with different levels of content.

The rebranding comes as Chief Executive Barry McCarthy hopes to transform Peloton from a hardware-focused company to one also invested in apps. With the company’s sales steadily declining, he’s working to attract new customers who may be interested in the brand but aren’t willing to spend thousands of dollars on its equipment.

McCarthy, ex. Netflix and Spotify Executives have long wanted a free tier for the company’s apps. He had bet that free users would fall in love with Peloton’s content and then, after trying the app and deciding they wanted more content, would opt for a paid membership, which included a wider range of classes.

The bet appears to have failed.

McCarthy told investors in November that the relaunched product “has been less successful in attracting and retaining free users and converting them into paying members” than the company expected.

Soon after, the unlimited free tier was no longer available.

period Morgan Stanley At the March meeting, finance chief Liz Coddington said the company “quickly” learned that the free tier was “cannibalizing” efforts to convert free trial members into paid subscribers, which led the company to move to a free trial model.

“It’s important to know that our app is still in development. We still have many opportunities to improve it,” Coddington said. “What we found was that we needed to find ways to better engage them during the trial period, get them to convert to a paid model, and then keep them engaged over time so they would retain them at a higher rate… when When we do this, we believe our marketing effectiveness will increase because we will have better retention and higher conversion rates.

Although app subscribers fell in Peloton’s fiscal second quarter, which ended Dec. 31, Coddington said the company still “believes” in its app strategy and that it remains “an important part of the business.”

Peloton shares fell more than 6% on Monday as of Friday’s close and have fallen more than 45% this year. The company’s market value has shrunk to about $1.2 billion, a drop in the bucket compared to the $47 billion Peloton had at the height of its success during the Covid-19 pandemic.