To say the at-home indoor cycling market is booming would be an understatement. Ignited by US-based Peloton back in 2013, when it first launched its bike on Kickstarter, the market has gained strong momentum over the last few years in particular. We’re seeing major new players enter the fray and a surge in consumer demand: recent research by Les Mills found that 85 per cent of gym members now also work out at home – and cycling is without doubt one of the disciplines seeing the greatest innovation and interest.

Peloton: Flying high

Let’s start with Peloton which, following months of speculation, in June revealed plans to launch an initial public offering (IPO). The number of shares and the price range for the proposed offering had, at the time of going to print, not yet been determined, but the announcement marks the culmination of a strong 12 months for the brand, which is currently flying high with 1 million-plus users, a US$4bn valuation, sales of US$700m+ in its most recent fiscal year, a predicted 6.2 per cent share of the US gym equipment market by the end of its current fiscal year, and successful roll-outs into the UK and Canada.

Peloton is also now gearing up for entry into its fourth market – Germany – later this year. This will mark the brand’s first foray into regular non-English language instruction, with bespoke content set to be created: German-speaking indoor cycling instructors will be added to Peloton’s roster, at this stage based out of Peloton’s London studio. Hundreds of existing English-language classes will also be made available with German subtitles.

Other plans for Germany include a network of branded retail showrooms in the major cities, allowing consumers to ‘try before they buy’; the bike can also be purchased online, retailing at €2,290 plus a €39 monthly fee to access classes.

While this price point may seem ambitious judged purely against the predominantly low-cost German gym market, in fact, the at-home market is a different story, says industry veteran Jon Johnston: “In my experience, the price point for home fitness products has held up better in Germany compared to other markets.“

Kevin Cornils, Peloton’s international managing director, is certainly confident, explaining: “Germany is Europe’s largest fitness market, where more than 10 million people belong to a gym, so it was a natural next step for Peloton.“ [Read our recent interview with Cornils here]

And as Leisure Database’s David Minton observes: “The reality is that Peloton will go everywhere, because it has so much money. In the last six years, it has spent US$1bn. If it spends the same again in the next six years, it could be in at least 100 countries.“

Back to Plan A

That said, things aren’t all rosy for Peloton, which has currently pulled out of the commercial space to focus exclusively on the at-home market – no doubt at least in part the result of its widely-reported lawsuit over music licensing. Observers do, however, predict a return to the commercial space – potentially with a new bike – once the licensing issue has been addressed.

And Peloton has unquestionably struck a chord with today’s convenience-driven, experience-led consumer. Global fitness industry observer Emma Barry comments: “Peloton was not the first to deliver at-home workouts by a long shot, riding the slipstream of greats before it, but this fit-tech unicorn has nevertheless delivered a software-hardware-subscription solution happily touting a 2-foot commute. It has raised the at-home stakes by elegantly connecting experience and community – linking riders to live-streamed NYC rockstars, and each other – and making it sticky enough to produce startling engagement: an average 13 rides per month.“

Boutique ventures

Little wonder, then, that Peloton has spawned a whole raft of copycats over the last few years.

Live streaming will be a great way for us to extend our brand to new audiences outside of London – 1Rebel.

Around the same time as Peloton announced its upcoming German launch, US-based Flywheel – with its 42 studios across the US – teamed up with Amazon to take its Flywheel Home Bike to a broader audience. The bike retails on Amazon for US$2,248 (with tablet) or US$1,948 (bike only), with two months’ access to Flywheel’s programming included for free. Although the bike originally launched towards the end of 2017, this new deal with online juggernaut Amazon marks a significant ramping up of Flywheel’s at-home ambitions.

And it’s surely just a matter of time before SoulCycle follows suit. “SoulCycle owner Equinox is looking at every opportunity to expand its reach,“ says Minton. “The space it has created in New York – with its first hotel alongside an Equinox health club, Rumble, SoulCycle all in the same place – shows the scale of its ambition. It won’t be long before we see Equinox and SoulCycle beamed into the home.“

Meanwhile, other innovations are harnessing the power of partnership to come to market, with each partner playing to their respective strengths: equipment manufacturers creating the hardware; operators coming on-board as content providers.

Late last year, Italian equipment manufacturer Technogym announced its entry into the dynamic at-home group exercise marketplace. Its Technogym Live digital platform – home to carefully curated class content – will be accessed through a range of Technogym Live equipment: a new bike, as well as other home equipment including a treadmill and a rowing machine, will all feature a special console. As with Peloton, users will be able to access live-streamed classes as well as a comprehensive on-demand library.

Classes on the Technogym Live platform will be created in collaboration with a specially selected line-up of operator partners – and this is where the boutiques come in again, with the line-up already including Virgin Active Revolution in Milan and London’s 1Rebel, which will be live streaming from its cycling amphitheatre in Victoria.

“We’ve been recording a catalogue of on-demand classes since January, and will be live streaming a number of peak classes when the bike launches, which I expect to be September,“ confirms 1Rebel’s James Balfour. “It will be a great way for us to extend our brand to new audiences outside of London.“

The Les Mills Virtual Bike was designed for the gym floor, but it’s easy to see how similar bikes could move into the home exercise space.

On-demand survival

And it’s easy to see how this market – equipment manufacturers partnering with content providers to create at-home solutions – might continue to grow and evolve.

Already on the market are a couple of products which, at this stage, have been designed with a B2B audience in mind – a way for operators to keep their gym floors competitive in an era where consumer expectations are being shaped by the likes of Peloton. The Les Mills Virtual Bike, created in collaboration with Stages Indoor Cycling, launched late last year, while a prototype of the Wexer Body Bike was showcased at FIBO 2019. Both products allow users to access a range of high quality on-demand virtual classes: the former focusing exclusively on Les Mills RPM, SPRINT and TRIP; the latter offering access to Wexer’s top cycling classes from a range of content providers, as well as complementary floor-based workouts which can be done post-cycle thanks to the bike’s 180-degree swivel screen.

Although currently B2B products, it’s hardly a stretch of the imagination to envisage similar bikes being made available for at-home use in the longer term. Indeed, Wexer Body Bike is already exploring options to allow operators to sell its bike to their members – potentially even white labelled with their own branding – for at-home use. “In addition to creating a new revenue stream for operators, this would allow gyms to extend their ecosystem into members’ homes,” confirms Body Bike CEO Uffe A Olesen.

And this is key to gyms’ survival in the on-demand economy, says HDD Group CEO Kim Hessellund: “Even though we have had time to prepare in Europe, it seems we’re still surprised by our ‘new’ competitors: many gyms still don’t have a clear strategy to compete in this space.

“We need to learn from Peloton’s B2C success and disrupt the disruptors, introducing new digital solutions that allow gym members to exercise anywhere, any time. I’m confident this flexibility would allow operators to offer a total health community in a way the likes of Peloton never could.“

“It’s not a binary conversation,“ confirms Barry. “While some consumers will prefer predominantly physical or digital experiences, most will converse with the greater ecosystem, consuming content when and where they choose – physically, digitally and everywhere in between.“

An exercise ecosystem

And why stop at simply selling bikes to members when, just as boutiques such as 1Rebel have already done, other operators could also become content providers themselves?

Minton continues: “I think we’ll see the merging of hardware and software quite quickly over the next two to three years. We’ll see more operators selling ready-made products: buying a bike with a live streaming facility, for example, which they can sell on to members and live stream their own classes. I can see the likes of David Lloyd Clubs doing something like this.“

It would certainly be a logical progression, as tech advisor and entrepreneur Bryan K O’Rourke explains: “We’re already seeing McFIT and other gym brands entering the content streaming business, and it’s just getting started. Brands will have to make decisions around how and where they wish to compete, given consumer expectations.

“Cloud computing, quality video production and enterprise platforms are already enabling businesses to deploy content solutions, at scale, more and more economically. You can launch streaming solutions relatively inexpensively. YouTube now has a subscriber model.

“The bottom line is that, if your content concept appeals to a certain segment, you – as a fitness professional or business – can already become a global provider to users directly. Indeed, there are fitness studios already making good money streaming their content to exercisers around the world.“

And this will only go up a gear as hardware and software move closer together, confirms O’Rourke: “There will no doubt be increasing competition, as several well-financed entrants are now planning on entering home cycling with equipment and platforms.

“There is certainly enough demand – people expect to have their fitness experience available to them whenever and whenever they choose – but more importantly the economics of delivery are going to become less expensive as well. When it comes to health and fitness as a frictionless service, what we’re already seeing is only the beginning.“

Good & bad news

All that said, Balfour is quick to sound a note of warning. “There’s good and bad news about the at-home market,“ he says. “There’s a proven model of demand and Peloton has low attrition rates, although that isn’t overly surprising: once you’ve bought a US$2,000+ bike, you’re unlikely to switch to another brand unless you have a terrible experience, and you also tend to keep paying the monthly fees.

“However, as far as I’m aware, Peloton hasn’t yet made a profit. It has dominated the market with a first-mover advantage and spent a lot of money to drive a big valuation – some sources are even touting £8bn as a pre-IPO price – but we shouldn’t be side-tracked by this. Although this trend is here to stay, ultimately nobody knows the value of this market; given we’re talking about US$2,000 pieces of home equipment, it has to be finite.

“It’s also important to recognise that, although I personally believe Peloton risks spending too much to grow, its price tag and consequent retention rates could mean its first mover advantage clinches a ‘winner takes all’ situation. Even if it doesn’t, the market is about to get very crowded.

“For me, the important thing is to be pragmatic. Certainly, in our venture with Technogym, I believe every bike should be profitable, otherwise, it will be a distraction for us. This is where Technogym’s economies of scale, as well as our ability to use our studios as retail outlets to sell the bikes, will come into play.“

Welcome the big brands

The crowd to which Balfour alludes is in fact already forming, including more affordable options for those not able to stretch to a Peloton-esque price tag. BKool, for example – a Spanish turbo trainer manufacturer that supplies UCI World Tour cycling teams – already manufactures the BKool Smart Bike, which retails through the likes of Powerhouse Fitness and Sports Tiedje for £1,199, plus £7.99 a month for on-demand workout content.

The bike has no integrated screen – classes are accessed via an app and can be cast onto a TV screen – but once connected to the user’s personal device via Bluetooth, the app takes control of the gearing, automatically adjusting resistance in response to the class profile or route shown on-screen.

“The best way to think about the future of at-home cycling is to forget about cycling altogether.”

More product launches are sure to follow in what’s set to be an increasingly competitive sector – one that now has the attention of the big consumer brands. Says Minton: “The big players have realised it’s all about entertainment in the home, about creating a great at-home experience. You just need to look at the likes of TCV – a lead investor in Peloton’s recent US$550m financing round – which has also invested in brands like Spotify and Netflix. We really are just seeing the start of all of this.“

Barry agrees: “GAFA – Google, Amazon, Facebook, Apple – are rubbing their hands in glee as they prepare to stretch out their long arm of end-to-end product, service and delivery to our consumer. With the accelerating force of AI and ongoing development of VR and AR, fitness will soon be as engaging as PlayStation for a 12-year old boy.

“The best way to think about the future of at-home cycling is to forget about cycling altogether. Think of it as just another service you’re passionate about receiving. Think food. Think fashion. Think human behaviour. Amazon has primed us to expect immediate delivery by drone or robot; Netflix is feeding us intoxicating content based on our preferences; Fortnite has us adventuring off-world with friends. These examples tap the tenets of convenience, hyper-personalisation and community – which brings us back to Peloton.“

She concludes: “Moving forward, the coaching capacity and ability to enhance the experience will be a dimensional shift in exercising. Tech will help take us to dizzying heights of new sensation. Our biometrics will directly inform our optimal programming and nutrition plan, while personalised nudges throughout the day will keep us on track. At-home workouts are all set to blow the ceilings off.“