Despite Peloton’s Legal Disputes and Injured Customers, What Keeps the Company Thriving?

By Thomas Price Saturday, October 24, 2020

With more people unable to visit and work out at an actual gym, the importance of high-quality home equipment has never been more apparent. Particularly for cardio equipment, a few names stand out clearly as the most popular among consumers. One of those names is Peloton, whose stationary bikes and treadmills have gained millions of users since its launch. With this in mind, what sets Peloton apart from other big names in cardio equipment, is it worth the money, and why are so many people flocking to it in high numbers?

Peloton’s Growth and Product Offerings

Peloton has seen major growth in 2020 with its fitness equipment and subscription-based workout program. In their most recent quarter, the company earned $607.1 million in revenue, which marks a 172% growth in revenue compared to the same quarter in 2019. Perhaps even more impressive than this, however, is that for Peloton, this marks the sixth straight year in the company’s history where they have recorded sales growth of over 100%. Peloton basically offers three product types, which each have two price and quality options: a stationary bike, a treadmill, and a fitness app that has a monthly membership fee. While each plays a major part in their sales, the subscription-based fitness app connected directly to the Peloton product, or which can be used without a branded product, is perhaps the most unique.

With over 1.1 million subscribers paying a hefty $39 a month to connect their Peloton equipment to the live classes and library of workouts, along with an additional 316,000 subscribers paying a reduced $12.99 a month to use the app without having it be connected to the bike or treadmill, Peloton has a sustainable model of revenue beyond the simple initial purchase of the bike. Especially considering that Peloton’s Connected Fitness Subscribers average 24.7 workouts a month, the service provided by the app appears to be worth it for the customers who pay for it. In fact, due in part to gyms still being closed for many people, the number of average workouts a month has more than doubled compared to last year, suggesting even more engagement with Peloton products than before.

Peloton’s Physical Equipment and Quality Concerns

While its monthly fitness app subscription has garnered serious popularity, Peloton’s physical equipment has caused some concerns both from other businesses and from consumers. On October 16, Peloton recalled 27,000 stationary bikes over major concerns involving the pedals on these bikes breaking off and injuring the user. Before the recall on these bikes, there were 120 different recorded cases of pedal breaks — 16 of which resulted in injury. This has led to major questions over the quality of the equipment being sold, especially considering the hefty price tag. While quality may be the major concern of the stationary bike, that is not the only issue facing it right now.

In fact, in the midst of having these bikes being recalled, Peloton is also being sued by the owners of NordicTrack, Icon Health and Fitness, for stealing bike features. Icon is suing over two specific features to the Peloton Bike+: the swiveling touch screen and automatically changing resistance during workout classes. Icon has emphasized that it has a patent-pending on the swiveling touch screen technology and currently holds a patent on the resistance changing feature. This is not the first time the two companies have been in legal waters against each other, with two other suits of similar natures in the past already having been settled.

Final Conclusions

Peloton is a dynamic company with highly popular equipment and an interesting business model for continuing its revenue streams. It is growing at an unbelievable pace and looks to be extremely valuable as time goes on. However, there are some concerns — primarily about the quality of products and where some of its technology originally came from — that need to be addressed to an adequate level for Peloton to thrive at the level they believe is possible in the near future.

About the Author

Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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