Peloton cycles out of your basement into new locations and business model

Peloton cycles to new locations, breaking out of the home model

The master of the first social, high-tech home cycle is now taking the bike out of the basement.

Peloton, a live-streaming, interactive fitness platform, announced it will begin building commercial-grade cycles. Starting in the spring of this year, riders will find them in hotels, universities, offices, gyms and health-care facilities.

It's a clear departure from the original business model that has now attracted more than 300,000 home subscribers worldwide in barely three years; apparently this was a direct response to those members and their need to both ride and connect in new places.

"When they travel, when they go to work, when they go to the gym, they want access to the Peloton platform and content," said CEO John Foley, who debuted the new cycle this week at the Consumer Electronics Show in Las Vegas.

Peloton Cycle
Source: Peloton Interactive Inc.

The New York City-based company launched its live-streaming classes from a Chelsea studio in May 2014 and fast became a multifaceted fitness force. It is a live cycling class, a video production house, a subscription video streaming service and a retailer, selling not just the bikes with video screens attached, but clothing, shoes and accessories.

It recently launched non-bike-based, video workouts including yoga and high-intensity floor training. Users can access those on the bike screen or on an the app.

The company is not ready to announce the new partnerships and is still fleshing out new relationships, but Foley said there would be "massive international hotel chains" involved. Companies like Urban Outfitters and the Westin Chicago had already purchased regular Peloton bikes for their employees and guests.

"Launching this new commercial-grade bike with specialized hardware and software made perfect sense as the next step in the Peloton journey," added Foley.

The investment for Peloton was not huge, under a million dollars, according to Foley, because the content is already there, and the hardware, the bike itself, already had a strong design. It was upgraded with a sturdier frame and easier adjustability, in order to cater to multiple daily riders without much maintenance.

The new cycles will have new software, introducing newbies to the experience and how it works. The hope is that new riders will try the cycle somewhere else and then need to have it at home.

"It is a great customer acquisition opportunity," said Foley

There are 12 live classes per day, as well as more than 4,000 on-demand. About 80 percent of rides clocked are on demand, according to the company, but that may change as Peloton increases its live capacity. Foley said he expects that in three to four years Peloton will have studios in Shanghai and Paris, streaming live content 24 hours a day in different languages.

"So when you come home from work at 11 o'clock at night, you hop into a class by a hot French man, who is half unshaven and playing Euro dance music, I think that would be pretty fun for you," he suggested.

No argument here.