Peloton Ends Free App Access Amidst Subscriber Struggles

Peloton has ended its unlimited free app membership, less than a year after its introduction. The company found that the free tier was not effectively converting users into paying subscribers.

Previously, new users could access a free membership option. However, this option has been removed in recent weeks. Existing users who signed up for the unlimited free membership before its removal will still have access.

Now, new users can choose between two paid tiers: $12.99 per month or $24 per month. Both options come with a seven-day free trial.

Last May, Peloton underwent a significant rebranding effort, emphasizing its digital app as central to its marketing strategy. This rebranding aimed to shift the company’s focus from hardware to the app, targeting potential customers unwilling to invest in Peloton’s equipment.

CEO Barry McCarthy, a former executive at Netflix and Spotify, envisioned the free tier attracting users to Peloton’s content, leading them to opt for a paid membership for a broader range of classes. However, this strategy did not meet expectations.

In November, McCarthy acknowledged that the rebranding had not been as successful in engaging and retaining free users as anticipated. Consequently, the unlimited free tier has been discontinued.

During a March conference, finance chief Liz Coddington revealed that the free tier was undermining efforts to convert free-trial members to paid subscribers. The company has since shifted its approach to focus on improving trial engagement and retention rates.

Despite a decline in app subscribers during the fiscal second quarter, Peloton remains committed to its app strategy, considering it an essential part of the business. However, shares of Peloton fell over 6% on Monday and more than 45% this year in total, with the company’s market cap dropping to about $1.2 billion from a peak of $47 billion during the COVID-19 pandemic.