Peloton: Plan Tiers & Loyalty

Peloton has typically employed a two-tiered pricing structure: All-Access Membership ($39/mo) - requires hardware (starting $1,495) + App Membership ($12.99/mo) - no hardware required

Antenna data indicates that Peloton's All-Access Membership has the most loyal Subscribers across any category we cover (Audio, Gaming, Health & Wellness, Video). Subscribers to Peloton's App Membership, on the other hand, behave more like users of other digital subscriptions in our coverage. This dichotomy in loyalty between the Peloton plan tiers is likely driven by the lock-in that follows the large upfront equipment purchase.

Peloton recently announced the testing of a new pricing system that will include a piece of equipment and subscription for one monthly fee; customers will be permitted to cancel at any time with no charge (link). We wanted to take stock of how Peloton's two-tiered pricing system has performed in the past, which may offer an indication of how the new structure could fare (should it receive a full roll out).

Acquisition

Total Sign-ups to Peloton dropped -16% in 2021, compared to the year prior. The decline in All-Access Membership Sign-ups (-23% YoY) outpaced that of the App Membership tier (-10% YoY). Over the past thirteen months, Antenna data indicates that 48% of Peloton Sign-ups were to the All-Access Membership.

Loyalty

Of users who joined Peloton's All-Access Membership in 1H'21, 87% remained subscribed eight months later. That figure bests Spotify by 9pts and Netflix by 31pts over the same period.

Of users who joined Peloton's App Membership in 1H'21, 48% remained subscribed eight months later. This loyalty level is 8pts below Netflix, and falls more in line with other Health & Wellness services, such as FitBit (46%). For additional perspective, both of these Health & Wellness services saw more loyal Subscribers than Apple TV+, which survived 37% of its 1H'21 Subscribers after eight months.

The testing of Peloton's new pricing structure should lower the barrier of entry to Peloton's All-Access Membership ($60-100/mo no upfront purchase required vs. $39/mo with an upfront purchase). Where it would fall on the spectrum of loyalty remains an open question. By the same token, Apple is reportedly working toward its own hardware subscription offering (link).

As companies continue to shift toward direct, recurring relationships with consumers (increasingly embracing the hardware + software model perhaps), Antenna will continue to measure the acquisition and loyalty dynamics associated with these services.