Zwift, a Long Beach, California based company offers an online platform for indoor cycling. It recently raised $450 million in a Series C round with the goal to build out its own bikes and hardware--so watch out Peloton!
Zwift is the newest $1 billion unicorn to take the digital fitness industry by storm. Having raised a total of $620 million, it has a lot of cash to start competing with its largest rival, Peloton. Since its founding in 2015, Zwift has added between 1.5- 2.5 million subscribers who love the 3D virtual worlds created, as well as the social gaming experience it offers. Peloton has 3.1 million subscribers and is valued at $24 billion based on a potential target market of at least 100 million+ subscribers over the next 5 years.
Zwift will use the funds to build its own smart equipment instead of using 3rd party equipment. In comparison Peloton announced earlier this month that it will be selling a cheaper treadmill called the ‘Tread’ for $2,495 in 2021, as well as a ‘Bike Plus’ that will also cost $2,495. Its original treadmill will get an upgrade as ‘Tread Plus’ and cost $4,294.
If you think Peloton is a bike or treadmill company, it’s not. It is a software company. Since Covid-19 hit, many people are looking for alternatives to in person gym sessions. Peloton’s virtual classes fill the gap created by an increased demand for fitness-at-home and adoption is expected to skyrocket.
To increase their appeal, Peloton and Zwift significantly invested in their social gaming experience. They look similar, except when it comes to software, Zwift has a much more immersive experience with 3D worlds, virtual competitions, and the ability for a user to organize their own group classes. When it comes to hardware, Peloton wins by incorporating a large screen display with crisp acoustics and a machine that auto-adjusts the tension by the class instructor in real time.
Both Peloton and Zwift offer cycling and running but they both currently lack weight lifting or bootcamp type classes. While these two companies are figuring out whether they will solely offer cardio solutions or expand to full home workouts, another smaller company is already cornering that market, Tonal. Tonal has the hardware and software and cheaper price tag ($2,995 +$49 monthly) to corner the non-cardio market, while also offering cardio classes that don’t require bikes or treadmills.
The equipment cost and monthly subscription can be a challenge for many people, which is why these companies offer monthly financing. Right now, Peloton has the lead for Cardio, and in my opinion Bowflex SelectTech and a bootcamp streaming video has the lead for strength training. The Tonal cost will eventually come down as most companies target the higher end market and then build a more affordable version---That’s how Tesla was able to stave bankruptcy in its early days.
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