Peloton is a media company now, with media company problems

Jessika Fernandez uses Peloton about two hours a day — maybe even four if she’s training for a marathon. In her house, you’ll find not one but two Peloton machines. There’s the bike that the company is known for, and in her garage, there’s the company’s smaller treadmill. A rack of running medals hangs on the wall right near it. On our video call, she shows up in a Peloton shirt, a little shy, but her enthusiasm practically buzzes through the screen.

Many owners of Peloton bikes wind up using them as very expensive drying racks; Fernandez is not one of those people. Her love for the beleaguered fitness company stretches back to 2018. On a day-to-day basis, she has her regular workout. That includes runs, bike, strength, or bootcamp classes, which combine cardio on the Bike or Tread with strength training. Then, she listens to Peloton’s outdoor classes while walking the dog. Before bed, she fires up the app to listen to a guided meditation. When she went to a friend’s wedding, she was at her hotel gym taking Peloton classes.

During a recent marathon race, Fernandez put an outdoor audio class on her headphones when she felt like she needed an emotional boost. “It was my comfort zone and what I was familiar with. I could hear my favorite instructors in my head, and it got me through my race.”

Plenty of people love Peloton as much as Fernandez does. Even so, Peloton plummeted from a pandemic-high valuation of $50 billion to $2.1 billion as of December 2023. The company sank about a billion dollars into meeting a quarantine-driven demand and was seemingly taken by surprise when lockdowns ended. Between 2020 and now, it laid off thousands of employees, recalled two treadmills, and saw the ouster of a CEO.

But people like Jessika Fernandez are why Peloton CEO Barry McCarthy insists that Peloton is more than “that bike company.” To hear him tell it, Peloton’s path to redemption is paved with content because that’s the real beating heart of Peloton.

Still, it’s one thing to fix a struggling hardware company. It’s another to also be a successful media empire.

It’s not a mystery why Peloton’s valuation has fallen so precipitously since the covid-19 pandemic. Everyone flocked to the company during quarantine, when home fitness thrived as gyms closed their doors. Peloton ramped up production to meet that demand and then floundered when vaccines helped reopen the world. But within that obvious narrative, Peloton itself seemed to invite drama — not avoid it.

Before the pandemic, then-CEO John Foley funneled fistfuls of cash at petty patent disputes with its rivals. (RIP, Flywheel.) There was the infamous Christmas commercial, conceptually meant to be the video diary of a woman gifted with a Peloton, but so flawed in execution that The Washington Post called it “a dystopian fitness inspo hellscape.” In 2020, the company — like many others — was hit by supply chain disruptions that led to angry customers and monthslong delivery delays. To fix that, Peloton spent $100 million in express shipping, dedicated another $400 million to a factory in Ohio, and bought commercial fitness equipment maker Precor for $420 million. It was the classic gamble of spending big to win big. Connected fitness was all the rage; the future of the gym would be streamed into your living room. (Peloton was asked for comment over the course of several weeks of reporting, but ultimately declined to speak on the record.)

Then, in 2021, Peloton had to recall both of its treadmills. The cheaper Tread was recalled before it even launched due to a wobbly screen. The more premium Tread Plus had injured dozens of people, including several children and pets. It killed a small child. Peloton did itself no favors in how it initially handled the recall. Foley blamed the injuries on negligent parenting before furiously backpedaling when that backfired. By the end of 2021, there were nonstop rumors of a sale and murmurs that the company planned to halt all production. And the cherry on top? Mr. Big died while on a Peloton Bike in the first episode of And Just Like That…

A testy activist investor first wrote a letter demanding that Foley step down and then followed it up with a scathing 65-slide presentation detailing the CEO’s failings. Shortly after, Foley resigned, current CEO Barry McCarthy came on, and Peloton’s dismal 2022 was marked by four rounds of layoffs in which over 5,000 employees lost their jobs. With this kind of volatile business soap opera, how has Peloton managed to make it this far?

That’s easy: the fans.

Around the time Peloton was fumbling its treadmill recalls, Dancing With the Stars fans were pissed. Some dude named Cody Rigsby had made it to the finale, and frankly, who the frickin’ hell was Cody Rigsby?

There’s no reason the average person should know who Rigsby is. I polled roughly 30 friends, family, and coworkers. Only two had heard of him. Which makes sense because Rigsby is a Peloton instructor. Arguably the most popular Peloton instructor with an army of fans who dub themselves the Boo Crew. On DWTS, a competition show where viewers vote for who gets to the next round, it pays to have a Boo Crew.

Fandom always looks odd from the outside, but Rigsby’s tenure on DWTS is exactly why Peloton has been able to outlast its imitators. What other connected fitness brand has an instructor who is a household name? For many households, this recognition might be begrudging, but the point still stands: the Boo Crew loves Rigsby so much, they’re willing to go support him outside the Peloton ecosystem. It’s not unlike how people often follow the side projects of their favorite TikTok, Instagram, and YouTube creators.

That fervent love seeps into every corner of Peloton’s brand. Logically, if you heard that your exorbitantly expensive treadmill had killed a child and injured several others, you’d probably return it when it’s recalled. That’s not the case with Peloton. Several loyal Tread Plus users refused to return their treadmills. That loyalty is likely why Peloton was able to bring back the Tread Plus for a whopping $6,000 late last year.

“Of all the products that I’ve ever been exposed to with Peloton, the single product that you couldn’t pry out of the dead hands of members is the Tread Plus,” McCarthy said during Peloton’s Q1 2024 earnings call. “I mean they are absolutely over the top, fanatically obsessed about the user experience on the Tread Plus.”

He wasn’t wrong. Orders for the $6,000 Tread Plus opened in December, and as of right now, there’s a backlog in demand.

What does an “over the top, fanatically obsessed” Peloton user look like? To find out, I spoke to several longtime Peloton users. There’s Jessika Fernandez, who I’ve already mentioned, who’s read the biographies of several Peloton instructors. There’s Oz, who’s getting his 13-year-old daughter into Peloton. And there’s also Albert G., who raided TJ Maxx to get a set of Peloton dumbbells, yoga blocks, a water bottle, and apparel to go along with his bike.

The Peloton diehards I spoke to don’t necessarily build their lives around Peloton, but the company does become part of their lifestyle. The bikes sit in living rooms, offices, and garages — sometimes accompanied by the treadmill or Peloton-branded weights. Most said they fit in at least a 30-minute workout about five to seven times per week. Many had streaks lasting hundreds of weeks. A few have started getting their kids into Peloton. Multiple fans said they buy Peloton apparel, follow the instructors on Instagram, and even read said instructors’ books. When I asked who their favorite instructor was, many had a hard time naming just one. Ben Alldis, in particular, was a popular pick for his music choices and chill demeanor. Adrian Williams, Jess King, and Ally Love were also frequently mentioned. (Oddly enough, only two mentioned Rigsby.)

In other words, the people I spoke to were pretty ordinary — and the main thing they had in common was that Peloton’s platform just works for them. But which parts made the platform sticky was a bit harder to pin down.

“The sweet spot is really the instructors. They’re like gold. And the fact that they’re able to create so much original content,” says Fernandez.

“I’ve had bikes and treadmills before where when you get tired or bored, you just get off and do something else. [But] when you take a class, even if it’s just pre-recorded, you feel this accountability to the instructor if nobody else,” adds Drew McManus, who started using Peloton in 2019 and has since taken about 4,000 classes. “It’s weird. You wake up one day and you realize you’re following all of them on social media.”

Aside from the instructors, the sense of community with Peloton users is very real. You see it the second you start pedaling via the Leaderboard, where you can see in real time all the other folks taking the same class. You can also “high-five” people in the same class. During classes, you’ll also see some hashtags — some based on user identity, geography, and interests (e.g., #PeloDoctors, #PelotonMoms, etc.) and others based on instructors (e.g., #JessKingCollective, #BooCrew). Those are meant to help you find other fans or friends to go do live rides with. The hashtags spill over to other social media platforms. There are several hundreds of Facebook groups, too. (My favorite name is the #435amTribe — the Mothercluckers.)

“The number of people I see pedaling for Jesus or, you know, #Pelo4Wine — there’s just this wide gamut of people who would otherwise probably want to kill each other if they met in a random bar. But here, you’re getting high fives from them,” says Chris Messina, an investor and avid Peloton user.

Not everyone I spoke to made heavy use of these features. Some, like Fernandez, instead found more community through comments on blogs like Pelo Buddy, an enthusiast site that offers news, tips, and tricks. Some joined subgroups within other fan communities. Many had checked out the Peloton subreddit at one point or another. Amanda Hasaka, who started using Peloton during the pandemic, has kept a yearslong thread going in a private podcast group collecting all the strength classes that don’t go heavy on burpees or other high-impact moves. McManus found himself interacting with other Peloton users in a small Slack group and on Mastodon. Others yet roped their real-life friends, family, and colleagues into the community by being “the Peloton person.”

Live classes are another draw, especially holiday-themed rides. Instead of an annual Turkey Trot, where you run a 5K on Thanksgiving in person, Peloton does the Turkey Burn, an annual live ride. For the 2023 Turkey Burn, Peloton’s servers crashed under the deluge of users trying to join in, prompting an apology from McCarthy. Over 37,000 people were willing — nay, eager — to subject themselves to a workout on a holiday famed for gluttony. That’s something.

Then there’s Homecoming, a yearly event that Peloton puts on to thank its members. It’s more like a convention, filled with special classes, product announcements, and panels with instructors. In that vein, Peloton also recently reopened its studios in New York and London so members could visit and be a part of its classes. As of this writing, every single class at Peloton Studios New York is fully booked for the next month.

Loyal fans and a sticky product should equal piles and piles of money. Instead, Peloton’s valuation has dropped about 97 percent since its pandemic high. It’s managed to turn it around a bit — Peloton’s revenue has been steadily clawing its way back for the past year, even if it’s falling short of investor targets.

But it’s not rolling in cash. Some of that might be because it’s not always clear what Peloton views its product to be.

The company’s leadership maintains that hardware will always be a key part of its strategy, and to be fair, there’s a common through line when you speak to the Peloton diehards.

“It reduces friction working out and when I remember working out with Apple Fitness Plus, like, I didn’t even have a place to put my iPhone,” says Oz, a longtime Peloton user who switched from Apple’s exercise service once he moved to the suburbs. “I think when it comes to fitness, you just want the least amount of friction because you’re already kind of having a hard time wanting to do it.”

“You could do a whole setup if that’s what you want,” says Hasaka, referring to how many people buy a cheaper machine with a tablet holder and pay for app subscriptions only. “But for me, it’s a nice screen, the sound quality is really good so I think it just made sense. I’d rather do the proper bike setup.”

Hasaka says she started her Peloton journey using the free three-month trial the company offered at the start of the pandemic. It wasn’t until six months in that she bought the bike, and three-and-a-half years in, Hasaka says she’s tempted to upgrade to the $2,495 Bike Plus.

Even so, there’s also been a clear shift away from the bikes, treadmills, and rowers that made the company famous. Because, while the Peloton faithful are sold on luxury equipment, fitness is highly personal. Even the slickest hardware experience won’t resonate with everyone.

“I had a lot of friends who were very into Peloton during the pandemic, and then now they’re back in a gym or in-person class,” says Fernandez, who says she’s seen firsthand how the hardware doesn’t click with everyone. “They’ve sold off their bike and it just served a purpose for them at the time.”

Hence why McCarthy has spent two years removing proprietary hardware as a barrier to access. That includes everything from a leasing program to opening up sales to third-party retailers. Last year, Peloton also rebranded its app, launching three app-only subscription tiers to lure people into its ecosystem. When Lululemon decided to call it quits with the Mirror, another rival for strength, pilates, and yoga, Peloton swooped in with a five-year deal to share content between the two brands. As Lululemon parachutes out of the connected fitness business, its users will get access to Peloton classes. Along that vein, Peloton closed out 2023 by allowing some subscribers to pair the app with third-party treadmills. It kicked off 2024 by announcing it’s bringing shortform content to TikTok, with the hope of boosting the profiles of its lesser-known instructors.

For better or worse, Peloton is increasingly morphing into a streaming service. A hardware company has to figure out supply chain logistics, but shipping a workable product is 90 percent of the challenge. A media company has to do that and churn out high-quality content consistently. And that’s not exactly an easy thing to pull off. Keeping your audience engaged is the stuff executives lose sleep over. Peloton doesn’t want to be a media company — I mean, who can afford that in this economy? — but a lot of its problems sure look like media company problems.

Music is an integral part of the connected fitness experience, yet licensing is an expensive endeavor. Peloton had licensing issues with the National Music Publishers’ Association (NMPA) a few years back, replacing songs it no longer had rights to with remixes. The move angered fans who’d grown accustomed to curated playlists. When TikTok pulled music from Universal Music Group artists after negotiations to extend its license failed, McCarthy had to address it in a recent earnings call, reassuring shareholders that the failed TikTok-UMG deal won’t affect Peloton content, since it has a separate agreement.

Then, there’s the sheer cost of keeping its instructors happy. The instructors are a big reason so many people pick Peloton over other connected fitness platforms. But what happens if Cody Rigsby decides to pack it up one day and take his 100,000-plus BooCrew and 1.3 million Instagram followers with him? How much does it cost to keep Rigsby and the bullpen of Peloton instructors? Peloton hasn’t disclosed how much its instructors make, but Rigsby’s salary is estimated at over $500,000 annually. Rigsby’s popularity isn’t the only leverage he has over the company, either. Peloton’s made him director of cycling, meaning he plays a role in talent recruitment and acts as a liaison between instructors and producers. That’s a lot of power.

Losing one or two instructors? That’s something Peloton can and already has moved past. Every single Peloton fan I spoke with also said that if their absolute favorite instructor left, they’d probably still stick with the platform because there’s a whole library of on-demand classes that they could retake. But what if Peloton instructors decided to unionize or a group of them decided to break off and do their own thing? That would be a lot trickier. Some, like McManus, say that’s exactly why they go out of their way to diversify the instructors they take in the first place.

Connected fitness is in flux. Right now, McCarthy is throwing a bunch of things at the wall to see whether they’ll stick — and so far, it’s been a mixed bag. At its Q2 2024 earnings, McCarthy noted that while initiatives like bike rentals were showing promise, the company has yet to see its app-only subscription strategy pay off. And Peloton’s devoted fan base is aware of the headlines.

“I have wondered what I’d do if Peloton went out of business, because for a while it’s felt like the future is not totally clear,” says Alex Rainert, who’s been using Peloton since 2019. Rainert says, during the pandemic, his wife and kids each bought a single share of a stock to teach the children about the stock market. Rainert chose Peloton. “That was the one where we got to go on the whole journey.”

“I feel like they’re gonna be around for the long term at this point as cooler heads have prevailed, but yeah, I worry about it. Like if they went out of business or if they got acquired by somebody I wasn’t thrilled about, I would be bugged and looking for something else that I’m not sure is out there,” adds McManus.

“I guess I just have faith that it will get figured out,” says Fernandez. “I don’t see it going away completely. And I think that would be such a shame if it did since there are so many loyal fans and users.”

Despite some uneasiness, the fans I spoke with pretty much echoed Fernandez’s feelings. What they weren’t sure about was why Peloton and its investors “need” to chase growth. Or at least the kind of growth it saw early on in the pandemic. Did investors really think the pandemic highs would last forever? Why can’t the company and its investors be satisfied with a smaller but highly engaged audience?

They have a point. Peloton may be a life-changing service for the folks I talked to, but creating a fitness habit is notoriously hard. It doesn’t matter how good Peloton’s product is or how accessible it becomes. There’ll always be a ceiling, because fitness — let alone connected fitness — simply isn’t everyone’s thing.

So perhaps it’s never been a question of whether Peloton can survive. Just whether the adults in the room are okay with simply letting Peloton be.