Peloton App to be relaunched in 2023 with pricing tiers, freemium, locked content & more according to CEO Barry Mccarthy

Peloton seems to be planning to overhaul their app strategy at the start of 2023. This will include new pricing models where classes are determined by the price a client pays. Barry McCarthy, Peloton CEO, has spoken about his plans for relaunching the Peloton Digital App in 2023 at almost all of his public appearances.

In the Q12023 earnings call, McCarthy spoke out about future plans for the Peloton app, digital-only pricing and a possible relaunch in 2023. This is an important part of Peloton’s effort to reach 100 million members, as McCarthy explained.

The Peloton App is currently priced at $12.99 monthly for digital subscribers (those who don’t own a physical device like the Peloton Tread, Guide, Bike, or the new row. This is the same price since it was reduced from $19.49 in December 2019. McCarthy claims that Peloton has never had more than one million App-only customers.

McCarthy previously stated that Peloton was not focusing enough on the App-only segment and was too focused on encouraging customers make machines purchases. He hopes that this will change. Essentially, Peloton doesn’t care if you have a subscription with a machine or an app subscription without owning a Peloton device.

This mindset shift will result in new pricing strategies, which will be launched in 2023. McCarthy talked about it on the company’s last earnings call.

“Our strategy is for the digital app to be relaunched during the New Year. This will offer a new price opportunity. Our content strategy will be subject to tiered pricing – it’s a new content strategy. The current app has never seen more than one million subscribers. Our goal is to achieve 100 million Peloton app subscribers.”

One part of Peloton’s new strategy is the “freemium” model. The freemium model basically means that certain features of the app will be available for free while others (and classes) will need to be paid for. McCarthy discussed a possible freemium version of the App in an investor presentation as well as an interview on Bloomberg earlier this year. In August’s earnings call, McCarthy also stated that Peloton was moving in this direction. He said:

“And in regard to the digital app strategy, I had previously stated to investors that I wanted to pursue a freemium approach to our digital app strategy. We will implement it soon. There will be different price points for the digital app and access to different types of content, depending on the amount you pay.

McCarthy answered a follow-up question on the strategy, that not all classes were available to all members (also called “gated content”):

“I will not talk much about the digital strategy till we roll it out. Other than to say it will have premium components and a gated part.”

Peloton already explored gated content. Peloton’s scenic content relaunch in 2021 saw scenic content removed from app users. Peloton stated that most of the rowing classes would be locked to Peloton Row owners in advance of the launch.

Peloton may also offer an annual subscription option for its app-only subscription. This would presumably give a slight discount to those who are more committed to a long term subscription. This pricing model has been rumored previously.

McCarthy shared his insight on the overall strategy shift in pricing and app development.

“The overall strategy is to get access to connected business hardware platforms that are competitive. Half of the paid users of our app are connected business content that is stored on another’s hardware. This use case has never been promoted. We are going to be open to it. Our marketing funnel has ended with the digital app. We are going to push it to the top with a premium deal and try to tap into that growth opportunity.”

This means that the Peloton App will see significant improvements in 2023. We will continue to share new information as it becomes available, just like always.

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