After reaching its all-time peak in January of 2021, Peloton’s stock began a steep decline as an end to pandemic lockdowns led to less interest in the fitness company’s offerings, and the overproduction created a surplus of exercise equipment. A couple of weeks ago, after news the fitness brand would temporarily halt production of new stationary bikes and treadmills, the company’s stock dropped by 24%, bringing its stock price below its initial public offering price.
Even cutting prices on Peloton bikes by 20% in August didn’t reignite the high interest the pandemic afforded the company just a year prior. The rapid decline of the brand has led to one activist investor, Blackwells Capital, which holds less than a 5% stake in the company, to call for the removal of Peloton founder and CEO, John Foley. Additionally, the firm has suggested that Peloton be sold off to one of the tech or fitness giants, like Apple, Disney, Sony, or Nike.
But there could be another answer to Peloton’s woes hiding in another pandemic success story: the metaverse.
Screen-based software is the key to Peloton’s long-term recovery
One of the keys to Peloton’s success is the screen positioned in front of the stationary bike and treadmill user. Beyond showing riders and runners statistics and coaching videos, the screens also deliver a feature called Scenic Rides, which virtually take users on trips through places like Hawaii, France, Australia, Italy, and other interesting locales. The screen-based tour works to make long stationary biking sessions seem a lot shorter and less stressful. But what if instead of watching the video from a couple of feet away, the user could instead be immersed in the virtual environments presented on the screen?
That’s exactly the experience delivered by Boston-based startup VirZoom, which focused on virtual reality (VR) experiences paired with stationary bikes and treadmills. Founded in 2015, the company initially offered its own stationary bikes to go along with its VR fitness software but has since moved to a model that uses a small motion sensor that can be attached to most stationary bikes.
When the company got its start, exercising in VR was part of an extreme niche of early adopters. However, the popularity of the Meta Quest 2 has rapidly taken VR mainstream, and along with it, immersive exercise apps like Beat Saber, which Meta acquired in 2019. In October, Meta revealed that Beat Saber, which encourages users to interact with virtual objects to generate calisthenic exercises, pulled in $100 million in revenue on the Quest platform.
So far, VirZoom remains small, with just $12 million in investment funding, and about 270,000 “lifetime active users.” Peloton’s scale, currently at nearly 5.9 million members, could rapidly bring a large new user base into the metaverse through a partnership or acquisition of the VR fitness company.
Peloton’s move into the Metaverse could happen overnight
Between Jan. 1, 2020 and today, VirZoom claims it has seen a 450% increase in subscribers, driven mostly by the mainstream traction of the Meta Quest 2.
“Our tech lets you move freely through virtual worlds instead of teleporting around in them, and our VR fitness apps employ that concept,” VirZoom co-founder and CEO Eric Janszen told Quartz. “Interest from institutional investors has grown considerably.”
In November, Peloton said it had nearly $1 billion in cash on hand. A recent crowdfunding effort by VirZoom values the startup at around $24 million, which would make it an easy purchase for Peloton—assuming the stationary bike company doesn’t already have its own VR plans.
In June, Peloton posted a job listing looking for a product manager to work on gaming and “3D experiences.” The posting could be related to the next iteration of Peloton’s Lanebreak game, or it could be something much more. Whichever route the company decides to take, all tech innovation roads currently lead to some branch of the metaverse, and Peloton can still gamify its way back to success if it pedals quickly enough.