Peloton silently ends unlimited free app membership due to lack of paid subscriptions.

• Less than a year after its introduction, Peloton has silently abolished the unlimited free membership option for its app.
• The fitness company, renowned for its Bike and Tread, introduced a free membership tier to attract new customers, but not enough of them were converting into paying users.
• Liz Coddington, the finance chief, stated at a Morgan Stanley conference in March that the free tier was harming our funnel and conversion to free trial and then to pay.

The company has quietly removed its unlimited free membership tier on its fitness app less than a year after it debuted because the initiative was failing to convert users into paid subscribers, the company said.

The company removed the free option for new users, which was a significant part of its growth strategy, recently. However, those who signed up for the unlimited free membership before it was discontinued will still have access to it, the company stated.

The company's app now offers only two tiers for new users, priced at $12.99 or $24 per month, with a seven-day free trial.

In May 2021, Peloton launched a new brand identity that positioned the company as a fitness platform for everyone, with its digital app serving as the focal point of its advertising efforts. The rebrand introduced a multi-tiered app strategy that included a free, unlimited membership option and two paid levels that offered varying levels of content.

As sales declined at the company, CEO Barry McCarthy aimed to transform it from a hardware-focused business to one equally invested in its app, with the goal of capturing new customers who were intrigued by the brand but not willing to spend thousands on its equipment.

McCarthy, a former executive, had long desired a free tier on the company's app. He believed that free users would become enamored with Peloton's content and subsequently upgrade to a paid membership, which offers a broader range of classes, after trying the app and determining they required more.

The bet appears to have been a bust.

In November, McCarthy informed investors that the relaunch had not met the company's expectations for engaging and retaining free users and converting them to paying memberships.

Soon after, the unlimited free tier was no longer available.

In March, at a conference, finance chief Liz Coddington stated that the company soon discovered that the free tier was harming the conversion of free-trial members to paid subscribers, prompting the company to adopt a free trial model.

"Coddington stated that our app is still under development and there are many ways to enhance it. He emphasized the need to improve user engagement during the trial period, increase conversions to paid subscriptions, and maintain engagement over time to improve retention rates and marketing efficiency."

Despite a decline in app subscribers during Peloton's fiscal second quarter, Coddington stated that the company still "believes" in its app strategy and it remains "an essential component of the business."