5 ms·

it's not just ecosystem => network effects => winner take all. apple is trying to skim the cream off the top with fitness+ like they did with music and itunes,

it's not just ecosystem => network effects => winner take all. apple is trying to skim the cream off the top with fitness+ like they did with music and itunes, but the market characteristics are different here. first, the market opportunity is much smaller. everyone listens to music (and has a phone nowadays). that's a huge reachable market. only the well-off will pay for fitness+, so you're looking at <20% of everyone to start. second, music was already in the transition from physical (cd's) to digital (mp3's) to streaming (just waiting for high-speed internet penetration). the fitness market is not in that same transition. it's still constrained by the physical world, no matter how 'social' it gets. third, peloton's hardware is what makes the ecosystem, not the other way around (which is apple's strategy). it creates a halo of influence around the purchaser through price and product that apple simply can't replicate with just an apple tv, a watch, and a subscription. (i don't like peloton personally, but the market dynamics here are recognizable) i'd be surprised if fitness+ really takes off. it has narrow appeal, a relatively high price, and little cachet or differentiation. zooming out, apple's "plus" strategy overall strays away from their strength in hardware-based consumer products, and i'm skeptical they can differentiate enough to retain that business long term, whereas homekit, carkit, and the like couch very neatly into that strength, and likely represents durable future expansion.

Jtsummers 6y ago
> i'd be surprised if fitness+ really takes off. it has narrow appeal, a relatively high price, and little cachet or differentiation. Fitness+ comes with one of the tiers of Apple One. That makes it "free" to the user. Let's say you only wanted Music, TV+, and the storage (especially useful if you have multiple iDevices in your family and you want cloud backup): Music - $9.99 individual, or $14.99 family TV+ - $4.99 (already at $20 for a family here) 2TB Storage - $9.99 (now we're at $30) So Fitness+, News+, and Arcade are "free" additions if you get Apple One Premier. Of course, you need an Apple Watch to use Fitness+ but you can use it with any garage sale treadmill, bike, rowing machine, yoga mat, dumbbell set, etc. And if you have the Apple Watch you've already been able to drop things like Runkeeper and Strava for tracking running and cycling.
- batter 6y ago
  While they're investing in marketing / engineering and they'll see user base grows, especially if products is free or almost free. But at some point of time question will come to revenue per user. And that will be completely different problem.
  - Jtsummers 6y ago
    In this specific case, Fitness+ is relatively cheap to produce (all the content is theirs except for the music, but they already have a good relationship with music producers) and cheap to distribute. They make 1-3 new videos per instructor a week. I doubt it's costing them much per user to distribute the content. However, the Apple Watch is a nice profitable device for them and Fitness+ requires Apple Watch. So for anyone who already has the highest tier subscription (probably a decent chunk of multi-iDevice families out there) they will find themselves having Fitness+ but being unable to use it, which creates one extra motivator to buy an Apple Watch. That's where they end up making money anyways, 75% or so of their revenue is from device sales (computers, phones, tablets, watches, etc.). The services help to keep people within that hardware ecosystem which gets people onto the upgrade cycle or to consider a second or third Apple device instead of just having one.
- clairity 6y ago
  yah, but $30/mo literally puts it out of reach for 60+% of households, and that's on top of buying an apple tv and an apple watch for each user. that's just part of the narrowness of its appeal. apple has historically targeted the mass premium customer segment, able to command a higher price and still entice the broader public to buy. fitness+ (and apple one) has the higher price but not the broader appeal. it's just not differentiated enough. a personal anecdote: i've had apple tv+ for free for the past year and have watched it maybe a half dozen times. the shows are so overproduced to be tone-deaf. they're now trying to buy their way into the market via awards, so we'll see if that turns into any compelling content and moreover, more subscriptions.
  - skinnymuch 6y ago

Jtsummers 6y ago

> i'd be surprised if fitness+ really takes off. it has narrow appeal, a relatively high price, and little cachet or differentiation. Fitness+ comes with one of the tiers of Apple One. That makes it "free" to the user. Let's say you only wanted Music, TV+, and the storage (especially useful if you have multiple iDevices in your family and you want cloud backup): Music - $9.99 individual, or $14.99 family TV+ - $4.99 (already at $20 for a family here) 2TB Storage - $9.99 (now we're at $30) So Fitness+, News+, and Arcade are "free" additions if you get Apple One Premier. Of course, you need an Apple Watch to use Fitness+ but you can use it with any garage sale treadmill, bike, rowing machine, yoga mat, dumbbell set, etc. And if you have the Apple Watch you've already been able to drop things like Runkeeper and Strava for tracking running and cycling.

batter 6y ago
While they're investing in marketing / engineering and they'll see user base grows, especially if products is free or almost free. But at some point of time question will come to revenue per user. And that will be completely different problem.
- Jtsummers 6y ago
  In this specific case, Fitness+ is relatively cheap to produce (all the content is theirs except for the music, but they already have a good relationship with music producers) and cheap to distribute. They make 1-3 new videos per instructor a week. I doubt it's costing them much per user to distribute the content. However, the Apple Watch is a nice profitable device for them and Fitness+ requires Apple Watch. So for anyone who already has the highest tier subscription (probably a decent chunk of multi-iDevice families out there) they will find themselves having Fitness+ but being unable to use it, which creates one extra motivator to buy an Apple Watch. That's where they end up making money anyways, 75% or so of their revenue is from device sales (computers, phones, tablets, watches, etc.). The services help to keep people within that hardware ecosystem which gets people onto the upgrade cycle or to consider a second or third Apple device instead of just having one.
clairity 6y ago
yah, but $30/mo literally puts it out of reach for 60+% of households, and that's on top of buying an apple tv and an apple watch for each user. that's just part of the narrowness of its appeal. apple has historically targeted the mass premium customer segment, able to command a higher price and still entice the broader public to buy. fitness+ (and apple one) has the higher price but not the broader appeal. it's just not differentiated enough. a personal anecdote: i've had apple tv+ for free for the past year and have watched it maybe a half dozen times. the shows are so overproduced to be tone-deaf. they're now trying to buy their way into the market via awards, so we'll see if that turns into any compelling content and moreover, more subscriptions.
- skinnymuch 6y ago