This week, Apple (NASDAQ:AAPL) unveiled its rumored fitness service, Apple Fitness+, alongside new Apple Watches and iPads. The new service comes as the Mac maker pushes deeper into the fitness market, which has become a core focus for CEO Tim Cook, an avid fitness enthusiast. With people staying at home more due to COVID-19 but still needing to exercise, demand for home exercise solutions is booming.
How does Apple Fitness+ compare to connected fitness leader Peloton (NASDAQ:PTON)?
Features and content: Peloton wins
Keep in mind that Peloton offers two types of memberships: All-Access and Digital. All-Access memberships cost $39 per month and require Peloton's pricey equipment, while anyone can sign up for a Digital membership for $13 per month. Anyone that just spent thousands of dollars on a bike or treadmill will likely sign up to take full advantage of the equipment, so Apple Fitness+ is more directly competing with the Digital membership.
Apple Fitness+ is designed to integrate with Apple Watch, syncing and displaying workout data. As such, the service will require an Apple Watch, which in turn requires an iPhone. Peloton is available more broadly on different non-Apple platforms such as Roku and Amazon Fire TV, among others.
Both Apple Fitness+ and Peloton Digital allow subscribers to access a catalog of instructor-led workout classes on just about any device. In terms of the content catalog, Peloton's library is far more expansive, including thousands of classes and live-streamed sessions. It's a bit early to know just how big Apple's catalog will be, but it's safe to say it will be far smaller initially (covering roughly 10 workout types) as the Cupertino tech giant works to build out the library, and Apple doesn't have any live-streamed classes at the outset.
Peloton will undoubtedly have the larger and more robust content catalog when Apple Fitness+ launches later this year.
Pricing: Apple wins
Similar to other new service categories (like video streaming) where it knows that it's behind, Apple is pricing Apple Fitness+ fairly aggressively. The service will cost $10 per month or $80 per year ($6.66 per month).
However, Apple Fitness+ supports Family Sharing, so the service can be shared with up to five other people within the user's family, potentially bringing down the per-user cost significantly. If the maximum number of family members (six) use Apple Fitness+ under the annual billing option, that translates into about $1.11 per user per month. A Peloton Digital membership only covers a single user for $13 per month.
Apple is also including Fitness+ with the higher tier of its new One bundle ($30 per month), but that's less comparable since it's hard to determine how much of that price would be allocated to Fitness+ and Peloton doesn't offer any similar bundles. The iPhone maker is including a three-month free trial with new Apple Watch purchases, and existing Apple Watch owners will receive a free one-month trial. Peloton Digital comes with a one-month free trial.
Apple Fitness+ is undercutting Peloton, but you'll get what you pay for.
Chasing subscription growth
Both Apple and Peloton are working hard to grow their subscription businesses. Apple now has over 550 million paid subscriptions across its platforms and is on track to top 600 million by year's end.
Peloton hosted its first investor and analyst day yesterday and CEO John Foley laid out an ambitious target to hit 100 million subscribers, compared to the roughly 1.4 million subscriptions it currently has across both membership types. Foley did not specify a timeline but did point to expanding digital availability as one of several ways to help get there.