While hardware is an important part of connected fitness, so are classes. Highly produced sessions led by committed instructors can make or break a product, especially if there isn’t enough of a library to justify a device subscription. On that front, Tonal announced today that it will be opening a studio in New York to expand its live class offerings and adding five new trainers to its lineup.
Tonal is one of the major players in the connected fitness industry with a valuation of approximately $1.6 billion. His $3,000 strength training system is endorsed by several professional athletes, including Maria Sharapova, Mike Tyson, and Drew Brees. But when the edge initially checked the device in 2020, the classes were disappointing. There was no live content and the class library was a bit sparse, as strength training benefits from repeating the same workouts over and over again. So it was intriguing to see the company introduce Tonal live in September. Tonal Live was the company’s response to the growing demand for live classes, a feature that was also one of Peloton’s claims to fame. That’s why expanding it further is a bold statement at a time when Peloton misfortunes that unfold have raised questions about the business of running a successful connected fitness brand.
The New York studio will be based in Hell’s Kitchen in Manhattan. Until now, Tonal’s studios were exclusively on the West Coast. According to Tonal CEO Aly Orady, the move is aimed at bringing more content to users on the other side of the country.
“We always knew with the startup announcement that it would take us to a New York studio,” Orady said. the edge, noting that about a third of Tonal’s membership base is on the East Coast.
In total, Tonal will now offer 32 weekly live classes and 24 encore classes. Live classes will take place between 7 am ET and 8:30 pm ET and will be available on demand within 48 hours. All of the new trainers will also be based in New York City and will offer a variety of specialties in addition to weightlifting, including HIIT, boxing and yoga. Trainers will also go beyond Tonal’s existing programs to include nutrition, balance and mental health content. Unlike the Peloton studios, which will reopen to the public later this summer, Orady says Tonal users won’t be able to take classes in person alongside instructors.
However, managing these studies is no easy task. While you only see the instructor on screen, there is a small army of people working behind the scenes. On a recent tour of Peloton’s new Manhattan studio, I saw firsthand how filming a live class required multiple stagehands, rehearsal blocking, a director, and multiple cameras capturing every possible angle. Connected fitness is also an expensive category in general, especially if you’re also producing high-tech proprietary equipment. For users, that often means expensive monthly subscriptions on top of expensive devices. In the case of Tonal, members have to pay a $49 monthly subscription on top of their $3,000 machine. A good chunk of that money, according to Orady, goes back into producing more content.
“Believe it or not, the content part of our business is the most profitable part,” Orady says, adding that she thinks this is probably true for most connected fitness brands. A large library of good and varied content is also key to increasing the number of followers.
While Orady declined to give hard numbers, he says Tonal’s membership base has tripled in the last year. But for fitness technology that involves hardware, that rapid growth comes with its own set of problems. Tonal currently has about a three-week backlog of orders, and at one point, Orady says customers were waiting 14-16 weeks.
It’s a story that sounds surprisingly similar to that of Peloton during the height of the pandemic. At that time, Platoon struggled to fulfill orders, leaving customers frustrated. He later ramped up his production efforts, but he couldn’t anticipate that demand would wane once people ventured out of their homes after the vaccine became more widely available. That miscalculation left Peloton with too much inventory — and it’s one of the reasons behind Peloton current financial problems.
“We haven’t been in that situation. What we have seen is sustained demand,” Orady says when asked if supply chain issues have affected Tonal’s business. “I think the sector has certainly been challenged and I think a lot of eyes are on really big public players. But for us, as a smaller private company, we operate by different rules.”
That may be true for now. However, it remains to be seen how Tonal will reconcile expensive hardware and expensive-to-produce content with increased competition in the space. While the company pioneered strength training, other connected fitness rivals have begun to expand into the modality. Earlier this year, Peloton released The Guide, a camera-based strength training system that costs “merely” $495 and can easily fit into small spaces. Tempo also released the Move on, another $495 smart gym that includes smart dumbbells and iPhone-based tracking for form feedback. There’s also the Mirror and a small army of Mirror impersonators.
Tonal’s decision to invest in a new studio, coupled with Peloton’s recent decisions to experiment with subscription prices Y reopens its studios to the public — indicates that two of the biggest players in connected fitness seem to think that the future of this space does not lie in hardware. Content is king.
