Zwift Cancels Smart Bike Hardware Plans, Announces Significant Layoffs

ZwiftHQ

Just two weeks ago Wahoo announced a round of layoffs to mitigate the dropping (or rather, normalizing) of indoor cycling hardware sales, and prior to that Peloton did the same. Now Zwift is following suit with a round of layoffs that sources put at upwards of 150 people. However, in addition to that, Zwift is also canceling their previously announced Zwift bike and trainer hardware plans, though technically they call it “pausing”, but usually you don’t lay off the bulk of the hardware division responsible for said product when you pause something. Without those employees, you’re basically starting from scratch to “resume”. Some employees are remaining, however, albeit with a new focus.

Zwift issued a statement acknowledging the layoffs as well as the product line shifts in a statement, saying:

Given the current macroeconomic environment, we have decided to scale back our hardware offering, pausing plans to launch a smart bike. As a consequence, Zwift has implemented difficult, yet important changes to the organisation of the business. We are grateful for the contributions of all those impacted and have done our very best to support them.

As noted above in Zwift’s statement, they cited the current economic climate as a reason for putting the brakes on their hardware. This hardly comes as a surprise, especially for a piece of hardware that was destinated to appeal to the pricier end of the indoor cycling spectrum.

ZwiftBike

Zwift would not confirm the precise number of people impacted – though did note that employees were given a severance package. However, they noted that the layoffs weren’t just limited to the hardware division. Zwift’s PR liaison, Chris Snook discussed the announcement a bit more, saying:

“There’s sort of two things at play with that. We started to scale the business with anticipation of launching hardware, spinning those products up. But also, we planned for the additional revenue that would have been driven by sale of that hardware, and that revenue isn’t going to be coming in now. So the decision has been made to right-size the business as the result of the loss of that projected revenue stream.”

However, Zwift was clear that they don’t see the company in a dire financial position. Like many other companies, including recent ones to announce layoffs, these moves are largely future mitigation against what some see as an inevitable recession or at least “turbulence” (in Zwift’s words). Specifically, Zwift says that “the business is in a solid financial position at the moment”, and this was more about being able to weather the upcoming storm while also “having to avoid [future] funding rounds”.

One major loss within the reorganization is Lead Game Designer Wes Salmon, who has often been the public face in various community aspects for many of Zwift’s hardware efforts, as well as software efforts. But perhaps more importantly, he has historically been one of the key liaisons between Zwift and their hardware partners too, helping to integrate new hardware types into the platform.

Over the last two years, indoor training companies have seen a massive market boom, selling orders of magnitudes more indoor trainers and smart bikes than they typically would. That’s especially true for the more die-hard cyclists, the vast majority of whom have likely upgraded any older/lesser gear to higher-end hardware over the last two years, fueled by quarantine justifications.

Said differently, the top-end of market demand has basically evaporated in the last 3-6 months. Anyone who wanted a high-end trainer or smart bike has done so by now. Instead, the market has shifted to newcomers to the sport that bought a new bike over the last two years, and may now be considering purchasing a more budget-friendly smart trainer.

Zwift undoubtedly saw that writing on the wall, when CEO Eric Min and the Zwift board made the decision to halt the project and lay-off much of that division. One only need to look at Peloton’s recent hardware manufacturing oversupply, and that’s a company that’s still managing to sell 200,000 new bikes/treadmills this past quarter, according to their financial filings on Tuesday. To put it into perspective, Peloton sells more smart bikes in a given quarter than Wahoo/Tacx/Wattbike sells in a few years (if not ever).

Zwift’s Chris Snook elaborated on that a bit more as a core reason for pausing their hardware plans:

“We didn’t think it was a wise move to launch a high-end trainer or a high-end smart bike at this time. There are products existing on the market that are readily available, and there are going to be fewer people looking to spend big money on high-end trainers, we don’t want to be fighting for that space….The intent [of their own hardware] was always to grow the market, not to go into hand to hand combat with those guys [hardware partners], and that’s not great for the industry.”

Adding to all that is the substantially increased cost of shipping, arguably the most expensive item you could build in the indoor cycling world (often weighing over 100-120lbs), and in a climate with ever-increasing component costs. Zwift acknowledged that, saying that even before the last few months, the “supply chain is a longstanding issue” for the project (which Eric Min previously outlined those challenges back last fall). In many ways, it was probably the smartest business decision Zwift’s made in a long time. At best it was a distraction with likely minimal payout, and at worst it’d have cost them enormously from a financial perspective.

Asked whether or not Zwift plans to resume selling partner hardware on their site, Zwift says they’re “reviewing options”. As you remember, about two months ago Zwift started fire-selling all the hardware inventory they had (e.g. Wahoo KICKR/Bike/etc…), to clear the way for Zwift’s own hardware launch that was assumed to be this summer. That sale put partner hardware well below list price or even approved sale prices (most US companies operate under a concept called MAP – Minimum Advertised Price), currently showing up to 35% off. It’d make sense for Zwift to resume selling hardware though, as that’s a key pathway to getting people on the platform.

It’ll be interesting to see if this shift allows them to refocus a bit, enabling them to double-down on the core software platform. Zwift seems to tip their hand towards that, saying:

We are committed to increasing the development of the core Zwift game experience, increasing the speed of new feature releases, and making the platform more accessible than ever before. We firmly believe these changes will allow us to achieve these goals and better support the continued growth of our subscription business. Further, these changes will preserve Zwift’s strong financial position as the world navigates these turbulent times

Of course, the biggest downside here is the loss of employment for those employees impacted. Nobody wants to lose their job, and this will certainly have a substantial impact for those employees and their families. Given the current job climate, I’m optimistic it won’t be too difficult for many to find work back in the sports technology sector. There are plenty of companies hiring, far surpassing the handful of indoor trainer companies that are reducing headcount.

Hopefully, we won’t see too many more layoffs in this sector going forward. I think most of the remaining indoor training companies have largely been a bit more diversified and didn’t scale quite as high previously.

With that, thanks for reading!

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84 Comments

  1. Well, I think I said about 3 years ago that Zwift needs to make an affordable smart bike so everyone can get one and get on Zwift quickly and easily. Going for the high end market was only ever going to see a small number of sales to already keen, affluent customers. Zwift is a ‘fitness’ brand and the vast majority are casual users. But casual users will still spend on decent equipment if the price is right.

    • Todd

      The vast majority of Zwift users are not casual users. They are racer types.

    • Brett

      Nah Todd – as a life long road cyclist and racer – I disagree. Most of Zwift’s user base are avid cyclists, not racers.

    • Bobsj

      Wow, you really have your finger on the pulse. You should pat yourself on the back, Warren Buffett.

      All joking aside, Zwift is a cycling brand. Almost no one runs on it and I don’t see CrossFit taking off on Zwift anytime soon.

  2. Stu

    As exciting as the real life Tron bike looked, it’s downfall means Zwift will, I suppose, need to continue to integrate new features into other trainers. (Non Wahoo’s at least 😋). As someone who wouldn’t be able to justify changing trainers this could be a good thing.

    • That really sucks that they are laying off anyone just to be ready for a potential recession. And Wes is a great guy, that’s a huge loss imo.

    • Didn’t mean this as a reply but it still stands

    • Joe

      The only hardware (if any) that Zwift should have ever been working on is stuff that doesn’t exist yet. Like… why not instead of making a new smart bike instead work on a small Bluetooth control that attaches to your handlebars for dirt-cheap steering, route selection, ride-ons, hell even braking if they wanted to add that?

      Like you say, they should be adding value to what’s already out there, not trying to reinvent the (Zwift) wheel.

    • JaJa

      Just look at what is happening at Peloton. It may be too big a risk to the viability of Zwift the company to go forward with hardware now, rather than just their worry about a “potential recession”. If that is the case, the only smart thing to do is (unfortunately) cut staff, to keep the company healthy. This is only a guess of course. If that is their reasoning, they probably would not say it publicly.

    • Patrick B.

      Reasoning behind layoffs isn’t any potential recession, it’s a right-sizing of the industry after meteoric growth over 2020/2021 due to the pandemic. If a recession does occur (and that’s a huge “if”), the company would certainly be in a stronger financial position, but that’s not the main driver behind the decisions re: hardware and layoffs today.

    • Paul Himes

      Some of the pictures of their trainer (or their smart bike – I can’t remember) appeared to have that. That’s actually why I was excited to see them developing their hardware. I couldn’t care about a trainer or smartbike from them (unless it was cheaper or had better features than currently available), but I was hopeful that controller would eventually be available as a standalone.

    • Klaus

      That steering Hardware is there, but not from Zwift.

  3. Eugene C.

    Well that’s a bombshell.

  4. Tommy Haywood

    This is really good news for us as the consumer. I was really concerned they were going the way of peleton or even apple (closed ecosystem). Competition bin the softwares and hardware space is a good thing, albeit it can lead to fragmentation.

    Let’s hope a) zwift focuses on the software now and makes it more accessible, i.e. cloud gaming e.g. stadia. B) get steering working with the tacx bike!

  5. StephenB

    It always seemed a strange choice for them to push into this sector. There was an assumption that people get an indoor trainer – smart or otherwise, in order to use Zwift. When in reality at it’s core was to more broadly be able to cycle indoors whether due to weather, environment, or lately restrictions. There was a certain hubris and arrogance to their choice which has now give them, and others in the sector, a big fat fish slap across the face.

    Zwift are at risk of running out of VCs to support their agendas? I don’t know. But they need to focus on the core product and importantly salve the fraying patience of long-term users who have seen very little improvement in the platform.

  6. Colin E

    They are already not the greatest in software, they probably figured out that they can’t get away with the typical zwift excuse of “oops sorry your trainer is on fire, we will fix it on the next update….”

  7. Fabian

    150 people fired. wes salomon out.. i’m a bit skeptical about “increasing the speed of new feature realeses”

  8. Saracen88

    The sooner Zwift merge with TrainerRoad, the better. SYSTM within RGT is far more appealing than a dual subscription model.

    • dan

      rubbish. thats just your opinion. i cancelled that other thing – its not good. <- and thats my opinion.

    • Florian

      Please not, I love TR and prefer them to stay independent, nimble and focused. They’re on a great trajectory right now with Adaptive Training, automatic FTP detection and all that.

    • Carl J

      Check out Xert. They’ve been doing this for a lot longer than TR has been

  9. Marko

    Zwift few months ago: we want more money, so please join us to build a product aimed to destroy our partners (who enabled us to grow and become the company we are)
    Zwift now: ups, there is no exponential growth any more, never mind, you are fired.

    • Brett

      I guess the unicorn power up ran out.

    • Carl J

      They never wanted to destroy their partners. There’s no way that they could. That would mean everyone on Zwift would need to own a high end trainer, which wouldn’t happen

  10. F

    When I have asked Zwift why the high min weight for a woman, why does it always crash, no real reply. I use the tacx app more and it’s much more similar to cycling outside, for me as a very petite woman.

  11. Steve D

    Noticed that recently zwifts ads started showing more wheel on trainers and “normal” people just getting into the game more than just the elite racers and expensive gear.
    Maybe they have realized that we all start somewhere?

  12. Dolo

    “Zwift’s Chris Snook elaborated on that a bit more as a core reason for the lack of” and then the sentence just ends there, looks like a missing few words?

  13. usr

    150? Sounds like they used the end of the hardware feint to right-size far beyond just the hardware hires. I guess they know that there won’t be another VC round after two of the last three have completely failed: zero revenue from running, which still hasn’t graduated from “free” to freemium” and now hardware. At least the standout topic of the round between those two, competition, hasn’t been a total failure, it’s impossible to tell from the outside how what they achieved in that field since 2018 relates to expectations.

    Well, perhaps they successfully pivot from chasing yet another VC boost to actually becoming a viable company with the subscribers they have, I’d really love to see that happen (I’m kind of fond of a Watopia loop on a dark wet winter night)

  14. Robert

    The point is always the implicit value of the company: even if they would reach 5 Million paying users (which would be already huge), it would generate a potential yearly revenue of max 400M$/year (assuming average 6 months of paying subscription per year). Moving into HW was a forced move to justify the kind of capital they raised from VC and project the future value above 1 Bln (like the Peloton of this world). Now that the balloon popped, it is going to be very hard for Zwift : eg: 1 Mln active users/month –> 15 Mln$ revenue/month. With this level of revenue, you can keep max 50-60 people in R&D , while the VC will ask for some sort of tangible return on their money, hence even more payroll cuts

    • still Robert

      my own comment is that they “bet the company” on a level of growth that was almost impossible to achieve.. now the risk is that they are going to pay for this wrong bet with a lot of lay-offs and stagnation in development. My best wishes

    • usr

      They never had much of a company to bet, just an investment sinkhole “reinventing” itself (running, spectator sports competitions, hardware) from one funding round to the next. Problem with this approach is that investors actually insist on their money getting spent on whatever reinvention they where promised, so the runway does not really get much longer. Declaring defeat and downsizing towards break-even is the only chance they have.

  15. Chris

    That is very disappointing. I was particularly excited about the ability to mate a custom (Tron) front end to my existing trainer. Reason? We can then convert the trainer to a smart bike usable by all the family (as I won’t let them fiddle about with the settings on my road bike which sits on the trainer and it is too much of a faff constantly to take different bikes on and off). Maybe someone else can pick this idea up – presumably much easier to execute as it doesn’t have the power meter bit in it…..

    • Florian

      For this use case, why wouldn’t you get a complete smart bike instead? Why have a ‘dummy’ bike to mount on a trainer? Because you can take it off to save space?

  16. Charles

    Remember when I said Zwift wouldn’t be around in 10 years and you guys called me a fool. Just remember I told you so. Zwift is a terrible company and an ever more terrible “game”.

    • Matt

      I’m not sure what zwift ever did to you but it must have been awful.

      Clearly many people, ranging from the overweight middle aged dude trying to change his life to elite professionals disagree that it is a “terrible game”.

      Plenty of room for improvement (hopefully axing the hardware distraction will help) but its existence is much better than non-existance.

    • Gabe

      No I don’t remember.

      Zwift will be around for years.

      Don’t believe they can grow much more though.

    • Robert

      Agreed. The VCs will dump them, they will be bought back by management or some investor with more realistic expectations, and they will live on. Without promising (or delivering) doubling subscriptions every year, but still live on.

    • mpulsiv

      @Chatkes why do you push the narrative that Zwift is a “game”? It’s a solid training platform, built to train and compete. In contrast, Peloton deployed a lame “game link to blog.onepeloton.com

  17. Becky

    I have had Zwift for 4 years now and it just started crashing every time I use it since the last update. As per usual, their email response is “It’s not our fault, it’s your computer and/or graphics card.” My computer is a brand new gaming computer bought a year dedicated to only my cycling and ONLY has Zwift and Rouvy on it. NOTHING else is on it. I’ve been riding only Rouvy now and never have a problem, even with the higher quality videos. All my hardware falls within the accepted range.

    Until they fix it, I’m just going to not use it. I can’t afford something that I can’t use.

    • Shannon

      Hi Becky, try using the iPad version of Zwift instead, you won’t ever go back to the Windows version. Program updates are much faster and device on to ride time is much faster on the ipad.

    • dan

      So the fix is for windows users to throw away they new 700-1200 dollar gaming laptops and buy 700-1500 dollar ipads? Personally I see zero advantage to using an IPAD. I’m pretty sure that from a hardware perspective there are things I have that my laptop works with that Ipads or apple tvs do not.

    • David W

      I gave up using Zwift on my Windows 10 laptop because Bluetooth never worked in Zwift. They blamed the laptop. However, the same computer worked fine with TrainerRoad, Rouvy, Sufferfest and several others. It wasn’t the laptop it was Zwift. They never did figure it out. Continued to blame the laptop.

    • Dbart

      It was probably old as hell.

    • Just use your phone! No-nonsense and straightforward solution.

    • Carl J

      I’ve been using Zwift on an old laptop, that can barely open a browser, and it works, for the most part, fine (only issue is that it takes 10mins to load up).

      There is a good chance, that it could be your computer/issues with drivers that are installed on it (most Windows crashes are due to bad drivers)

  18. Lee Fox

    This gives me a faint hope of a partnership with Peloton. I think being able to access Zwift on that huge Peloton tablet would be awesome. With the newer bikes that have auto resistance you could add/remove distance automatically to match the terrain. Peloton seems to be going away from the longer rides in favor of shorter rides and being able to choose to do a Zwift ride for longer indoor rides would make me renew my Zwift subscription!

  19. anatso

    And with this from 3 days ago; Wahoo Debt downgraded:
    link to sgbonline.com

    • Indeed, someone sent that to me as well. It’s packed full of nuggets.

    • JaJa

      Seeing that makes Zwift’s decision a no-brainer.

    • Bruce Burkhalter

      From the article:

      “Wahoo has a good record of successful new product launches and it expects significant sales and earnings contribution from several new products and refreshes in late 2022″

      Ray – Any comments on this? 😉

      “There is also uncertainty regarding macro-economic conditions, particularly in Europe, the company’s largest market”

      I’m surprised by this. I thought the US would be their biggest market.

    • Brett

      I fully expect there to be consolidations in coming years with stagflation / hyperinflation in full force. Money is no longer cheap and companies who cannot control their bottom line / expenses will be forced out of the market. Who knows what the market will show us but Watopian Wahooligans in on a magic road in the Zwiftym would be everything many have been requesting for years…

  20. whereisfrance

    They are spinning this as only hardware focused, but with the loss of Wes and so many others it’s not about that. They let go so many people who only focused on the core game they want to say is their new focus, staff who have been there for years not working on a trainer.

    People who knew things about the game, bugs and community, pre smart bike, that no one else can replace. The people who actually listened to the users who built Zwift and advocated for what Zwift now claims is their focus everyday and didn’t care about an expensive smart bike. Many things that made Zwift special no longer exist in their staff and thinking otherwise is foolish.

  21. Thomas Fearnley

    Any thoughts on what this might signal for a potential merger or acquisition with Trainerroad?

    • Jay

      Not great. ROI will have an even stronger focus than before, so expect less niche development and more focus on breaking into new markets for users. TrainerRoad is a niche within a niche that’s already part saturated by their own plans and TR users who sub to Zwift anyway.

      User retention tactics should increase though. Events often have recyclable frameworks, and they can add addictive role play elements seen across other ‘games’.

      Only hope for a TR deal now is that the cash is already allocated or perhaps it was a decision between hardware or TR, and TR made more sense as is pulled in more users.

      Still holding a flicker of hope myself, but I wouldn’t bet on it.

    • Hard to say. I mean, ultimately, it really comes down to whether or not TR wants to sell (to Zwift or others). That’s the only thing that’s kept it from happening.

      I’d guess though that any offers that were made 3-4 months ago would certainly be higher than any offers made now. And higher further than any offers made in 3-4 more months.

    • Daniel Andrews

      I assume TR likes the fit with its current investors. Zwift VC’s seem to be the standard garden variety types who focus on increasing subs and decreasing expenditures, but send companies further into the red to do the former. Zwift should have purchased the hardware end and rebranded or just licensed if they needed to. Saris/Rouvy and Wahoo/RGT will prove to be formidable rivals in the coming months. Who ever wins the war for racing and training will win the day, because that is your hardcore subscribers. Those are the ones you have to win. The general fitness and social aspects of Zwift are great and possibly Zwift can survive longer because of those. If RGT and Rouvy get better at doing segments especially shorter segments they have a chance because Zwift racing allows some value to almost all types of racers and that’s where the war will be won.

    • Daniel Andrews

      Sorry to repy to my own post again. Zwift has never shown an interest in purchasing or rebranding, they acquired ZP, but that was a fiasco on Zwift’s end integrating it into their current systems and didn’t have to rebrand then cut API access. The Zwift VCs think they have should have the entire cake. They may end up getting it without rebranding and being able to merge and acquire on the cheap, but that’s a long shot. The TR crew seems have been able to resist all comers in the acquisition department primarily because they are likely being low balled.

  22. Jay

    The hard work will have been done. When/if conditions improve years from now they can return to it with upgraded tech (and hopefully design).

    Hardware exists already so no real loss to consumer, but what doesn’t exist is a deep training platform fully integrated into a gamified environment. TrainerRoad could have been the start of that, though all talk seems to suggest that’s off.

    It’s also quite niche and many people are happy enough, not that they have a choice. There really only is Zwift.

    Wahoo needs years to even possibly catch-up. Zwift can coast for now. Manage cash flows. Keep an eye on opportunities.

    Chasing non-roadies might be a better spend than acquiring TrainerRoad. Go after Peloton’s fitness market. At worst they’ll have to deal with whining from current NIMBY types, but financially it could provide the best ROI. How they’d do that I’m unsure -new type of live ‘classes’? New gamification modes?

    Building more routes is good for us existing users, though many of us barely look at the screen while doing ERG workouts. We just kinda like it being ‘there’. Racing if gamified into some sort of fun group challenge where most power or whatever earns points could draw fitness types. There is stuff out there already.

    Interesting times, but perhaps no fireworks for while.

  23. Dolo

    Kinda feels like Zwift and Wahoo are like Homer Simpson in that one episode: “I put all my money into Pumpkins, they’ve been going up the whole month of October. I think they are going to peak around January.”

    “Indoor training has been more popular then ever during the pandemic! It’s definitely going to sustain that popularity and continue growing after the pandemic is over.”

    • C.Sco

      Ha! The Simpsons really do have a reference for pretty much everything. I think you (and Homer) summed up the situation perfectly.

  24. C.Sco

    I think the home fitness industry, in general, got a HUGE economic bump from the Covid lockdowns / work from home phenomenon; and that some companies (apparently Peloton and Zwift in particular) possibly were a little too optimistic in their growth plans during what turned out to be a finite sales bubble.

  25. dan

    Not sure about the EU or others, but i’m wagering that even if you have a warehouse full of product ready to go outside the US border, getting it onto a ship, through a port, onto a truck to a warehouse and then onto another last mile delivery service could EASILY take an additional 6-9 months right now. Otherwise you would then need to relay on the DHL’s of the world to transport one at a time from production to end user?? Good luck there is no more price competitiveness at that point

  26. DBart

    What a crock of shit.

    I know people there. There story here doesn’t line up.
    They got rid of an office manager – nothing to do with hardware.
    They got rid of our longstanding membership and compliance guy – NOT hardware related.
    They got rid of YC, the head of operations for the game side of things.

    Somehow, they still have the people that run the hardware stores. None of this adds up. The business decisions don’t seem all that smart.

    Hopefully RGT and others snap up these people. I’m eager to hear about anywhere that Wes Salmon ends up.

    • Joe

      I’ve said this on Reddit, but to me a lot of this feels like the type of streamlining you’d do if you’re trying to put yourself out there as an acquisition target.

    • Jay

      Apple would be interesting. Nice win for both sides.

      I’m not sure why there’s so much consternation over the software layoffs. We’re well into time for a refresh. Zwift needs new ideas and new talent. Wes has done, fine. But with Zwift having built some reputation, they can surely attract some heavyweights. Or at least some midweights.

      Sport gaming or this type isn’t that attractive in the Valley, but get the cheque book out. That talks too.

    • A noted in the post and Zwift’s own quote in the post, it wasn’t just hardware teams directly, because Zwift had ramped up people based on revenue projections that of selling that hardware. That included support and others as stated in the post.

      Keeping the hardware store people actually makes sense, if you’re going to go back to selling partner hardware (which, also makes sense). If your goal is to make it easier for newcomers to get into your platform and the sport, having a one-stop shop on Zwift.com (or any platform) is well proven to do exactly that.

  27. Kevin LaCour

    “So the decision has been made to right-size the business”

    That’s French for “fire a bunch of people” …

  28. James

    They fired 100’s of people, from all parts of the company. Not just hardware teams; Events staff, CS teams, design, copywriting, everyone got hit hard. Hell, a founder and multiple VPs got the axe.

    These absurd hiring sprees that are then followed by even larger firing sprees are indicative of a massive issue thats been dwelling for years.

  29. Francis

    awww. I have the Wahoo Kickr Bike. Would have gladly replaced that with the Zwift Tron Bike if it proved to be as capable as the Wahoo bike. Maybe I’ll just add some neon lights on the bike instead.

    • Bnt Dlll

      It looks like Zwift has no business model.
      You don’t have to come from any high end business school to understand this.

  30. Mike Richie

    I must say I’m a little surprised people in the industry were this clueless, their businesses started growing wildly because of the pandemic and the need for indoor fitness solutions, not because they had invented the next hula-hoop (although in truth that didn’t last long either). They had to know the pandemic would end. I would think that if Zwift had created a bike that could have been transitioned to fitness clubs they could have reached an entirely different market (and perhaps even product). And would not have been in competition with their hardware partners.

    • usr

      It’s not “industry”, it’s the general state of VC funding: VC used to be about finding hidden gems with a reasonable chance of fulfilling its promises, but in more than a decade of quantitative easing and money concentration, VC has slowly turned into a game of drowning in money Abby growth fantasy that isn’t a solid contender for worst investment opportunity ever. Zwift surfed those waves on absurdly high funding rounds (compared to the market size of core Zwift audience) and it’s better for everyone involved if they switch into salvage mode earlier than later.

    • jww

      @Mike – these were my thoughts exactly. It has been clear for 18 months that **at some point** these Covid-winner industries were going to face serious pain from pulled forward demand.

      The way the CEO initially described the hardware strategy was obviously disingenuous: That Zwift had to own hardware because the existing players couldn’t make enough. Come again?

      Seems like a case of an empire building banker turned CEO. Growth slowed, so they realized they needed a new “story” to tell. Then growth REALLY slowed and they couldn’t afford the story.

  31. Charlie Dill

    I’ve been an avid Zwift rider for 3+ years. I also am very familiar with the complete lack of business acumen from Peloton for assuming that the sales trend during Covid was going to continue. Their failure in this regard was pretty obvious.

    But Zwift has a different offering IMO. This is a legitimate alternative to outdoor riding. It’s nowhere close to taking a class with a pre-recorded instructor. Even if you feel like you know that instructor.

    Zwift subscriptions are a lot cheaper than Peloton so easier to keep active during an “outdoor” season. Plus the bonus of being able to ride at night or bad weather. Those of us outdoor riders know the continuous risk of weather affecting a planned ride.

    I also race on Zwift (WTRL TTT) which by itself will keep me engaged even in the summer months. I can’t see that sort of thing happening with Peloton. People choose an instructor / class but no one else on the site has a relationship, or even much of an identity on the platform.

    Besides friends I ride with on Zwift whom I met through the TTT, it’s easy on a ride to develop enough of a relationship on a ride to have a chat via messaging in game. Peloton is an incredible workout but there’s zero social connection.

    And Peloton’s value is in their programming / content. The hardware is becoming a commodity. For the same reason it’s a decent idea for Zwift to move away from hardware sales.

    Licensing or being an agent for 3rd party hardware makes lots of sense.

    I am confident that Zwift has long term promise. I would be legitimately sad if Zwift disappeared.

    All that said, I hope they double down on product development. More worlds, more routes, more variety.

  32. Avidzwifter

    Zwift is a good product for multi rider cycling but there are so many areas the product needs improving. I believe they should focus on the software. The interface is below par and the screen data and customisation is also lacking. They have the opportunity to really drive this so I hope they regroup and double down on the experience.

  33. Martin C

    if they are purchasing TR then this makes sense.

  34. Jason

    As a newbie, I welcome more budget-focused products.

    I am consistently blown away by what people will spend on bikes.

    • Michal

      Huh, bike stuff price bubble is something special. You end up with bikes costing more than good motorbikes for no good reason. I don’t want to even start with cycling apparel or tires.

  35. Zwift says that “the business is in a solid financial position at the moment”. Tell me what you praise yourself of, and I’ll tell you what you suffer from.

  36. Jonathan Zappala

    It’s not a sign of peak indoor as some have suggested, it’s a sign of the coming recession. Zwift is preparing for it. Maybe not directly, but they are right sizing the company because they don’t see demand coming for a new product. I want to buy a smart bike, but I can’t afford it right now. What did I cut back on first as inflation eats my wallet? Bike purchases. I can be content with what I have, it I also have to. The other thing I have greatly cut back on his how many races I do. Consumers cutting back on stuff like this is the gateway to a recession probably coming the end of this year or next. Sad times, you should get your own house in a good position for it too.
    I guess my hope that they lower the price now that they have more users to spread the costs won’t be happening.

  37. Alan Peery

    This could be a good thing. Maybe their focus will return to creating more terrain as it should have been all along, because their rate of creation has been far below the number of riders that came along during the pandemic.