With Fitbit’s fall from the wearables throne in recent years, is the company now looking to its services to help it rise again?
In late August this year, Fitbit unfurled the new subscription offering named ‘Fitbit Premium’ alongside its fall launch line-up. Costing $9.99 a month, or $79.99 a year, Fitbit Premium allows you to enjoy in-app tips, guides, and step-by-step health and fitness programs tailored to your needs. With over 10 years of experience making devices that track people’s activity, Fitbit is also trying to work with third-parties as well as internal experts to come up with guides that help improve energy levels, nutrition, and general wellbeing.
After its revelation in late August, Fitbit Premium was launched in September. Though the main aim of the subscription model is to help people facing issues like weight loss and overall wellness, the company also said that they are looking to target specific chronic issues ultimately. Amongst the many features of the premium service are thousands of workouts and a health report that you can carry to your doctor at your annual physical.
Apple’s Top Strategies: Offer Subscription Services To Customers
Back in 2016, Fitbit sold more wearables than Apple and Samsung combined. However, in recent years, Fitbit faced struggles competing with bigger companies like Apple in the smartwatch market which steadily eroded its market placing them in 5th position this year.
Now, they have adopted a strategy straight from Apple’s playbook – offering subscription services to customers.
After Fitbit’s Versa Lite smartwatch witnessed disappointing sales, its stock is presently trading below $3 a share, over 85% lower than its IPO price from 2015. In Fitbit’s 2019 revenue forecast that was released on Jul 31, they blamed the disappointing sales of the recently launched smartwatch Versa Lite for sending its shares tumbling as much as 16%.
Based on the recent report released by Strategic Analytics, Apple is the leader in the smartwatch market followed by Samsung, and then Fitbit.
During the press event held before the launch, James Park, CEO of Fitbit, stated that the subscription services are a way of bringing transformation to its business model. Rather than relying on convincing customers into buying a new device after another, the subscription services will help Fitbit hold on to its customers and build a long-term, beneficial relationship with them. Park also mentioned that the subscription services will help create more predictable and frequent revenue streams.
Fitbit’s chief competitor Apple has found success through subscription services such as Apple Music, iCloud, and Apple TV+. It has also been found that revenue from such services helped Apple offset declines in revenue from the iPhone business.
Talking about Fitbit Premium, it should be noted that this isn’t the first time Fitbit has introduced a paid service. For instance, Fitbit already owns a Fitbit Coach App that costs around $39.99 per year and offers personalized video workouts.
Currently, Fitbit is also working on another paid service that will allow users to contact certified health and wellness coaches for personalized guidance to overcome weight loss or diabetes issues. This coaching service is supposed to launch in 2020, and these added digital health features are thought to help Fitbit boost its financial health.
With all their advances in the subscription arena, Fitbit is definitely not giving up on its hardware ambitions. But, will the new subscription model help Fitbit in the long-run?
Presently, Fitbit Premium puts every health and fitness feature that the users require in a single app. What’s more, there are even fitness collaborative and adaptive challenges in which a user can compete against their friends and family. It is a smart strategy because no other app, let alone Apple Watch, track sleep and count the users daily step count, or resting heart rate.
With all such features, Fitbit will definitely succeed in squeezing some extra money out of their customers. Like Apple’s strategy of developing services that are exclusively available to owners of its hardware, Fitbit’s new subscription service will keep the users loyal and paying for the long term. In fact, the strategy will prove to be especially beneficial for Fitbit because it offers incremental updates without pushing the existing users to spend more money on new hardware.
Though only nine guided programs are available on Fitbit premium presently, Fitbit said they will be adding more as time goes on. With a lot of updates to come, Fitbit’s new subscription model definitely looks a winner that will help the company take some market share back from the likes of Apple and Samsung.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Apple and Fitbit. Read our full disclosure policy here.