Fitness pioneer Freeletics adapts cyber dumbbells to the crisis

Freeletics is about speed. A few years ago, the fitness app inspired recreational athletes with a new approach to their training: almost endless repetitions of strength exercises such as sit-ups, squats and push-ups in virtual competition - without equipment. All over Germany, mostly young men jumped and panted in parks, on soccer fields and even playgrounds.

But now the app has lost its momentum. Innovations are also a long time coming: the long-announced intelligent "Staedium" dumbbell set, for example, is still not on the market. According to WELT information, Freeletics now wants to deliver the set to the first customers by the end of the year at the latest – almost nine months later than initially planned. In addition, the hardware is significantly less demanding than initially planned.

The new offer is important for the start-up to keep up with the competition. In 2018, the three Munich founders sold their app five years after it was launched to a number of sports investors from the USA - including former Nike managers and financiers behind legendary sports teams like the San Francisco 49ers. According to "Crunchbase", a total of ten different financiers put 70 million dollars into the company in order to, among other things, drive expansion into the USA.

Nevertheless, it became quieter on the German home market for Freeletics, while another type of home training boomed at the latest with the first corona lockdowns. The US manufacturer Peloton first took the living room and then the stock market by storm. Connected sports equipment, it seemed, was the future of the sports industry.

The German start-up Vaha, for example, not only won national goalkeeper Manuel Neuer as an investor for an interactive sports mirror, but also venture capitalists. Investors criticized the old generation of fitness apps: Without their own sports equipment, according to the theory, customers only stayed with the app subscriptions for a short time - too short for a highly profitable business.

Freeletics followed suit late, but nonetheless. A year ago, the Munich-based company announced its own sports equipment that is intended to bind users in the long term. Under the new Staedium brand, they wanted to market a weight bench with two dumbbells, an exercise mat and, most importantly, a console. A camera should use artificial intelligence (AI) to monitor recreational athletes like a personal trainer and recognize incorrect training.

The promise: Connected to the television at home, the training would become a kind of video game with the opportunity to compete against other players in a network. Incidentally, that should clear up the main criticism of Freeletics: Because the classic Freeletics app does not use weights, advanced athletes in particular often have to do hundreds of exercises in a row.

And that's pretty dull in the long run. In internal surveys, 80 percent of users reported that they were bored during strength training. The fluctuation is correspondingly high.

Now Freeletics is belated with Staedium - and thus perhaps too late on the electronic sports equipment market. In any case, the hype surrounding Peloton disappeared as suddenly as it arose with the end of the global corona measures. The US company is cutting locations, and the share has lost two-thirds of its value since the beginning of the year. The classic fitness studios, on the other hand, are making a comeback after the pandemic.

Freeletics justifies the delay with the fact that it has thinned out its plans. The company does without the high-tech console with the smart camera. In addition to the two dumbbells and the gymnastics mat, Freeletics now only sends a holder for a smartphone that can be connected to a television.

Apple's iPhones and some Samsung models of the upper class are compatible, i.e. comparatively expensive devices whose computing power enables image recognition via AI and which have a video output. "Staedium" has shrunk to a mobile phone app that uses the device camera to recognize markings on the adjustable dumbbells and thus enables games to be played on the television.

Freeletics is thus adapting the system twice to the current crisis. On the one hand, the Munich-based company is refraining from a new round of financing for their company, which was actually supposed to give Staedium additional fuel. With the sharply fallen valuations of competitors like Peloton, a new round of financing would have been expensive for existing investors:

They would have had to give up a large part of their shares in order to collect fresh money. And they just weren't ready for that. The company has also optimized its marketing with online tools in such a way that it can achieve 50 percent more growth with the same budget. Therefore, fresh money is no longer necessary.

On the other hand, by dispensing with high-tech components, Staedium is also significantly cheaper for customers. For the originally planned 2450 euros for the starter package alone, it would probably be very difficult, especially in times of inflation, to convince enough customers from the rather young target group.

Now the dumbbell set, which can be adjusted between four and 24 kilograms, will cost 795 euros. This is still just within the price range for comparable adjustable dumbbells without app gimmicks. However, a monthly fee of 30 euros is due for the app, which is the same as the monthly costs of a fully equipped discount gym – and is three times as expensive as Apple's Fitness app for TV and smart watches.

Freeletics co-founder Daniel Sobhani defends the decision to do without the console to WELT: "It has so many advantages, such as lower costs and thus a significant price reduction, better user-friendliness, easier shipping and less dependence on international supply chains, that we have decided to accept the associated later delivery date in favor of an even better offer.”

The Freeletics boss is hoping to fill an alleged gap in the fitness market just in time for Christmas sales: So far there have been offers for endurance training at home, such as networked fitness bikes or gymnastics games such as for the Nintendo Wii console, but no mixture of strength training and video games.

At the same time, the classic Freeletics app should be tidier and more user-friendly. After the planned round of financing was abandoned, this core business would have to become profitable "soon", according to Munich sources. Therefore, the app must remain attractive. For a number of years now, she has also included barbell exercises – in other words, she is partly competing with the new offer for strength training with weights.

Freeletics' most recently published business figures are from 2020. According to the "Bundesanzeiger", the company had a turnover of 37 million euros with 169 employees - ten million euros more than in the previous year. The bottom line is that the loss in the period decreased by 1.6 million to 9.8 million euros. At that time, networked sports equipment was not planned as a sales driver, but rather the increased sale of sportswear.

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