Fitbit pushes beyond hardware with new subscription service
Fitbit has struggled to compete in the smartwatch market against bigger companies like Apple. Now, it’s looking to boost its business by taking a page from Apple’s playbook: offering more subscription services to customers.
On Wednesday, the company announced a new subscription offering called Fitbit Premium, which promises users access to more in-depth insights about their sleep, fitness and overall health. Among other features, the premium service will include thousands of workouts and a health report you can give your doctor at your annual physical. It will even offer personalized health insights, such as noting whether your resting heart rate went down because you increased your step count.
Fitbit Premium will launch in September and costs $9.99 per month or $79.99 per year. Fitbit is also working on a paid service that lets users chat with a certified health and wellness coach to tackle goals such as weight loss or managing diabetes. The coaching service will launch in 2020.
These added digital health features may be key to boosting Fitbit’s financial health. In July, Fitbit slashed its outlook for the full year following disappointing sales of its Versa Lite smartwatch. Fitbit stock is now trading below $3 a share, or more than 85% below its IPO price from 2015.
Apple is the leader in the smartwatch market, followed by Samsung and then Fitbit, according to a recent report from Strategy Analytics.
At a press event ahead of the launch, Fitbit CEO James Park said the subscription service is part of a “transformation” of its business model. Where it once relied on convincing customers to buy one new device after another, Fitbit now hopes to hold on to its customers with premium services and build “a long-term, beneficial relationship” with them.
Subscription services could help build “more predictable, recurring revenue streams,” as Park told investors in the company’s most recent earnings report. The company had previously been testing the premium service in New Zealand and Australia.
“While the device sales begin to decelerate, it makes sense that content sales would be an opportunity for the company,” said Monica Peart, senior forecasting director at research firm eMarketer.
Apple, one of Fitbit’s chief competitors, has also found success by investing in an increasing mix of subscription services, including iCloud, Apple Music and Apple TV+. Revenue from these services has helped offset declines in revenue from Apple’s core iPhone business.
While the initial version of Fitbit Premium will focus on everyday goals such as weight loss and improving sleep, Fitbit eventually plans to expand the service to help customers manage and prevent more serious health conditions, including diabetes, heart disease, hypertension and sleep apnea.
This isn’t the first time Fitbit has launched a paid service. For example, it already has a Fitbit Coach app that costs $39.99 per year and offers personalized video workouts.
While it’s doubling down on subscription services, Fitbit certainly isn’t giving up on its hardware ambitions.
The company unveiled two new products on Wednesday, including the Fitbit Versa 2, the latest version of its health-focused smartwatch. The device, which sells for $199.95, will incorporate Amazon’s Alexa voice assistant for the first time. Fitbit also announced the Aria Air, a new $49.95 smart scale that helps users track their BMI and weight.