Updated: Apr 26, 2020
As gyms and studios are temporarily closing their doors as an immediate response to help “flatten the curve” and help mitigate the spread of COVID-19, many operators and managers are scrambling to deliver content to their member base who are now self-quarantined AT HOME. Many options exist and gym brands and instructors are quickly uploading content to YouTube and various social accounts while doing live streams via Skype, Zoom, Instagram, Facebook and more to immediately meet their members with little to no investment. These are all smart options for now, but only temporary and limited.
We at Endorphinz are seeing the rumblings of a bigger shift and the need to think about this as a product while still interacting with your members to help them feel connected with your brand and instructors. Prior to the COVID-19 outbreak there was a shift taking place to an omni-channel strategy for the industry as a whole and with this huge wave of fitness content online the supply is through the roof and will now become a requirement going forward.
Prior to COVID-19, there were hundreds of club and studio brands who offer free content online while offering monetizable options. These organizations are making 6 and 7 figure incomes with a much lower cost of acquisition and running a +75% margin business. There are a lot of factors that go into achieving that but based on our research we had estimated the market to have grown last year alone at triple digit growth rates. Whether you agree with it or not, fitness streaming and content is now a necessary channel for all fitness organizations and will be a fail safe revenue stream for the future.
We believe it’s the decisions you make today that will impact how this plays out for your fitness organizations. Standing up a platform is not even half the battle and that is why we focus on program management with a heavy focus on the upfront plans being developed. We even envision the brand of the future in fitness will follow the Warby Parker model and start online first and then go into bricks and mortar.
The 7 Step Process To Developing and Launching A Fitness Streaming Solution
1. Create A Business Case Using Insights
2. Financial Model and Allocation of Resources
3. Platform Procurement and Integrations
4. Content Production and Sourcing
5. Online Store Merchandising
6. Online Channel Development
7. Story Media and Connections
INSIGHTS INTO EACH STEP PROVIDED BELOW TO START YOUR THINKING
1. CREATE A BUSINESS CASE: We say “The process of putting the business case together is the product vs the plan itself”. We have a template model we follow like any other business plan which starts with aligning the companies mission and vision with an agreeable vision for the fitness streaming business. The difference with fitness streaming is our research shows that depending on your business model the user base of the online platform consists of between 70-80% of the users NOT being members of the club. The reason is clear and it is part of the why: a more accessible product, no schedule to align with, a lower price point and it’s a top of funnel product that can serve those with “gymtimidation”. We have one of the largest fitness streaming knowledge bases with best practices which supports our efforts in creating a viable strategy.
2. RESOURCE ALLOCATION + FINANCIALS: Each plan requires resources, even free ones. Just like any other plan you have to evaluate what skills you have and don’t have etc. We look at resource planning as A) Time B) Money C) People. We recommend doing a top down and bottom up approach to the financials and have the KPI’s and industry benchmarks that makes for a more accurate forecast model. Currently, most platforms operate in a resource lite model with the average SVOD model delivering a low 6 figure revenue stream using their existing staff with split time between retail and digital. We are currently supplementing the brands team in a fractional role to see what the increase int output results in along with being a partner to operate these platforms.
3. PLATFORM PROCUREMENT + INTEGRATIONS: The plan and model needs to be in place BEFORE you select your platform as not all platforms do the same thing. In addition, there is this common trend of starting with a quick to launch platform and eventually needing to switch platforms. Options exist to stand up a browser based solution in the matter of days and then depending on the application you can have all screens covered in 4 to 6 weeks. We have evaluated close to 24 platforms and segmented the various types into 4 categories across all types of content to make the selection process very rapid. The average selection and procurement process can take up to 90 to 120 days as there are a lot of options and things to think about and learn. We have years of experience in this process and have narrowed this entire process down to days.
4. CONTENT PRODUCTION + LICENSING: The heart of this business is in the content. We have a matrix of all the types of content and what options exist with a quality vs cost matrix. We see 4 options with your content 1) DIY 2) Hire A Virtual Producer 3) Use A Production Studio 4) License Your Content. Each has pros and cons and a lot of people make this decision based on the cost versus the ROI. The cost to produce an hour worth of content has a large variance from $250 per produced hour and in some instances as high as $2,000 per produced hour. And when it comes to licensing content there are thousands of options but not always a publicly knowing sourcing option where one can work through aggregators or do direct licensing deals. Those licensing deals can be done in multiple ways but requires you to have thought about your business model. Production is an entire article on its own as there are many things to think about, including music (another article). We work across all 4 options and have our own virtual producer model as most clubs like to do their shoots at their location with their staff.
5. STORE and CONTENT MERCHANDISING: Now that you have a platform and content it is time to set up the store. When you think about your merchandising we consider this to start with meta data, content ingestion, curation, tile management, pricing, bundles and much more. This part of the process will impact the engagement once the consumer gets to the store. A good quality experience with the ability to up-sell and cross sell to users is part of the revenue strategy. In addition, more and more groups are integrating accessories and apparel with a % of all users purchasing based on the convenience. This process is not a one and done process. As an example if you have been on Netflix at all lately you’ll notice the tile management with image and promotional changes and if you do this correct you use the data analytics to execute some great programming with this.
6. CHANNEL DEVELOPMENT + FUNNELS: As mentioned earlier a lot of the users are not members of the physical retail store so this requires you to think about outreach. What we have found is consumers are engaging with the brand because they know of it and then discovering this digital content option which is a lower to barriers entry product and what we call top of funnel. We have found a direct correlation between the number of monthly active users in your website and your social channel followers. There are additional campaigns and paid media that can help here but we work to set up the funnels based on this type of thinking while developing a separate channel plan for the paying members as they both have different conversion rates and we believe the brand can start this thinking early way before they launch the store. We have retail to digital and digital to retail funnels that we use and test variations of based on the brand.
7. STORY MEDIA and CONNECTIONS: We have a philosophy when it comes to content and one of the 3 is creating genuine content. People love stories and what you might think of as behind the scenes and personal stories. There is a 7 step process to developing that compelling story line and it has a much higher connection and engagement rate when coupled with the core product. This requires you to think about this “script” ahead of launch and capture the content throughout the process. As Gary Vaynerchuk says “Document, Don’t Create” and this approach saves time and hits the spot. Capture content from the entire process from the behind the scenes of the production shoot to the stories about the instructors and more. Consumers love the humanizing side of content and this can facilitate better connections. It also can serve as a lead up to the launch of the platform to create more stickiness as the momentum factor can really help with any potential network effects strategy. We have been developing multiple concepts around story media as well as different ways to package the content into programs vs just stand alone exercise videos.
As you can see there is more than just standing up a platform when it comes to developing and launching a successful fitness streaming solution. Ask any of the existing brands with content and they will tell you it’s the content you create and what you do on top of that platform that matters the most. It can be the difference between success and failure. We welcome the opportunity to connect with you and your team to talk about this virtually as we are all heeding the recommendations of social distancing