Zwift has become the latest company in the indoor cycling space to lay-off staff and shelve plans to expand as it too has been impacted by the lockdown-related boom coming to an end.
Peloton and Wahoo have already seen their businesses hit in the same way and Zwift following suit confirms the unprecedented growth period for indoor cycling witnessed during the pandemic is over and more normal trends are returning.
However, the company claims it has hit “turbulence” rather than running into serious problems that would put it at risk. In a statement first reported by DC Rainmaker it said “the business is in a solid financial position at the moment”.
The following decisions have now been taken by Zwift as its revenues come under pressure:
- It has paused its Zwift bike and trainer hardware plans, meaning the bikes and home trainers it planned to roll out are now officially “paused”
- An estimated 150 employees have been laid off as revenues from the anticipated top end of their market have dried up
- Many of the staff let go were those working on the Zwift bike and trainer hardware plans, meaning that project looks like it is abandoned rather than paused
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The company has decided to switch its focus away from developing high end, expensive, offerings to diehard cyclists who justified spending more on indoor cycling when riding outdoors was banned or restricted during periods of lock-down.
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“We didn’t think it was a wise move to launch a high-end trainer or a high-end smart bike at this time,” Zwift’s press spokesman Chris Snook told DC Rainmaker. “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.”
Snook added the lay-offs were not limited to hardware staff, saying the anticipated areas of growth were not going to happen, with supply chain issues and more turbulent economic conditions also impacting their decision-making.
“We started to scale the business with anticipation of launching hardware, spinning those products up,” he said. “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.
“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.”
