Music rightsholders are very excited about digital fitness and wellbeing as a new category of licensing partners. Peloton and Calm have been at the forefront of that trend, with their services focused respectively on working out and chilling out. However, both are also enduring some challenging times in 2022, as represented by their latest plans to cut their workforces.
Peloton already laid off 2,800 staff earlier this year, but now 784 more will be let go, as part of cuts that include rowing back on its retail presence in North America. “Unfortunately, these workforce shifts result in the departure of 784 employees from the company,” a spokesperson told The Verge. “Any decision we make that impacts team members is not taken lightly, but these moves enable Peloton to become more efficient, cost-effective, and agile.”
At its peak in January 2021, Peloton was worth $49.27bn as a public company. At the time of writing its market cap has dropped to less than a tenth of that: $4.56bn. That reflects the scale of the challenge for CEO (and former Spotify executive) Barry McCarthy, who was appointed earlier this year.
Peloton recorded a $757.1m net loss in the second quarter of this year (its fiscal Q3) as its revenues declined by 24% year-on-year. The company will be announcing its Q4 and full-year financials on 25 August, where we’ll get more insight into the problems it’s facing, and whether McCarthy is getting much traction turning them around.
As for Calm, it has laid off around 90 staff (out of a total headcount of 400) according to the Wall Street Journal. It reported on a memo announcing the news sent by the company’s CEO David Ko, who took sole charge at Calm in July as its co-founders stepped back to co-executive chairmen.
The cuts are part of wider strategic changes at Calm, with Ko telling staff that the management team have “revisited the investment thesis behind every project… We did not come to this decision lightly, but are confident that these changes will help us prioritize the future, focus on growth and become a more efficient organization.”
Fitness and wellbeing tech was one of the sectors that had a silver lining from the Covid-19 crisis, and one matched by investor confidence and dollars. However, as the biggest markets for this technology reel from a global pandemic into what’s anticipated to be a tough economic crunch, the sight of their flagship companies laying off staff is a warning worth heeding.
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