Categories
Corporations Startups

Digital Subscription Growth Partnerships

I’ve written before about the power of partnerships and Peloton’s recent deal with United Healthcare (UHC) is another example of why this can be extremely powerful. Beginning in September, UHC customers on employer sponsored plans will get complimentary access to Peloton’s digital subscription for one year. Afterwards, customers can continue and pay Peloton directly or simply let the subscription lapse. We’ve seen trial deals on entertainment subscription products now for a few years (think Netflix and TMobile, Verizon and Disney+, Hulu & Spotify, etc), with more likely in the pipeline. All of these services struggle with high customer acquisition costs and partnerships are an extremely effective way to grow. 

Consider a scenario in which Peloton is able to convert 10% of UHC’s 4 million customers who will have access to the free subscription (this is not unrealistic – some studies suggest that upwards of 30% of customers who got 6-months of complementary access to Disney+ with their Verizon plan, ended up keeping the service beyond the trial period).  That’s 400,000 new subs paying $12.99/month delivering potentially $60m to the topline annually. And that’s just one partnership. There’s a large addressable market of employers who could subsidize these subs for their employees, and even consumer product companies who could bundle as a gift with purchase. Healthcare insurers have been trying to roll out perks to their customers in earnest for the last few years. The idea is simple – wellness perks attract more employers to the insurer while at the same time helping reduce risk by incentivizing customers to live a healthier, active life. 

If you’re a startup with a digital subscription business model, distribution partnerships akin to Peloton’s should be actively pursued. I want to note that obviously being a public company and a modish of the moment during Covid, might make this seem easy, but each of the insurers has built a marketplace of wellness brands willing to offer discounts to the insurance companies’ customers. Rally Health, Better You Strides and others are a few companies managing this on behalf of the healthcare giants. 

Share this: