Beachbody: Thinking Beyond the Infomercial
Nov. 18 (Bloomberg BusinessWeek) -- Tony Horton has trained senators, soldiers, and celebrities such as Bruce Springsteen and Billy Idol. In the past three weeks, the latter-day Jack LaLanne has been to six states to promote his grueling in-home fitness program, P90X. Soon, Horton is off to Japan and France for training sessions, his first book will be published in December, and he's shopping around a reality TV show. "The first five months of the year I slept in my own bed only 50 times," Horton says. "It's pretty crazy."
P90X, flogged countless times daily on cable TV, is an anomaly in direct marketing. Most of the pills and potions seen on infomercials seem to offer physical perfection with little effort. Horton, by contrast, has persuaded 3 million people to pay $140 for his 12-DVD program by promising three months of pain and perspiration in a routine that combines resistance training, yoga, boxing, weight lifting, and a strict diet.
At age 52, 5 feet, 11 inches, and 175 pounds, Horton can do 35 pull-ups, 100 push-ups, and climb a 25-foot rope upside down while barely breaking a sweat. In the videos, Horton combines the discipline of a drill sergeant with a touch of humor left over from a youthful flirtation with stand-up comedy. What Horton calls muscle confusion—a series of varied workouts targeting different muscle groups at different times—seems to work. Initially, "I would do the leg workout and wouldn't be able to walk the next two days," says Liz Beebe, a 29-year-old actress from Los Angeles. "But once you start, you get hooked."
Now that it has built a loyal customer base, Beachbody, the Santa Monica (Calif.) company that sells P90X, knows it needs to figure out what's next. It has sold $420 million worth of P90X DVDs since they were introduced in 2005, and buyers of the program will drive nearly half of Beachbody's $430 million in revenue this year. Problem is, P90X sales growth has slowed in recent years, from 85 percent in 2008 to about 30 percent this year. "Fitness is very much like fashion," says Carl Daikeler, chief executive officer of Beachbody. "The important thing is that the company continue to learn from the marketplace."
One thing Beachbody has learned is that P90X isn't for everyone. So the company is introducing programs for the elderly, teens, and the religious (Body Gospel, a program set to church music). Next year, Horton will star in a revision of a less intense P90X variant called Power90, as well as a tougher version for die-hard fitness nuts. And Beachbody has created Spanish-language P90X videos, something it plans to do for its entire product line.
The company is also stepping up a direct-sales initiative called Team Beachbody in which people market products to friends and get a share of the revenues (and a piece of commissions earned by other salespeople they recruit). The plan is paying off: Shakeology, a meal-replacement drink sold only by direct sales, is Beachbody's fastest-growing product.
Daikeler expects Team Beachbody revenue to reach $200 million in 2011, up from $35 million last year. "Long term, more people are likely to buy from friends and family members who got results vs. people who are going to buy from an infomercial," he says. Half of P90X buyers have never even seen a commercial for the DVDs, he says.
Finally, Beachbody is trying to broaden its appeal. The company's website sells P90X drinks, protein supplements, chin-up bars, and other spin-offs. "If you look at direct marketing folks that aren't on television anymore," Horton says, "what they didn't do is work on building their brand."
The bottom line: After racking up $420 million in sales of P90X DVDs, Beachbody is seeking to reduce its dependence on the smash-hit fitness program.
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