More Thoughts On Zwift’s Rouvy Acquisition

It’s been seven days since Zwift announced their acquisition of Rouvy, and since that time I’ve been pondering Zwift’s big move while reading community comments and talking to various leaders at ZHQ.

Today, let’s take a deeper dive into Zwift acquiring Rouvy. Why is Zwift making this move? How do users feel about it? What does it mean for the future of both platforms and indoor cycling as a whole?

Let’s dive in…

A Quick Comparison

Not familiar with Rouvy or perhaps Zwift? (Then how did you get here?) Seriously, though, here are two good videos from GCN that introduce you to the ins and outs of each platform:

A few more comparisons:

• Locations: While both companies have multiple offices, Zwift’s official HQ is in Long Beach, California, while Rouvy is based in Prague, Czechia.
• Subscribers: Zwift has around 1 million subscribers, while Rouvy has around 300,000
• Employees: Zwift has around 325 employees, while Rouvy has around 125.
• Core Business: Both companies see subscription income as their main source of income, but Zwift has the additional revenue stream from its hardware, most notably the Zwift Ride.
• Core User Experience: Zwift is a video-game like virtual environment with strong social features, while Rouvy uses real-world videos of routes with augmented elements (rider avatars, etc) and an emphasis on realism.

Community Sentiment

Put your finger on the pulse of Zwift/Rouvy community sentiment by looking at comments on the videos below, and these links:

• Official Zwift forum thread
• Reddit threads like this, this, this, and this (started by a Rouvy employee)
• DC Rainmaker’s blog post

Here’s how I would summarize community sentiment:

• It’s largely negative, with users voicing:
  • Concerns stemming from reduced competition
  • Distrust of the “nothing will change” message
  • Fear of Rouvy eventually being shut down
• The quieter positive sentiments include:
  • Official, less buggy Zwift hardware compatibility with Rouvy
  • Possibility of a combined subscription
  • More and shared resources between companies leading to faster development of core features

The Big “Why?”

Everyone’s speculating on exactly why Zwift made this move, and your take on it will be largely based on whether or not you trust the official messaging from Zwift and Rouvy. Here it is, from paragraph one of Zwift’s official press release:

The acquisition aims to accelerate growth in the indoor cycling category through strategic cooperation between the two companies, while maintaining their independent operations.

While Zwift and Rouvy are both saying this is a friendly acquisition made with the goal of growing indoor cycling while both companies remain independent, it’s clear that many in Zwift and Rouvy’s communities don’t believe what’s being said. And that’s a fair take, because it feels more common than not for corporations to say one thing in these touchy situations, yet eventually do another.

I chatted with Mark Cote, VP of Product at Zwift, who said, “It’s of course easier to say things will improve for both platforms from the inside than to be trusting from the outside – most Rouvy riders don’t know me or our leadership team.” Zwift CEO Eric Min had a similar tone when I chatted with him, acknowledging the community’s concerns without deviating from the message: this is about both companies working together to grow “the whole pie” while remaining independent.

Some users have been comparing Zwift buying Rouvy with Wahoo buying RGT four years ago, noting that Wahoo initially invested in RGT but eventually shuttered it a year and a half later. But is that a fair comparison?

I would submit that the Wahoo+RGT situation is nothing like Zwift+Rouvy. RGT was a very small platform, and nowhere near profitable. Wahoo is largely a hardware business, and they bought RGT as a strategic move to bolster their smaller software/subscription business. Zwift, on the other hand, is the leader in the indoor cycling space, and they’ve acquired Rouvy, a profitable company and the second-strongest in the space.

Perhaps a better comparison is Facebook’s acquisition of Instagram in 2012. While Insta users saw the move as anti-competitive when it happened, and many mourned the loss of their beloved platform before any changes were actually made, Facebook kept Instagram going as a separate app as promised. And grew it to a massive scale.

While longtime Insta users may argue that they prefer the Insta of old (fewer ads and commercialization), what’s undeniable is that the acquisition gave Insta access to a massive pool of engineering talent, global data centers, and growth expertise that led to Insta exploding from ~30 million users to billions today.

So, what happens next?

In the short term, let’s say the next 6-12 months, Zwifters and Rouvy users (Rouviers?) probably won’t see much change on their respective platforms as a result of this acquisition. Rouvy riders can now use Zwift hardware reliably in the game, which is a quick win for both companies. And I would bet we’ll see Rouvy activities begin to count toward Zwift Fitness Metrics soon, as that’s a fairly easy change and a no-brainer to encourage use of Zwift’s growing training ecosystem.

The bigger question, of course, is what happens long term? How does last week’s news change things in the indoor space 3, 5, or even 10 years from now?

Unfortunately for Zwift’s PR department, the potential for negative outcomes increases as the timeline is pushed out. It really boils down to three potential long-term negatives for customers:

• Price Increases: Rouvy’s pricing is friendlier than Zwift’s, with family and duo plans much lower than Zwift’s single-user pricing model. With Zwift now benefiting from subscribers on either platform, there is less pressure to stay price-competitive. The logical eventual result? Increased subscription prices.
• Reduced Options: Rouvy is a strong alternative to Zwift, with both platforms providing very different indoor environments on compatible hardware. But Zwift now owns Rouvy, and could choose to shut it down at any time.
• Closed Standards: Rouvy had reverse-engineered connectivity to some of Zwift’s hardware, and the move was forcing Zwift to evaluate their proprietary approach with Zwift Protocol. That pressure to open up their hardware standard no longer exists, which means Zwift can continue to leverage hardware compatibility to drive subscriber growth, making it much harder for competitors to launch and grow in the indoor space.

I’m generally a Zwift optimist, though. I believe their leadership team genuinely wants to keep Rouvy healthy and running and growing, and to see Zwift do the same. To continue investing in making the hardware simple and affordable, while offering engaging indoor riding experiences. My take on the three potential negatives above is thus:

• Price Increases: It wouldn’t surprise me to see Rouvy and Zwift increase their prices a few years from now, but that’s only because prices are increasing everywhere. I wouldn’t see this as a direct result of the acquisition, but the result of a myriad of market factors that drive subscription prices for every other app we use.
• Reduced Options: Zwift has no plans to shut Rouvy down. It wouldn’t make sense. Rouvy is a sizeable, profitable business serving up an experience (real video rides) that subscribers clearly want. Zwift wants to keep it this way, and so do Zwift’s investors. (As DC Rainmaker commented, “If you disappear Rouvy, then you disappear those gained 300-500K+ users.”) In fact, I bet we’ll see Zwift refering people to Rouvy and vice-versa in the future as some sort of suggested alternative.
• Closed Standards: I’d love to see Zwift “do the right thing” and open up their hardware standard to other platforms (Training Peak Virtual and MyWhoosh, for example). But that’s really a “community goodwill” move and not a “smart business” move at this point. Holding proprietary protocols is an advantage for Zwift today, so I think they’ll keep it that way.

Time will tell, of course. None of us has a crystal ball. But it’s not as simple as, “Less market competition is never good for customers” (a comment I’ve seen in various forms from hundreds of people in the past few days). Yes, this acquisition reduces competition for Zwift. But it can also lead to a sharing of knowledge and other valuable resources between the two companies, to broader hardware compatibility between the platforms. Perhaps the net result will actually be a positive for consumers? A few potential positives:

Hardware/Functionality Expansion

Rouvy now supports Zwift Ride and Zwift Click controllers (but not Zwift Play). Steering and braking aren’t yet supported, though, since Rouvy doesn’t have steering or braking in game. My guess is you’ll see those features arrive eventually, though. New game features driven directly by Zwift’s acquisition of Rouvy.

Subscription Changes

Yes, Zwift says subscription pricing won’t change on either platform any time soon. But wouldn’t it be great if it did? Zwift has never had a family plan, but they can now use Rouvy’s subscriber data to predict how a family plan might increase or decrease subscriber counts or revenue. That’s valuable information that’s hard to come by in this industry.

Shared Learnings

Zwift does a better job of creating a social environment, while Rouvy, by some accounts at least, does a better job of onboarding new users. The two teams could share this knowledge, helping both products improve in areas of weakness. Hardware teams could also collaborate to work on stubborn problems like connection reliability and simplifying device connections at startup.

Your Thoughts

Well, there you have it. Community opinions, Zwift’s messaging, and my own take on it all. Who is correct? Unfortunately, we’ll have to wait and see.

Share your thoughts below.