Anybody who is involved even slightly in cycling will have heard of Zwift, the online virtual world where you can cycle with people from all around the globe, 24/7, 365 days a year. And it’s a perfect example of how to launch and grow a platform (rather than a product) in the modern world.
Here we look at what platforms are, how Zwift operates as a platform, how it’s using this strategy to grow massively, and how this approach is killing off anybody else trying to muscle in on its turf.
What Are Platforms?
Most successful businesses up until around 10 years ago were very much based around products and services. You survived and thrived by being the best at what you did – the best product, the best service, most efficient supply chain, best customer service – and you’d put up barriers to stop anybody encroaching on your market. The world was about your company succeeding and beating other companies.
Platform businesses completely flip this on its head, and focus on removing those barriers and creating an ecosystem that brings lots of parties together to create value. In fact, most of the biggest companies in the world today are platform companies. Apple, Amazon, Facebook, Alibaba, Tencent, Microsoft, Google are all platforms, creating environments where producers and users gather to buy and sell goods and services in a virtuous circle where more users attracts more producers who bring more and better products and services, which in turn attracts more users, and so on. The platform naturally takes a cut of the exchange of money, and uses this to administer the platform.
Many of the traditional products-and-services companies that have been overtaken by the tech platform companies have ambitious plans to become platform companies themselves as a way of surviving in the new world. GE have famously developed their IoT Predix platform, Disney are launching a new subscription channel and Daimler (Mercedes-Benz) are developing their own ambitious end to end urban transport platform covering all modes of transport.
Whether the platforms’ origin is a tech start up or an existing industry behemoth, the key to success in the early days is down to getting both producers and users on to the platform. You can have the best app or user interface in the world, but with no content or value, you have a platform but not a business! Seeding the platform with users is critical but once you reach a critical mass, the virtuous circle of growth kicks in with the platform needed to govern and guide that growth. It’s then up to the platform to nuture this growth and help producers and users add further value by expanding its capabilities.
So What is Zwift?
As a headline, Zwift is an online cycling “game” where your cycling efforts in the physical world are translated into a virtual cycling world where you can ride, race and train with thousands of other cyclists on hundreds of miles of virtual road, some of them modelled on real life courses. I say “game” as to many people, it’s far more than a game which is a great basis for growth – passionate users tend to be quite vocal both inside and outside the platform which piques interest in non-users, bringing them into the platform.
To get going on Zwift, you need a few basics – a bike, a computer (or tablet or phone), a turbo trainer that allows you to cycle in a stationary position and some sort of sensor speed or power sensor that connects what you do on your bike to your computer. Oh, and an internet connection – otherwise it’ll be a lonely experience. So most people with a bike will only need to purchase a turbo trainer and/or sensors with the most basic 2nd hand ones being about £50, going all the way up to some rather flashy, all singing, all dancing affairs that are now topping out at about £3,000. You can even get bikes that physically move up and down to simulate hills and fans that change velocity to simulate speed.
The basic premise is that as you cycle on your bike in a stationary position, the power that you put out in Watts is sent via the computer to the the Zwift platform and this is converted into your speed in the virtual world. With a more expensive set up, Zwift will tell your computer when you’re going up a hill, and this will increase the resistance proportionally on your Smart trainer which will make it harder to cycle. A more interactive simulation vs the ‘just spin your legs’ approach.
Zwift as a Platform
Looking at the description above, it would be easy to think of Zwift as ‘just a game’, so what is it that makes it a platform and how is Zwift using this to generate growth. A great way to look at this is to understand the evolution of Zwift over the last 5 years.
Prior to Zwift, if you wanted to cycle in the winter months and didn’t want to brave the cold weather, your choice was essentially to hook your bike up to a stationary trainer, spin your legs round, and sit in front of a TV catching up on a box set, watching football, or listening to music and staring at a blank wall. Pretty dull.
When Zwift CEO, Eric Min, launched Zwift as a free beta product in September 2014, it added a whole new level of interactivity to the occasion (helping acheiving Min’s desire to “make cycling social”), immediately improving the experience for those who wanted to train indoors. Initially it launched to 1,000 beta testers (selected from 13,000 applications) before opening up to the public the following May. In these early days, functionality was fairly basic. Although you could ride with others on the one initial virtual world, you basically logged in and pedalled around. In September 2015, it’s first ‘real life’ course was launched and in October 2015, Zwift started to charge it’s users a monthly fee, currently £12.99. An early integration with the Strava platform allowed users to log their virtual Zwift rides alongside real life rides, helping to encourage adoption as cyclists were then able to log and measure any cycling that they did in a single location.
And then the magic of the platform kicked in.
As more users came onboard and interact not just with the platform but also wth each other, they started to organise themselves. Although there was no functionality to race in a structured manner, Facebook groups sprung up where Zwift riders would organise to meet at certain times in certain locations in the virtual world, hosting their own races. Because of the open nature of the platform, people developed websites that connected to Zwift so that data could be extracted and used to record race results and create racing leagues.
On the other side of the platform, bike makers, turbo trainer makers, kit makers all started to engage with the platform more. As the users engaged more, they wanted to buy better trainers, they needed more kit, sensors etc. As better trainers are made that are more suited to virtual riding with added functionality, people buy them and the virtuous circle turns and the platform grows. Prices of good trainers also came down to encourage more people to buy them for use on Zwift. Virtual cycling kits were produced to mirror pro-teams or bike manufacturers. Virtual equivalents of real life bikes were created to help market those goods, with challenges set to users to qualify for them. So benefits to both producers and users were generated as more and more people joined the platform and Zwift carefully monitored the needs of both to facilitate more value adding capability.
Zwift continues to bring more to the platform – the UCI World Championship courses spring up each year to give people the opportunity to ride real life courses in the virtual world. The Harrogate course has been opened up in September to mirror this years’ world championships in Yorkshire. Racing leagues have formed over the years and are now set up and run by virtual cycling teams through the functionality of the platform. Structured training plans exist, leisurely group rides and group workouts have evolved so that there is something suitable for all different types of riders. Racings team that have formed online have even turned their kits into real life kits and met up in the real world to cycle together!
Pro cycling teams are even signing up to the platform to compete in races alongside amateurs with some of the amateur riders even pro-contracts through their efforts online.
And if you’re not convinced about the growth of Zwift as a platform, BT Sports televised the live finals of the British Cycling Zwift eRacing Champioships, live in March of this year with a mixture of pro and amatuer cyclists having qualified through online events in the lead up to the event.
All of this included within the monthly subscription fee that’s a fraction of the price of a typical gym membership.
Zwift is not without it’s faults as a platform though. As with many platforms, governing its use is critical. The early days of eBay were dogged with scams that eBay had to develop governance and controls to ensure trust remained. Similarly, it’s easy to cheat Zwift by putting your weight in as 15kg lighter than you really are – you fly up hills! This is where some of the passionate users voice frustrations, particularly in races. But all platforms evolve and user power will require the platform to address the biggest concerns, if users turn away, the platform will start to die. But with peak usage hitting over 13,000 simultaneous users earlier this year, the continual addition of new courses and new features, it’s hard to see anything other than continued growth for the Zwift platform.
Competitors to Zwift
Platforms succeed because of their communities of users and producers, and this makes Zwift a tough proposition to beat with 5 years worth of value created and people bought into the platform.
Road Grand Tours (or RGT Cycling as it is now) is probably the closest competitor. It has a number of real world courses, real world bikes and kit. But currently it’s lacking in users. Although there are no official numbers, the Facebook user group as about 1,600 members with the official RGt page having 1,000 likes. Compare that to one of the many Zwift user groups that has 55,000 members and 239,000 likes for the official Strava page on Facebook, you can see the mountain that they have to climb in order to get to a tipping point.
Coming from a slightly different angle is Peloton, a spin bike based system that allows you to subscribe to access an online library of spin classes and join in with some live spin classes alongside other Peloton owners. However, this isn;t really a platform in the same sense as Zwift. Peloton provide the bike (at a cost of £2,000) and provide all the classes (with a monthly subscription cost of £39 per month) so there’s minimal ability to open up the platform to other producers. So while there is a definite market for this, it’s unlikely to challenge Zwift in terms of scale, although it does have a large marketing budget to get that initial seeding of users onboard.
So while there are these and other competitors to Zwift, the fact that it has got a great platform strategy, has already got scale, has a thriving community, provides good value for money and continues to develop new capabilities thorugh that community, it’s hard to see other competitors getting a significant foothold/
Platforms clearly provide an amazing vehicle to build a business that can thrive in the modern digital world. Traditional products and services will still be required, but you only have to look atthe success of companies like Amazon and Apple to see the value that is created by building these ecosystems that connects producers and users, and how their initial growth creates a virtuous circle of attracting more value into the platform.
If you look at your own industry, it’s highly likely that platforms are impacting you in some way. And there’s also a good chance that your slice of the pie might be swallowed up someday by a platform if you choose to ignore that impact, rather than embrace the new connected, collaborative world.