Report: Zwift cuts staff, ends hardware development projects

Zwift has laid off upwards of 150 people and is canceling the hardware development projects, which have teased a smart bike, smart trainer, and other similar indoor cycling devices, according to recent reports.

“Given the current macroeconomic environment, we have decided to scale back our hardware offering, pausing plans to launch a smart bike. As a consequence, Zwift has implemented difficult, yet important changes to the organization of the business. We are grateful for the contributions of all those impacted and have done our very best to support them,” reads a statement issued Thursday by Zwift director of public relations Chris Snook.

Also read: Zwift to cease support of older hardware, operating systems as of August 1

The reports of Zwift layoffs come just two weeks after hardware manufacturer Wahoo announced the acquisition of RGT Cycling — one of Zwift’s competitors — while also shedding upwards of 20 percent of its staff.

VeloNews was told that the four-year partnership with the Tour de France Femmes Avec Zwift is unaffected by the restructuring.

While Zwift may not be struggling financially, according to reports by Ray Maker, the California-based company wants to avoid financial difficulties down the road, while continuing with the development of the game software which has been used to host the two UCI world cycling esports championships.

Snook indicated that the end of hardware R&D was driven by forecasts of decreased revenue.

“There’s sort of two things at play with that. We started to scale the business with anticipation of launching hardware, [and] spinning those products up. But also, we planned for the additional revenue that would have been driven by sales of that hardware, and that revenue isn’t going to be coming in now. So the decision has been made to right-size the business as the result of the loss of that projected revenue stream,” Snook said.

The departure of a lead game designer, Wes Salmon, who was integral in the interactions between the hardware and software development teams also indicates the refocusing of Zwift’s priorities, according to Maker.

“We didn’t think it was a wise move to launch a high-end trainer or a high-end smart bike at this time. There are products existing on the market that are readily available, and there are going to be fewer people looking to spend big money on high-end trainers, we don’t want to be fighting for that space. The intent was always to grow the market, not to go into hand-to-hand combat with those [hardware manufacturers], and that’s not great for the industry,” Snook said.

Other factors may have also contributed to Zwift’s termination of the hardware development projects, such as market saturation (anyone who wanted a high-end smart bike during the pandemic likely has one by now), shipping costs inflated by supply line backups, and additional transportation costs, and other factors.

“We are committed to increasing the development of the core Zwift game experience, increasing the speed of new feature releases, and making the platform more accessible than ever before. We firmly believe these changes will allow us to achieve these goals and better support the continued growth of our subscription business. Further, these changes will preserve Zwift’s strong financial position as the world navigates these turbulent times,” Snook added.

A Zwift representative declined to comment about further details out of respect for those who lost their jobs.

Peloton, while not a competitor of either Zwift or RGT Cycling, has experienced a 90 percent drop in its valuation since its high during the COVID-19 pandemic.