**Video was done after the 2018Q1 Quarterly Results**

Back in November 2017, Bodybuilding.com (Vitalize LLC) did something that seemed to shock much of the nutritional supplement industry. It decided to lock down its most media rich fitness programs behind a paywall called “All Access”. Visitors wanting to access the fitness and health programs must now pay a monthly fee of under $10. Gone are the days of knowledge hungry visitors coming to Bodybuilding.com for all things educational about their fitness and health journeys without paying a dime. They still do have a massive number of free articles on every sub-topic but those fancy trainer series with fitness influencers are now hidden for the most part. This move has tended to be controversial between industry pundits and passionate customers.

The truth is, Bodybuilding.com did content marketing before content marketing was hip or cool. They realized that soft selling content would convert better than tons of hard selling ads. This was not really the game plan for companies back in the 2000s. That was a time when search ads were hot and email still got massive open rates. This was also the time when Internet commerce stores were highly-focused on a few complementary categories. You didn’t have the marketplace model of today even though Amazon was around and growing fast in that decade. The internet was very desktop-focused until 2007 when the iPhone app world changed it from deep-conversational forum engagement to egotistical social media surface-level sharing.

That rise in social media created BodySpace. In my opinion, this was one of the biggest opportunities for Bodybuilding.com and one that they never truly capitalized on. They let social media apps like Instagram and YouTube become the spots that fitness influencers built their businesses’ on. They even had early successes in this as Cory Gregory was found on BodySpace and co-founded MusclePharm. BodySpace is the perfect place for fitness minded individuals to share, learn, and become a part of a bigger supportive community. That shouldn’t have been Instagram and YouTube, that should have been bodybuilding.com and its likely still not a complete mirage. The influencer marketing world is still in the early innings of a nine-inning baseball game. Every brand in the nutritional supplements industry is either using fitness influencers to a huge degree or they are creating strategic plans to utilize this massive growing marketing category.

Additionally, that shift in commerce around the mid to late-00s to marketplaces created the second biggest mistake by Bodybuilding.com. The content marketing strategy was actually creating fuel to Amazon’s growth. This was the time that Bodybuilding.com should have been creating ways to raise switching costs with unique loyalty programs. They used to have this “currency” from the forums and BodySpace that was never used but that idea of social loyalty programs has been proved out by white-label software companies like ShoutEm or SpotOn. Bodybuilding.com instead leaned on their vendors to provide price breaks and promotions that some say created a “race to the bottom” and killed much of the legacy brand equity. That was a strategic mistake likely because they misunderstood Amazon’s ambitions. Reality is, you can’t compete against a company that can lose money on a product category for 10 years and it never really touching a material difference on the financials. Even with the deep pockets of Liberty Interactive, this wasn’t the right play.

But lets get back to the topic of “All Access” and what I think it tells us about the bigger Vitalize LLC strategy…

Paid educational content has become huge business in 2018. It has been proven that consumers are willing to pay for expert content on all sorts of topics, especially fitness related topics. The parent that owns Vitalize LLC is a media conglomerate so it’s safe to say the shift to a media company that happens to sell nutritional supplements is the current plan of action. I think the “All Access” content library will become deeper and wider in the coming years. Vitalize will use trends in social media and look to mimic digital media companies like BuzzFeed. I also think they start to create a place where fitness influencers can monetize their attention. With YouTube changing its ad metrics, fitness influencers will be interested in diversifying their revenue streams.

So, back to BodySpace…

I still think a revamp of this social network is a play in a bigger winning plan, including “All Access”, and other social media marketing pages to create a fitness digital media company. The ad-supported mash up of current social media winners with features that are unique to the fitness community could provide great value.

Finally, I also like the refocus on private labels. Private labels are big business and huge for profitability, so I think a continued development of concepts would be smart. You can even tie in fitness influencers’ ambitions to own brands like TigerFitness seems to be capitalizing on with Chris Jones.

So, in closing…I might have been negative on Bodybuilding.com for missed opportunities in hindsight but all that matters today is how to they create higher switching costs by creating an ecosystem that will keep customers in. They have the assets to do it but it will likely be a hurtful few more years of revenue loss as they restructure the business. I don’t think we right off Bodybuilding.com yet to the Amazon Death Star but this “All Access” shift was a telling sign for the direction of Vitalize LLC.