Endemic but 'Home Training Robot' Business?… LG Competes with "Customer Experience Management"

Partnering with SM to Launch Home Fitness Business
'Fitness Candy' Debuts on June 30

Subscription-Based Fitness Devices and Services to Launch in September
"Premium Service for 20,000~30,000 KRW per Month"

Jo Joo-wan, CEO of LG Electronics, explains the background of the business entry during the keynote speech at the launch ceremony of the home fitness joint venture 'Fitness Candy' with SM Entertainment, held at the Conrad Hotel in Yeouido, Seoul, on the 30th of last month. (Photo by LG Electronics)

[Asia Economy Reporter Moon Chaeseok]

At home, people watch LG Electronics TVs and follow exercise moves taught by celebrities. If needed, they pay 20,000 to 30,000 KRW per month to subscribe to K-pop dance-based workout content on LG smartphones and smart TVs.

This is the future customer lifestyle explained at the launch ceremony of Fitness Candy, a joint venture established by LG Electronics and SM Entertainment. The smart watch program is already commercialized, and with the COVID-19 endemic easing and the 'stay-at-home' trend fading, why did LG Electronics go so far as to establish a home fitness joint venture?

On the 30th of last month, Jo Joo-wan, CEO of LG Electronics, answered this question in a keynote speech explaining the Fitness Candy business. He said they would break away from the traditional practice of producing high-performance products that earned LG the reputation of 'LG for home appliances' and lead a smart appliance paradigm centered on customer experience.

A representative example is the AI camera-based service. By opening the Fitness Candy app on an LG Electronics smart TV and selecting workout content by model Han Hye-jin, the AI camera installed on the TV analyzes how similar the user's posture is to the model's and provides feedback. Through this 'customer experience,' they plan to encourage customers to use the Fitness Candy subscription service at home regardless of whether they own a smart watch.

This means LG aims to keep customers within its appliance ecosystem, such as LG smart TVs and smartphones. Major competitors like Samsung Electronics, which offers products like Wind-Free air conditioners and gaming hubs, also pursue management strategies that encourage customers to purchase their operating systems (OS) and subscription services as packages across various product categories. In short, the plan is to secure as many loyal customers who use only 'LG products and services' as possible. This strategy is similar to Tesla, which sells both electric vehicles and OS, and Apple, which creates 'Appdungi' (a slang term for Apple loyal customers) through iOS-based devices.

Fitness Candy's blueprint is to attract one million paying subscribers within three years, each paying 20,000 to 30,000 KRW monthly, generating 500 billion KRW in revenue. They also expressed ambitions to enter overseas markets and compete with Apple Fitness Plus. Although the subscription fee is about twice as expensive as Apple Fitness Plus at 9,900 KRW per month, they plan to create new revenue streams by incorporating SM's premium content. The business will officially start in September with the launch of subscription-based fitness devices and services. Market attention will focus on whether they achieve their initial goals of 50,000 paid members and 10 billion KRW in sales next year.

There is also a strong possibility that LG will concentrate its device manufacturing capabilities, which it excels at, on the Fitness Candy business. LG Electronics said it is considering developing TV-connected devices using AI camera technology, as well as strength training equipment, indoor bicycles, and smart bands equipped with AI, big data, displays, and motors. Having partnered with SM to enhance content, the plan is to maximize synergy with device manufacturing capabilities.

CEO Jo said, "LG Electronics' technology-based platform building capabilities and software development skills, combined with SM's content and services, will provide a differentiated home training service." SM CEO Lee Sung-soo said, "We see this as an opportunity for SM's music, dance, and artist content, which created K-pop, to meet LG Electronics' global IT technology and contribute to the global fitness and healthcare industry."

Jo is both CEO and CSO (Chief Strategy Officer) of LG Electronics. He said LG can collaborate with completely different industries like SM to ensure customers accept LG's IT devices naturally in their daily lives. An LG Electronics official said, "Fitness Candy should be seen more as a new business than a BS (business segment), and the entire company is leading the business. Since Jo's appointment at the end of last year, the CSO division has been actively promoting new businesses and company-in-company (CIC) initiatives, and results such as the Fitness Candy home fitness business and electric vehicle charger business are gradually emerging."