Can Weight Watchers get with the times?

Most of the company's revenue still comes from customer-meeting fees, but subscribers are dropping off.

By MSN Money Partner May 2, 2014 1:16PM
File photo of packs of Weight Watchers sliced meats (© Isopix/Rex Features)By Kyle Stock, Businessweek

After 53 years, Weight Watchers (WTW) kind of hates the way it looks -- and honestly, it should.


While millions of healthy strivers have been busy slapping on bracelets that count their steps and sync their workouts with their diets, Weight Watchers just keeps tallying calories and trying to get people together for morale-boosting meetings, just as it has done since 1961. 


It's a coffee klatch business in a yoga world. The question is: Can Weight Watchers get with the times?


"It's really at a crossroads here," said Morningstar analyst R.J. Hottovy. "The popularity of some of these services has almost commoditized the weight-management industry."


The value of Weight Watchers over the decades has rested on a food-analysis program it calls PointsPlus, which rations meals and snacks, based on a proprietary formula that measures protein, fats, carbohydrates, and fibers. The company wisely casts the net wide in terms of what foods it can crunch, and it has even developed a pair of apps -- including bar-code scanners -- to help users keep track.


There's been little effort to factor exercise into the mix, even as a new crop of wearable computers kick out calorie-burn data based on a person’s daily activity, measured down to the step. Such companies as Nike (NKE), Jawbone and Fitbit sold an estimated $330 million worth of activity trackers last year, according to NPD Group.


Most of Weight Watchers' revenue still comes not from any app or device but from the fees it charges its customers to get together for an hour and talk about eating. The theory is that moral support brings results. 


"Tools alone, technology alone, food programming alone will never reach the levels of success that are possible when they are combined with human engagement to guide and provide accountability," Weight Watchers Chief Executive Officer James Chambers said on a conference call this week.


That accountability isn't cheap. For unlimited meetings, Weight Watchers charges $14 a week or $43 a month; once a customer has maintained a target weight for six weeks, payment is no longer required. Last year, the company collected half its revenue from those charges. That's a fee for sitting, talking, and feeling -- no wonder members are disappearing.


Slightly more promising is the company's online-tracking services, for which it charges from $15 to $19 a month. A rash of startups, however, will provide similar services at no cost.


MyFitnessPal, a free service that tracks both meals and activity, has drawn strong reviews. So far the startup has made its money by selling ads and convincing venture capitalists to get on board. Dieters who just want a free tool to track nutrition, meanwhile, are increasingly turning to FatSecret and Cron-O-Meter. These platforms are doing to Weight Watchers what Craigslist did to newspaper classifieds in the early 2000s.


The Weight Watchers Web platform isn't even that great, considering the premium price it seeks to charge. Daniel Crow, the company's chief technology officer, called the website a "mid-2000s" model.


To recap: Weight Watchers is relatively low-tech, time consuming, and kind of expensive. It has lost 14 percent of its "active subcribers" in the 12 months through March. Its sales in the first quarter dropped 17 percent to $409 million, following a 6 percent drop in revenue last year. Weight Watchers could lower prices, but it's hard to beat free. The alternative is to offer more value.


On that front, the company is rushing to integrate its platform with the leading activity-tracking devices. "They're effectively turning fitness apps from a source of competition to an asset," Hottovy said. "Though pricing is still a hurdle they're going to have to overcome."


Weight Watchers also recently bought Wello, a startup that connects customers via video feeds to remote personal trainers. Instead of a 12-person huddle for food talk, Weight Watchers members may soon be cranking out push-ups and burpees under the remote supervision of a trainer named DonnyBrocs.


The company is also hustling to make inroads as a health partner for insurance companies and employers, a segment that is less likely to bolt to a Silicon Valley startup. Weight Watchers currently makes about $75 million a year from business customers, a number it hopes to push up to at least $300 million by 2018.


One bull case for Weight Watchers: Demographics are in the company’s favor. From 1980 to 2008, the share of overweight adults worldwide surged from 23 percent to 34 percent. In the U.S., that number is hovering near 70 percent. That's a big pool of potential customers if the company can step out of the last century.


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23Comments
May 2, 2014 3:11PM
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Say whatever you want about Weight Watchers being behind the times. Every single person I have known who had gone on Weight Watchers and stuck to the program has been successful in losing weight. That is much better than you can say for the majority of the "diet" programs out there. Add to that the fact that you don't risk your health like you do on Atkins, fasting diets, or with drug assisted weight loss. Once Weight Watchers adds exercise regimens to their program, they will be hard to beat.
May 2, 2014 3:09PM
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Some of that is just badly researched bull, WW uses a fitness device called a "active link" that measures how many points you burned in a day during your daily activity. You can wear it all day (it's waterproof), set personal challenge goals, change the setting to match the activity you are doing (like swimming or yoga) and login to see your activity during the day broken down in 15 min increments. Just from personal experience, I lost more weight going to meetings, than my weight loss "partner" did by using only the online tools. Some of the coping tips you get in class, and the local tips for finding WW friendly options close to your personal demographic area are irreplaceable with online apps.

Plus, many of the WW members are women, who benefit more from F2F interaction and support than men seem to. Obviously there is some attrition through the year (peak joining times seem to be January), so again - measuring how many people have dropped out at this time of the year also seems to be judging the program without considering it's cyclical nature.

 

Plus the one hard to argue point, the program WORKS.

May 2, 2014 3:03PM
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I personally have had success with this program!!
May 2, 2014 3:51PM
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The writer of this article has obviously not been to a WW meeting in some time. Poorly researched BS spat from a marketing angle. Weight Watchers currently has the highest long-term success rate and was rated "the best weight loss diet" and the "easiest to follow diet" in January 2014 in US News and World Report. I have personally lost 65 lbs. on WW and my wife has lost 95 lbs. Exercise is stressed every meeting and in almost every weekly publication. Pull your head out before opening your mouth.
May 2, 2014 6:08PM
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Weight Watchers  is the only program that acknowledges that all calories are not created equal - fruits and vegetables are not limited - yum.   

It is a tried and true program - not a quick fix. 

Well, that said,  it's  no wonder that it is less popular now  - folks these days want to take  no responsibility for their own health.

May 2, 2014 4:10PM
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I can only speak for myself.  I have lost 70 lbs in a year with WW and love it.  Unfortunately, due to the rural area in which I live, the meeting I attended was discontinued and the nearest one is now 30 miles one way.  I still belong, but I am weighing the benefits in my mind......
May 2, 2014 5:57PM
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Why should Weight Watchers change?  It has successfully helped millions lose weight and learn to make wise food choices.  Although Weight Watchers does not focus primarily on exercising one's posterior off, it does encourage exercise and awards points for doing exercise.  Remember, most people who start WW are not very healthy to begin with and moderate exercise is introduced once the first goal is met.  It's a great program.  If it ain't broke, don't fix it.
May 2, 2014 4:47PM
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I have gone to Weight Watchers most of my life and been through all the changes in programs it does work if someone sticks to it.  But unfortunately people still want a quick cure and healthy eating takes a lifestyle change you can't have both.  And Weight Watcher's does encourage exercise all though it is not mandatory, so it is still left up to the individual.  But when I was on the programs I was successful only when I did the tracking, and planning and kept tract of the points.

 

What people don't realize is it is the processed packaged foods with hidden fats, and sodium that are causing the problem,  the high fructose corn syrups, hydrogenated oils,  before all of these things came out there was not a severe obesity problem.

 

I have lost about 100 lbs since July 2013, simply by giving up fast food, processed foods, diet pop, and eating fresh fruits and vegetables, and whole grains.  The best I have ever done on Weight Watcher's counting points was about 58 lbs in 6 months.  But since the founder sold Weight Watchers it has become more commercialized and based on profit and I think that was the start of Weight Watcher's downfall.  Even Weight Watcher's food products are made by the food industry with the high fat and sodium content, and fructose corn syrups.   Realistically if they are more based on profit now you really think they want people to reach goal weight, if that happened they would not need the program if everyone ate healthy and maintained their weight because as the article says once you reach your goal weight and stay within a certain range of that weight you no longer pay dues for weekly meetings unless you go out of that range and then you pay until you are back in your target weight range again. 

 

It some ways it can be like a cult, and one can become codependent on the program.  This can be true of any weight or self help program.

May 2, 2014 7:40PM
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DO ANY OF YOU INVEST IN the WTW Stock.......???
May 2, 2014 6:55PM
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I have been a "lifetime" member of Weight Watchers for many years.  The attractive part of the program for me was being able to eat "real" food and learning to choose and plan wisely.  This alone saves lots of money compared to programs where you have to buy their foods and special (icky) diet drinks.  Honestly, once you have lost the weight you can't live on that stuff forever.  Weight Watchers meetings are informative and I share a bond with the other members, some who are at goal like myself, and others who are just starting the program.  We share ideas and encouragement.  Exercise is a part of a healthy lifestyle and the Weight Watchers program encourages members to find an activity that fits their lifestyle.  Exercise earns "points" that can be used for an occasional special treat.  As far as I'm concerned, keep up the good work, Weight Watchers!
May 2, 2014 6:43PM
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As long as you follow their program, sure you will lose weight, BUT you need time to sit and listen to everyone's story if you attend their meetings.  B-o-r-i-n-g!  
May 2, 2014 5:07PM
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WW should drop the high fees to get together and get weighed. Other than this, the so-called 'support services' are lame. Their frozen foods are available in-store and the rest is common sense eating for the most part.
May 3, 2014 11:48AM
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BTW, Crazy.....We own WM, and WAG, but no WTW or WTF....arf, arf, arf.
May 3, 2014 11:46AM
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A few hits of Whiskey weekly, and 8oz. of Apple juice a day...Keeps the Doctor away....For me.
May 2, 2014 2:10PM
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What do you mean put a little pot in the meals to make them happy?
May 2, 2014 5:02PM
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Hmmmm, Don't know about WeWa....But do know people should try and be comfortable in their own skin..

It does pay to be of a lower weight in your size, but not to any extreme...

Try or strive to be healthy, and enjoy life for what it is..

If you need to exercise some, walking alone usually serves the purpose...

And reading food labels helps others, to control or maintain healthier levels also.

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