BeachBody informed investors on September 30, 2024, that it is abandoning its multi-level marketing (MLM) structure. The company will shift to a single-level affiliate program starting November 1, 2024. This move marks a significant departure from its long-standing network marketing model.
Executive Chairman Mark Goldstone described the MLM model as "outdated and unsustainable." He cited current market dynamics and changing consumer preferences as key reasons for the pivot. Goldstone stated the new affiliate approach offers a simpler, more modern way to acquire customers. He also indicated that the complexity of the MLM structure had hindered the company's turnaround efforts and the ability of its distributors to reach their full potential.
The company is now prioritizing direct-to-consumer sales, its presence on Amazon, and partnerships. This shift aims to optimize its omnichannel distribution platform. BeachBody plans to fully wind down its MLM operations by January 1, 2025.
This strategic change is accompanied by significant workforce reductions. BeachBody has laid off 33% of its staff, a move expected to save $54 million annually. The company's MLM revenue break-even point stood at $430 million annually. By exiting MLM and cutting staff, BeachBody aims to lower this threshold to less than $225 million.
Earlier this year, BeachBody had projected positive cash flow for the first quarter. However, an August update revealed revenue of $110.2 million, a decrease from $134.9 million in the same period last year. Despite the revenue drop, the company reported a smaller loss of $10.9 million, down from $25.7 million a year earlier.
A WARN Act notice filed October 13, 2024, indicated that BeachBody would lay off between 101 and 250 employees on December 1, 2024. This appears to correspond with the previously announced 33% workforce reduction.