Black Box VR partnering with California-based gym chain

Black Box VR, a Boise-based virtual reality exercise product, is undergoing a pilot project with Eos Fitness, a rapidly growing gym chain that could lead to Black Box VR being installed in Eos gyms nationwide.

“We’re doing a pilot with them in four gyms starting this summer,” scheduled to open July 3 primarily in the greater Phoenix area, plus one in Oceanside, California, said Chuck Westerberg, vice president of business development and partnerships for Black Box VR. “Upon successful conclusion of the pilot, the anticipation and goal is to expand into all their clubs. This will allow us to grow and scale much faster than if we had to identify 300 locations on our own.”

Right now, Eos, based in San Diego, has about 45 legacy clubs in Nevada, Utah and Florida as well as California and Arizona.

“Starting in 2021 and 2022, they plan to open 50 a year,” he said. “We would be following them on all their club openings, as well as retrofitting existing locations, for 30 to 50 locations a year starting next year.”

Each Black Box VR installation in the gyms will consist of about six to eight machines per location and will be similar to the installation that the company has in Boise at The Gym at Eighth and Main, Westerberg said. However, the booths will have hard walls, like the company’s flagship gym in San Francisco, rather than the modular walls used in Boise, he said.

Similarly, the Black Box VR installations in the Eos gyms will likely be staffed by Eos employees, unlike the Boise and San Francisco installations, which are staffed by Black Box VR employees.

“We’re trying to manage this stuff more remotely and more hands-off in comparison with Boise, where we have our own employees,” Westerberg said. “We would prefer to manage the game, content and streaming in the future, and let Eos work on the day-to-day sales and member management.”

Westerberg couldn’t reveal the financial details, but some of the cash for the project will come from Eos, while Black Box VR will focus on growth and scaling to accommodate the manufacture of the machines it would have to produce over the next year to meet expansion, he said. There will also be a revenue split with Eos with people who become Black Box members, he added.

“They’re looking to set themselves apart from the competition as being innovative and forward-thinking,” Westerberg said of Eos.

The Eos deal may not be the only one. While Black Box VR has a 36-month exclusive deal with Eos, which is still being worked on, it excludes the company only from dealing with Eos’ direct competitors in the high-value, low-price gym market such as LA Fitness and Planet Fitness. It wouldn’t preclude the company from partnering with other gyms, such as Anytime Fitness, as well as internationally.

“We’re excited to get it out there to a couple hundred locations with this partner alone,” Westerberg said.

The deal also has the potential to increase both the company’s office space as well as its workforce, Westerberg said.

“If we nail the pilot, we increase the manufacturing side,” he said. “Obviously, a lot of that will be internal hiring.”

The company is also looking at external partners that produce gym equipment and are looking to manufacture something more high-tech, he said.

“From a content standpoint, there will definitely be expansion on the game side,” he added. “A lot of operations stuff we’ll have to increase.”

For example, the company is likely to consolidate its headquarters and warehouse into a single building, Westerberg said.

“We need more square footage for manufacturing and operations for game development,” he said. “We have some ideas of what that might be, but until the pilot concludes, we don’t want to speculate too much.”

EOS Fitness received $120 million from Golub Capital in January 2019 to expand in the U.S.