Don’t even think about it. Photographer: David Paul Morris/Bloomberg

This should be the perfect time for a company like Weight Watchers to thrive. The U.S. is still one of the fattest nations on the planet with a third of the country considered dangerously overweight. Global obesity has nearly doubled since 1980, growing into one of the world’s most intractable public health crises — and opening a huge market for the weight-loss industry.

Yet Weight Watchers, the 50-year-old diet giant selling a slimmer, fitter America, has never looked so gaunt. The company said Wednesday that its third-quarter revenue had plunged to its lowest point since 2010, extending an unprecedented seven-quarter money-losing streak. Its market value has fallen to $1.1 billion, its lowest point in history.

So what happened? Instead of paying for a subscription to one of Weight Watchers’ signature support groups or learning how foods translate into “points,” Americans seeking to shed a few pounds are looking, instead, to free fitness apps on their smartphones, a simple shift that has devastated one of the most iconic names in weight loss.

“We do not believe that free apps will solve the obesity epidemic,” chief executive Jim Chambers said in a call with analysts late last year. But “I see now that the situation we are facing as a business and organization is more difficult than it originally appeared.”

The rise of smartphones opened an entire ecosystem of new apps that could suggest diets, count calories and track progress, undercutting Weight Watchers’ longtime business model. And because many are free, they’re gobbling up the company’s most important audience: trial-minded newbies looking for a change but hesitant to fully commit.

The popularity of free health apps has exploded alongside fitness monitors, like the FitBit, which cost only a one-time fee and offer a simple, visual, social element to exercise in a way Weight Watchers still can’t. And Weight Watchers has never been cheap. Duke University researchers said in July that the average Weight Watchers subscriber paid $377 a year and only lost five pounds — in other words, paying about $75 per pound.

“It’s a matter of free vs. not free,” said Efraim Levy, an analyst with Standard & Poor’s. “There are so many free apps out there to help people lose weight that people are choosing to at least try. … It’s really a cost initiative, and that will remain a challenge, and they have to restructure to hope to compete.”

Founded in the early ’60s by an overweight New York housewife, Weight Watchers found its claim to fame largely due to its social appeal: support groups of women meeting often to talk diets, and all the reasons they shouldn’t cheat. Over the decades, it ballooned into a corporate powerhouse, fueled by a sale in the late ’70s to the Heinz food conglomerate, which sold branded frozen meals to dues-paying attendees of the firm’s bustling weight-loss classes.

About a million people attend more than 40,000 Weight Watchers meetings every week worldwide, according to an S&P report, and the program remains well-reviewed: The U.S. News & World Report this year ranked it the country’s best diet for losing weight.

But Weight Watchers is far from the only player in America’s $60 billion weight-management industry. Their competition has expanded beyond longtime rivals like Jenny Craig and Nutrisystem — both with their own sales woes — to larger sophisticated players like Nike seeking to win over a growing fitness-minded clientele.

Half of the company’s revenue comes from meeting dues, with the rest tied to online subscriptions and sales of things like snack bars, books and points calculators. But even the packaged parts of Weight Watchers’ business model are shrinking, losing out to health-conscious eaters opting more for fresh foods. The market share for Weight Watchers’ frozen-ready meals has fallen to its lowest level since 2005, beaten handily by Stouffer’s, Lean Cuisine and Healthy Choice, data from market research firm Euromonitor show.

Weight Watchers has tried to change with the times. They launched a mobile app with a barcode scanner, food log and meeting finder, announced partnerships with fitness trackers and, this month, unveiled a few upgrades to better match the iPhone’s new health and fitness suite. Earlier this year, the company spent an undisclosed sum to buy Wello, a Silicon Valley startup offering streaming video of fitness classes.

But other campaigns have done little to fatten their business. The number of subscribers to WeightWatchers.com, their online plan, dropped about 7 percent last year, and a big push to appeal to both genders has mostly floundered; only 18 percent of today’s online users are men. The company is working to win over corporate America by installing company-wide fitness plans, but even those membership numbers remain slim.

“They’ve signed up some bigger companies, but even if you’re an employer with 100,000 employees, the number of people signing up will be … a drop in the bucket,” said Kurt Frederick, an analyst with Wedbush Securities. “They need a lot of big companies to make a big swing in that mix. And they haven’t gotten to the point where its a big piece of the business.”

Every quarter of this year is expected to see double-digit sales decreases over the year before, a losing streak the company didn’t even see during the Great Recession. Investors have also lost confidence the company can turn it around: Shares today are selling 65 percent below their 2011 peak. And there’s little optimism about future prospects: JPMorgan analysts wrote this summer that 2015 looks like “another difficult year.”

As the crucial New Year’s diet season nears, the company said it’s trying hard to engineer a turnaround. Their big strategy to compete with the app-store diet, they said: The human touch.

“It is our fundamental belief that tools alone, technology alone, food programming alone will never reach the levels of success that are possible when they are combined with human engagement,” said Chambers, the chief executive, in an analyst call in July. “The strength of the Weight Watchers brand is and always will be in the human connections that make a weight-loss journey more successful.”

A 1984 magazine ad for Weight Watchers, via Retro-Ads.
A 1984 magazine ad for Weight Watchers, via Retro-Ads.