EveryThing: How Do You Solve A Problem Like GoPro?

For a decade, extreme sports enthusiasts who wanted to capture their amazing hobbies on camera have championed one brand - GoPro.

Resilient, compact and powerful, GoPro kit has become synonymous with extreme sports photography, just like Red Bull has on the marketing side. In the past twelve months, however, times have gotten tough for the one-time king. Sales are down, stock prices are plummeting and consumer confidence is at an all-time low - why?

“There are only so many base jumpers in the world”

To answer that, we have to go back to 2005 when the original GoPro Hero was launched. There were few products on the market that had the required toughness, waterproofing and portability for extreme filming. Mobile phones could also take pictures and record video but to be brutally honest, the quality at the time was atrocious, and the majority of people were unwilling to risk damaging their expensive smartphones.

The Original GoPro

An untapped market was ripe for the taking, and GoPro did just that. By 2010, with the advent of the HD Hero, GoPro’s reported sales of over 20 million cameras had blasted the competition out of the water and seized 70% of the action camera market in the US alone. By 2013 they had grabbed 45% of the of the overall U.S camcorder market. By 2014 Youtube users had posted around 2.8 years of video proudly featuring GoPro in the titles of videos that together garnered over 1 billion views. The future was looking bright for the fledgling company, but things soon started to take a downward turn.

A statement made by GoPro President Tony Bates earlier this year gives a clue as to why. “There are only so many base jumpers in the world,” he said. It is fair to say that by 2014 GoPro had reached near-total saturation with the ‘dedicated sports enthusiasts’ the company lists as its root audience in its Sec-1 filing . The company realised far too late that it needed to aggressively target consumers outside of the extreme sports video capture market and pursue other uses for its gear. In the same document GoPro proposes trying to woo music artists, celebrities, and events to drastically change their image.

The GoPro Hero4

What’s more, even though GoPro patented a lot of its tech, this was not enough to stop rival companies with similar products stealing its customers, particularly cheap Chinese knock-offs.

To add to their woes, existing GoPro customers didn’t really need new cameras. GoPro’s products did as advertised - they were incredibly resistant to damage and the footage they produced was so good that users may never have felt the need to replace or upgrade them. There are subtle hints dropped throughout their 2014 Sec 1 filing that GoPro anticipated that they did “not expect to continue to grow in the future at the same rate as we have in the past”.

Targeting a different market segment in July 2015, GoPro released the Hero 4 Session. With a simplified interface, it was intended to target the average consumer who felt intimidated by the traditional GoPro setup. The Session was designed to be user-friendly and scoop up even more of the bottom end of the consumer camera market that GoPro had struck gold in. And it bombed.

Even after slashing the price repeatedly from US$399 all the way down to an affordable US$199, abysmal sales of the Session cost GoPro US$40 million in lost revenue. Things got so desperate that in December 2015, the Chief Executive of GoPro, Nick Woodman, made a cringeworthy appearance on shopping channel QVC in order to boost sales. The Session’s failure to shift units certainly contributed to the company laying off of 7% of its staff in January.

The GoPro Session

Reeling from this blow, GoPro countered. Understanding how essential diversification and innovation was going to be for its survival, it already had several projects in the pipeline. In November 2015, it announced that it would be producing its own series of drones. In April 2016 it launched a developer scheme to place GoPro cameras in products from 100 different companies including BMW and Fisher Price. The purchase of two editing apps (Replay and Splice) was also completed, with the intention of improving its much-maligned editing software. In another heavily publicised announcement in the same month, GoPro hired Apple veteran Danny Coster as its Vice President of Design, which led to a 20% spike in share prices. Things were finally looking up for investors, and the company appeared to be turning a corner.

However, the relief was only temporary. When GoPro released its sales figures for Q1 2016, losses stood at US$107.5 million and the company’s revenue had plummeted a devastating 49% from US$363.1 million to US$121.4 million in a single quarter. Its share prices soon followed suit, tumbling to US$12, an 88% decrease from GoPro’s highs of US$94 per share in 2014.

The company followed this earthquake with the announcement that it would delay the release of its first drone unit, codenamed ‘Karma’, from June 2016 until the Christmas period, explaining that the wait would be worthwhile due to the drone’s unique features. Unfortunately, GoPro was unable to reveal any of these features, prompting more questions from investors.

The Karma delay was also met with utter bafflement by the photography and drone communities. The drone market is already at capacity in terms of manufacturers, with Chinese company DJI holding 45% of the US market share. This is indicative of the overall problem GoPro faces, relying too heavily and for too long on its original concept, it is now late to the party on multiple fronts.

The GoPro Omni

Similarly, GoPro’s Omni camera kit (which was announced in April) for VR recording, will face competition from products already on the market such as Samsung’s Project Beyond. To make matters worse, GoPro is even being challenged on its home turf. LG introduced its LG Action Cam LTE in May 2016, which will allow users to livestream their footage, something that no existing GoPro product can do. This is the kind of product innovation that GoPro desperately needs right now, and it's being introduced by competitors with little or no foothold in the market.

"We do not expect to continue to grow in the future at the same rate as we have in the past”

GoPro is now standing on the precipice of collapse unless it shakes things up fast. Flailing as it is, new schemes such as the developers program are a sign that GoPro understands that it must evolve or die. If GoPro means to evolve, though, it needs to do it fast. Unless the company can produce something truly revelatory (which hasn’t happened for many a year), it will shed fans and sales figures rapidly.

The GoPro Mobile App

The technology just isn’t innovative enough compared to their competitors, some which (like LG) weren’t even competitors until a very short time ago. They also have to concede that the future of GoPro likely isn’t as a titan standing alone, but as a collaborator with larger, more sellable brands. To reiterate its own point, GoPro has simply run out of base jumpers.