Rise and Fall of GoPro: 8 Reasons Why It Stumbled
We contemplate as to what happened to GoPro which led to its current situatuon
Okay, so Nick Woodman announced he’ll take home a salary of just $1 as the CEO, that he’ll layoff 20% of its employees and also scrap the production of its Karma Drone. Wait wait wait, what happened? If you’re an average Joe and unless you don’t actively follow the strides of tech companies or invest in them, chances are that this news might come out as a surprise to you. So what actually happened? Turns out, quite a lot. Let’s try to understand the GoPro fall and dive a bit deeper.
GoPro, as we all know, has been known for its high-end action cameras that have found a place in the bags of the biggest names in the video making world. GoPros have been especially more popular with adrenaline junkies and sporty athletes. The ease of shooting on a GoPro, the quality of the videos and the plethora of available accessories and mounts to plug your GoPro almost anywhere has made them one of the biggest names in the action camera industry. But as it is with a lot of other companies too, the GoPro made some expensive mistakes that might’ve cost them a bit too much.
The $427 million GoPro raised through an IPO gave it a valuation of almost $3 billion in 2014.
GoPro had historically been a company that only focussed on a single product and pretty much nothing else. Their action cameras have had the focus for almost all the company’s efforts and have been the only contributing factors to the revenue of the company (that and its mounts). If you didn’t know, GoPro went public in June of 2014 where they raised $427 million which gave the company a valuation of $2.95 billion.
Why did they come up with an IPO in the first place you ask?
GoPro, thanks to its adrenaline-charged users, came to be known as an adventurous sports brand rather than a camera brand. Although, stale now, but in 2013 itself GoPro users uploaded 2.8 years-worth of video featuring the word GoPro in the title; a number that we think is way more now. Now the challenge for GoPro now was to decrease the dependability of the company’s revenues on the sales of its camera. GoPro had to expand its horizons and create new verticals for financial stability. One main reason for the company’s conscious efforts to diversify their business was because of the heat it faced from proliferation of mobile phones. The versatility and popularity of mobile phone have killed many markets and with the rate of improvement of its cameras, GoPro feared that the smartphone industry would eventually eat into its share. In fact, their percentage increase in growth fell from 125% to 87% in 2014.
Now let’s get into the reasons that has led to GoPro’s current situation. Although a single factor didn’t falter the company’s strides forward, there are some possible strings that might’ve pulled the rug from under its feet.
1) Failure in capitalising on the brand image and creating a media company
As discussed above, the GoPro IPO in 2014 was intended to turn GoPro into a media company and reduce its dependability on its action cameras only. But just a couple of years after, GoPro shut their entertainment division which had initially aims of realising GoPro’s dream of becoming a media company. It tried to create a platform for content creators where they could publish and monetize their videos. But none of that worked out for GoPro as competitors like YouTube served the same purpose and was arguably better in it.
2) Undercutting its own flagships with the Hero Session
In 2015, instead of following up on its flagship; the Hero 4 Black, GoPro announced a $100-cheaper Hero Session 4. The cube-shaped camera didn’t fit well in the line-up as it cost the same as the Hero Silver 4 which had more features and better video quality. This caused confusion as people weren’t sure where it fit in terms of product line-up. And obviously, the Session 4 needed 2 hefty $100 price-cuts in order to make consumers even consider it as an option. The 150$ priced Polar Cube+ served to be a great competitor to the Session 4. This hefty cut in price proved to be a dual-edged sword for GoPro. Although it increased sales, it did great damage to their revenues and GoPro’s reputation as it clearly meant that GoPro had overestimated its brand value.
3) Undercutting the ‘undercutter’ with its new budget series of cameras
As if the Hero Session 4 debacle wasn’t enough to tarnish the sales of the premium cameras, GoPro decided to enter the budget action camera market to reach more mainstream users. The Hero, Hero+ and the Hero+ LCD which were priced at $129, $199 and $299 respectively. This new series sabotaged the sales of the high-end cameras the company had to offer and grossly decreased the price expectations consumers had from GoPro. This also meant that future iterations would have to more elaborately justify the increase in prices.
4) An outdated rider in the VR wave
Virtual Reality has graced so many technological fronts that almost all big players in the tech and allied industries have come out with devices that either incorporate or ease the adoption of virtual reality. 360 cameras were in dire need to push Virtual Reality content and YouTube was adamant in being the pioneer of hosting such content. Hence, YouTube partnered with GoPro to give access to creators of its $15000 16-camera Odyssey rig. YouTube soon realised that in order to push VR into mainstream appeal it had to push and partner with cheaper alternative provider. In fact, Google also partnered with GoPro’s competitor Yi Technology in 2016.
5) Incapable software to complement capable hardware
For a long time customers grumbled about the lack of efforts of GoPro in providing easier editing and content management tools. In response to this GoPro acquired two start-ups to integrate their services with their desktop and mobile software. Their cloud backup program launched much later in 2016, a time where Google’s Photos and Apple’s iCloud were already dominating the cloud space.
6) Failure in keeping up with Foxconn’s expectations
Foxconn was an early investor in GoPro and held an 8.88% stake in the company before it came out with the $457 million IPO. Foxconn had invested $200 million in GoPro making the founder a billionaire in 2012. But with waning business and pessimistic outlook on the company’s future and its growth potential, Foxconn sold 30% of its stake in GoPro. There were also reports which stated that Foxconn founder, Terry Gou, had lost complete faith in the company which further eliminated the chance of any strategic alliances to potentially increase profit margins.
7) Failure in the Drone biz
The GoPro Karma was an embarrassing failure and also led to a recall with an eventual shutdown. The Karma simply lacked the technology and features that its more modern competitors did. Some critics even compared it to the DJI Phantom 2 in terms of technology which launched way back in 2013. If its ‘techno-simplicity’ wasn’t enough, DJI dropped the bomb just a week after the Karma was announced. This bomb was the Mavic Pro which was much smaller, lighter and technologically advanced than what GoPro had to offer.
Most don’t realise that the DJI pinched GoPro way before GoPro even entered the drone market. The DJI Phantom 2 Vision+ which was launched in 2014 had its own gimbal-camera which meant that users didn’t have to separately buy a GoPro to attach it to their drones. Well played DJI!
8) Intense competition
GoPro when launched in 2004 wanted to make cameras that could fit in a pocket. With the proliferation of smartphones with great cameras, some even waterproof, not only point-and-shoot cameras but action cams also felt the heat. And ofcourse, it’s much easier to edit and share content from a smartphone. Even in the action cameras segment, companies like Yi Technology wonderfully undercut the GoPros while offering quality that was comparable if not better at a price almost half of the GoPros. Even in terms of 360 cameras, the Odyssey ($15,000) and the Omni ($5,000) were obliterated with much cheaper options like the Samsung Gear 360 VR ($360), Insta360 One ($269) and the Garmin Virb 360 ($699) just to name a few.
So what lies ahead for GoPro? With continual losses, the company missing its own revenue estimations and an all-time low run on the Wall Street the future doesn’t seem that bright for now. But Nick Woodman, CEO of GoPro, still has a mixed outlook. Although he’s open for offers to sell the company and integrate into a bigger one he’s also optimistic about their hardware and software road-map. With new plans and lower operating expenses he expects GoPro to return to growth and profitability as early as the second half of 2018.
No matter what, it’s definitely going to take more than just lay-offs and reduction in operating expenses if GoPro really wants make a turnaround. Without solid new offerings price competitively and a wholesome overall experience in terms of software GoPro will be paving its own grave. What do you think about the future of GoPro?