Evolve or die — words expressed by Nick Woodman, CEO and Founder of GoPro.
What started out as a simple camera strapped onto the wrist with some rubber band has now become a household name in the action camera business. But it wasn’t all smooth sailing. The company has had its fair share of ups and downs. In this article, we will take you along the story of GoPro.
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GoPro: The Birth of a Hero
The year was 2002 and after failing to succeed in his previous businesses, Nick Woodman and his wife set out on a surfing getaway for a few months in Australia and Indonesia. There, Woodman noticed that a lot of folks weren’t able to take videos of themselves while surfing. With people either shelling out wads of cash for waterproof cameras or simply taking photos from the shore, Woodman then set out to find a better solution to film oneself when surfing. He fastened rubber bands, seashells and straps to create what was his first iteration of an action camera.
Later that year, Woodman started his company after saving up money with his wife selling seashell jewelry and belts out their old Volkswagen van in California. Together with $235,000 that he had borrowed from his mom and dad, he started his camera company. In 2004, GoPro had built and started selling its first-ever camera, the Go Pro Hero. A 35 mm film camera inside a plastic housing with a hand-sewn wrist strap. Although it could only shoot photos, GoPro had amassed $150,000 in revenue their first year. Things were starting to ramp up with GoPro in 2006 when the first-ever Digital Go Pro Hero was introduced and revenue hit over $800,000. The year after saw a massive leap in sales for GoPro, with them earning $3.4 million.
Going Pro: GoPro’s Golden Era
From 2008 to 2013, GoPro just blew up in popularity. These were the years GoPro cemented itself as the action camera to buy. With products such as the Flip camera and iPhone popping up, Woodman had stated in an interview with Forbes that GoPro isn’t intended to compete with the likes of smartphones but is its very own unique product.
The year 2009 saw their sales go up to $80 million with the release of their HD Hero that could record 1080p video. Fast forward to the peak of GoPro in 2012 and 2013, it now has the best selling POV camera on the market with its HD Hero3 and racking up over $521 million in revenue. 2013 was also the year when Foxconn, one of the world’s largest manufacturers of electronics had bought a $200 million stake in GoPro for roughly 9% of the company. As well, the year saw Nick Woodman make it to the Forbes’ list of Billionaires.
Losing Focus: GoPro’s Decline
2014 rolled around and to keep GoPro growing, they decided to take the company public. Selling approximately 17.8 million shares at varying prices ranging from $21-$24 a share. With its IPO, GoPro’s value soared to almost $3 billion. The company after going public then hired Tony Bates as President, a former Microsoft executive. At its peak, a share of GoPro was valued at $86.
Everything seemed to be going well. But as the years went by, GoPro saw itself declining. By 2016, GoPro found itself losing revenue and incurring a net loss of over $419 million. By this time Tony Bates had resigned as president and as well saw GoPro laying off over 500 of its workers. As well, seeing the stock price of GoPro jump off a cliff to just $4.81. So what caused the downfall of GoPro?
One reason for the decline of GoPro is its lack of market research and development. GoPro prior to it going public, had understood full well what market they were in and what niche they were supplying. It had known that at the time, no other company had offered a product like theirs. As well, they had what people called the first mover’s advantage by offering a unique product first. But as they grew, GoPro lost focus and understanding of their market
By the time in 2013-2014, DJI was putting out their first drone, the Phantom. GoPro failed to capitalize on this and by 2016 the DJI Phantom was now capable of shooting 4K video at 60 fps, and at the time no GoPro was capable of that. GoPro was rather late to the party, decided to make their own drone, the Karma. However, this would be another blunder in GoPro’s history. The Karma was met with huge expectations as it was a compact and foldable drone that could fit in a backpack. Yet it failed. For two reasons — one, it was literally falling out the sky as it malfunctioned quite often. Secondly, a few days later the Karma was announced, DJI announced its Mavic Pro drone, which just swept the Karma off the floor with its more robust features, smaller design, and lower price. Not long after, GoPro laid off all their drone staff and had exited the drone business.
On top of that, competitors in the action camera market started popping and actually taking a bite off GoPro’s segment in the market such as the Yi 4K+ and others on which they were offering action cameras half the price of GoPro’s. Furthermore, in 2015, GoPro faced some backlash with the release of the GoPro Hero4 Session. Charging way too much at $400 and being accused of copying and being identical to the Polaroid Cube. GoPro eventually ended by dropping the price to $200 which resulted in a $13 million loss for GoPro.
When the company started losing money selling cameras, GoPro pivoted to creating content and becoming a media company. The plan to start a media company had been laid out since their IPO in the hopes of turning GoPro into a fully-fledged media company by tapping into its adventure-seeking and vibrant community. To launch their new vision for creating original content, GoPro hired executives from Hulu, HBO, and CBS. They were creating dozens of content with shows of Olympic athletes, another about middle kids trying to “save the world”, and shows about recording artists at the time. At the time of announcement, it sent the stock going back up in 2016 but it was rather short-lived. Eventually, GoPro had dropped the entertainment division and laid-off workers.
What’s next for GoPro?
In 2019, after years of declining stock price, failed projects, and negative income, GoPro shifted its focus back to what it does best, action cameras. They introduced their GoPro+ subscription model. At the time of release, for an introductory price of $4.99/month, you were able to get damaged camera replacement, unlimited cloud storage, and even 50% off mounts and accessories. Unfortunately, like most companies in 2020, GoPro took a hit during the COVID-19 Pandemic. GoPro had to lay off more than 200 of its workforce and saw revenues decline by as much as 25%.
Things were starting to look brighter for GoPro. By mid 2021, GoPro+ subscribers were up 211% to 1,160,000 and revenue was up by 86% with earnings from gopro.com amounting to $88 million. The company’s CFO/COO, Brian McGee, stated that the shift in strategy has now started to pay off in the form of financial and operational improvements. With controlled spending and significant margin improvement, GoPro is now looking to be growing in profitability once again.
The average street price of GoPro cameras hit a record high of $336, which tells us that the more premium action cameras such as the Hero 9 Black are selling better. This can be attributed to their shift in strategy and their evolution into a more focused OEM as well as the subscription model that complements their product line.
In March 2020, GoPro acquired ReelSteady, a stabilization software company. Their latest financial report for 2021 is looking healthy, indicating total revenues of $204 million and with their adjusted earnings before taxes and other expenses (EBITDA) at $11 million. This certainly doesn’t sound all that impressive, but this is still a significant improvement from an EBITDA of -$41 million from the previous year.
All things considered, GoPro seems to be back on track. It has been a bumpy ride but we’re optimistic GoPro will eventually land on both feet.
