On June 1, GoPro filed a regulatory notice revealing “substantial doubts about the company’s ability to continue.” The culprit? A deadly combination of increased competition, falling sales and rising memory prices. It seems hardly believable that the company that essentially invented the action camera is struggling, but it’s been a long road to get to this point.
GoPro’s origin story is almost comically Californian. Founder Nick Woodman founded the company in 2002 with a loan from his parents and a surfer’s frustration at not being able to capture what he was doing in the waves.
Woodman’s first product was a wrist strap designed to hold a camera, but by 2004 he was selling cameras of his own brand, designed specifically for action sports photography. In 2012, GoPro accounted for more than a fifth of all digital camcorders sold in the United States. A year later, Woodman would become a multimillionaire.
GoPro’s IPO in 2014 was the high point for the company. GoPro was not just a camera manufacturer at the time, but a comprehensive lifestyle brand. He had democratized the hero-shot and made cinematic shots of oneself accessible to anyone with a surfboard, a mountain bike, or a pair of skis.
Where things started to go wrong
Suddenly, problems came quickly and from multiple directions. In 2016, GoPro launched its Karma drone to great fanfare, only to recall all units just weeks after some began losing power and falling from the sky. The drone made a brief comeback in 2017 before being quietly scrapped; Margin pressures were cited, but the reality was that China-based DJI already had the consumer drone market entrenched in a way that left almost no room for a late entrant.
GoPro’s forays into virtual reality with the Omni and Fusion followed a similarly faltering trajectory. Meanwhile, smartphone cameras were becoming capable enough to satisfy the casual segment of the market, while DJI and Insta360 were building serious competition with action cameras at the top. GoPro came under pressure from both sides.
A bold pivot toward a direct-to-consumer model and subscription service helped stabilize things for a while, with subscriber numbers growing considerably throughout 2020 and 2021. But revenue continued to trend in the wrong direction, while competitive pressure never eased.
An unexpected blow
The latest twist in this story is that GoPro’s current crisis has not been caused by a rival that overtook it or a failed product launch. Instead, the rise of AI infrastructure has generated voracious demand for memory chips at the data center level, driving supply away from consumer electronics and skyrocketing prices; The cost of memory reportedly more than doubled in some cases during the first quarter of this year. Add to this weaker sales during April and May, and the regulatory filing starts to make sense.
GoPro was already running on slim margins, so these AI-driven rising costs come at a terrible time. The company’s own warning states that without new financing or a strategic transaction, it may be forced to “significantly reduce, restructure or cease operations.” At the time of writing this article, no specific plans have been announced in this regard.
What it means to you
There is a cruel irony in the moment. GoPro launched its Mission 1 range just a few weeks ago – a trio of cameras that represent a real step forward for the brand, with 8K capture, impressive stabilization and enough versatility to appeal well beyond the traditional action camera audience. We have an in-depth review on the way, but our first impressions suggest that Mission 1 is a great piece of engineering and that the company still knows what it’s doing when it comes to hardware design. The presentation, however, shows that he may be running out of time to prove it.
And if the worst happens and the brand goes off the market, there could be significant consequences for consumers. GoPro is the Coca-Cola of action cameras: the brand everyone looks for first and the name that defines the category in mainstream consciousness. Rivals like Insta360 and DJI make excellent products and would continue to push each other without GoPro. But losing it would mean losing the market’s default benchmark and losing the brand against which competitors have measured themselves for years. It is the type of presence that is not easily replaced and its absence rarely benefits the consumer.
Nothing is set in stone yet and GoPro can still change things. But the notice seems like the kind of document that tends to mark a turning point, one way or another. We’ll be keeping an eye on developments and bringing you more news on what’s next for GoPro.
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