“I was up jammin’ ’til 3 a.m. last night,” GoPro founder and CEO Nick Woodman says by way of apology, as he arrives half an hour late for a recent interview at the company’s headquarters in San Mateo, Calif. If the surfer-dude lingo isn’t enough of a giveaway that Woodman isn’t your typical CEO, there’s the motocross helmet and skateboard deck on display in his playfully decorated office.
What kept him up the night before were meetings with marketing and product teams, preparing for a couple of busy months ahead. GoPro is expected to officially unveil its next-generation consumer camera, dubbed the Hero 5, in the coming weeks. But despite the near-all-nighter, and with his breakfast untouched on his desk, Woodman exudes enthusiasm about the future of his company — a future that has been overshadowed by significant losses over the past three quarters.
To get GoPro back on solid ground, Woodman sees the company’s future encompassing more than cameras. He’s building a suite of software and services around GoPro’s core hardware, including what may be the chief exec’s most audacious move yet: an ambitious foray into the world of entertainment that he feels will help fulfill the brand’s potential.
“This holiday, we will have realized the full vision,” Woodman says. “GoPro 1.0 will finally be deployed.”
Of course, “1.0” is a funny way to describe the state of a company that has gone through more than a few upgrades since Woodman, 41, founded it in October 2002. An avid surfer and world traveler, he hadn’t wanted to choose between being the person behind the lens and the one actually riding the surfboard. As a result, he developed a compact camera that could be strapped to the body, the roof of a car, a bike, or anywhere else that was in the middle of the action. “Before GoPro, you had a world full of people pursuing their passions with no record of it,” Woodman says.
GoPro started selling its first cameras in 2004, and quickly became a hit with action-sports fans — snowboarders, surfers, divers, BMX bike riders, motorcyclists. It has catered to those users with an ever-evolving lineup of cameras and accessories, including straps that can mount GoPros to motorcycle helmets, backpacks, and even the family pet. What was once a scrappy startup has become a billion-dollar publicly listed company.
But the past year has brought considerable turbulence. Investors got spooked when the company’s sales cratered during the holiday season, with year-over-year revenue declining from $634 million to $436 million in the fourth quarter. Things looked even worse the following quarter, when the company lost a record $121 million during the three months ending March 31, compared with net earnings of $22 million the year before.
GoPro also quietly acquired San Francisco-based computer vision startup Lumific last year with the goal of adding more smarts to its services. Lumific developed apps that were able to find similar photos in a user’s camera roll, and help them find the best shots for sharing. Applied to video, similar features could further advance GoPro’s cloud services.
Asked about revenue opportunities from cloud services, Woodman is enthusiastic. “Is there an opportunity to provide a fee-based service, subscription service? For sure!”
But GoPro isn’t just looking to generate cloud revenue with subscription fees. It also aims to assemble a giant repository of sports and lifestyle videos through its cloud services. “Imagine when all of that content is managed in our cloud, and you’ve given us rights to license it and monetize it on your behalf,” says Woodman.
GoPro already has taken the first steps in that direction with its awards program, launched in October. As part of that initiative, the company invites users to submit photos and videos, paying them up to $5,000 for their footage.
However, until now, users had to submit content to GoPro to take part in the program. With its upcoming cloud services, the company could automatically tap into a huge pool of videos that could then be redistributed on GoPro’s own channels, or licensed to others. “We go from having access to a very small amount of content to having access to dramatically larger amounts of content,” explains Woodman. “That’s going to dramatically scale our licensing opportunities.”
GoPro also wants to use this content pool to identify the best filmmakers in its community, work with them directly on future productions, and, over time, build out a network of correspondents. “Those correspondents then become our stringers around the world,” says Lynch. He likens the effort to the way Vice has been working with freelancers to develop programming with a distinct look.
While becoming a kind of Vice of action sports, travel, and lifestyle — powered by a worldwide network of freelance correspondents — is no easy feat, making money with it may even be harder. Bates readily admits as much. “It takes many, many years to change a business model,” he says, cautioning against overly high expectations. “We as a company need to be realistic that monetizing content is a whole different approach. I think what we are building is the optionality to do it.”
|“We as a company need to be realistic that monetizing content is a whole different approach.”|
The question is whether GoPro’s investors have the patience for a multiyear bet on media and the cloud. That patience got tested severely last year by the bungled introduction of the Hero Session, the company’s smallest camera. GoPro had to delay the launch, and decided to go to market in July, at a time when people are frequently on vacation. What’s more, the new camera was priced close to the company’s top-line model, confusing consumers and reviewers alike. The launch was a disaster, and consumers weren’t buying the Session until GoPro cut the retail price in half.
“We introduced a product that competed with our own product,” admits Bates.
Earlier this year, GoPro also delayed the launch of its long-awaited drone, which is now scheduled to be released in time for the holiday season. All of this scared investors, sending the company’s stock sharply down, from a high of $63 a year ago to a low of $8.88 in May, before an August rebound that saw shares climb above $15 to a seven-month high. The company took some painful steps to turn things around, including laying off 7% of its staff and cutting several camera models from its lineup.
Bates maintains that quarterly revenue generated by selling cameras to retailers doesn’t reveal the whole picture. Sell-through data, which shows how many cameras consumers have actually bought, has been on the uptick, suggesting that stores are moving their inventory before GoPro introduces a new model. “From a business perspective, the company is in as good a shape as it possibly can be,” says Bates. “Inventory has never been lower.”