On June 1, GoPro filed a regulatory filing that disclosed “substantial doubt about the company’s ability to continue as a going concern.” The culprit? A deadly combination of increased competition, plummeting sales and soaring memory prices. It hardly seems credible that the company that essentially invented the action camera would struggle, but it’s been a long road to get to this point.
GoPro’s origin story is almost comically Californian. Founder Nick Woodman started 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 out on the waves.
Woodman’s first product was a wrist strap designed to hold a camera, but by 2004 he was selling his own brand of cameras, designed specifically for action sports photography. In 2012, GoPro accounted for more than a fifth of all digital video cameras sold in the United States. A year later, Woodman would become a billionaire.
GoPro’s IPO in 2014 was the high water mark for the company. GoPro was not just a camera manufacturer at the time, but a full-fledged lifestyle brand. It had democratized the hero image and put cinematic self-shot footage within reach of anyone who owned a surfboard, a mountain bike or a pair of skis.
Where things started to go wrong
Suddenly, problems came quickly and from several directions. In 2016, GoPro launched its Karma drone to great fanfare, only to recall every single unit within weeks after some started losing power and falling out of the sky. The drone briefly reappeared in 2017 before being quietly canned; margin pressure was cited, but the reality was that China-based DJI had already sewn up the consumer drone market in a way that left little room for a late entrant.
GoPro’s ventures into virtual reality with the Omni and Fusion followed a similarly shaky trajectory. Meanwhile, smartphone cameras became capable enough to satisfy the casual end of the market, while DJI and Insta360 built serious action camera competition at the top. GoPro found itself squeezed from both sides.
A bold pivot towards a direct-to-consumer model and subscription service helped stabilize things for a while, with subscriber numbers growing strongly through 2020 and 2021. But revenue continued to trend in the wrong direction, while competitive pressure never let up.
An unexpected blow
The latest twist in this tale is that GoPro’s current crisis has not been caused by a rival outmaneuvering it or a botched product launch. Instead, the AI ​​infrastructure boom has created voracious demand for data center-grade memory chips, pulling supply away from consumer electronics and sending prices skyrocketing; memory has reportedly more than doubled in cost in some cases during the first quarter of this year. Couple that with weaker sales through April and May and the statutory filing starts to make sense.
GoPro was already running on thin margins, so these rising AI-driven costs come at a terrible time. The company’s own warning states that without new financing or a strategic transaction, it may be required to “significantly reduce, restructure or cease operations.” At the time of writing, no specific plans in that direction have been published.
What it means to you
There is a cruel irony in the timing. GoPro launched its Mission 1 series just weeks ago – a trio of cameras that represent a real step forward for the brand, with 8K recording, impressive stabilization and enough versatility to appeal well beyond the traditional action camera crowd. We have an in-depth review on the way, but our early impressions suggest that the Mission 1 is a stunning piece of engineering, and that the company still knows what it’s doing when it comes to hardware design. However, the filing shows it may be running out of time to prove it.
And if the worst happens and the brand leaves the market, it can have major consequences for consumers. GoPro is the Coca-Cola of action cameras: the brand that everyone searches for first and the name that defines the category in the mainstream consciousness. Rivals like Insta360 and DJI make excellent products, and they would continue to push each other forward without GoPro. But its loss would mean losing the market’s standard reference point and losing the brand against which competitors have spent years benchmarking themselves. It’s the kind of presence that isn’t easily replaced, and its absence rarely works to the consumer’s advantage.
Nothing is set in stone yet, and GoPro may yet turn things around. But the announcement feels like the kind of document that tends to mark a turning point one way or another. We’ll keep an eye on developments and bring you more news on what’s next for GoPro.
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