GoPro (GPRO -2.86%) CEO Nick Woodman believes virtual reality is a huge growth opportunity for his company. During a conference call in May, Woodman claimed GoPro had "an opportunity to be a leader in consumer VR" while discussing the company's VR filmmaking rigs and VR app.

Woodman declared that by combining the six-camera Omni, 16-camera Odyssey, and Kolor, the company's stitching software, GoPro had "created one of the world's most comprehensive platforms for capturing, stitching, sharing and enjoying VR content." Unfortunately, that platform is also extremely expensive -- the Omni costs $5,000 and the Odyssey costs $15,000. Woodman mentioned developing a "more casual" spherical camera for mainstream consumers back in January, but the company hasn't revealed such a device yet.

Enter Samsung's Gear 360. Image source: Samsung.

That's where Samsung (NASDAQOTH: SSNLF) comes in. The company's new Gear 360 camera is a spherical device that weighs about the same as GoPro's Hero 4 Black, but uses two ultrawide fisheye lenses to capture 360-degree images and videos. It's an elegant solution which makes GoPro's pricey rigs look clumsy and outdated. The Gear 360 costs just $350, which makes it $150 cheaper than the Hero 4 Black.

However, the Gear 360 only works with Samsung phones, and its video quality obviously can't match the professional grade video of GoPro's multi-camera rigs. But if GoPro still plans to launch a "casual" spherical camera for the masses, Samsung might have raised the bar well beyond GoPro's reach.

The business of 360-degree cameras

Samsung isn't the first company to launch a 360-degree camera. Other notable devices include the Kodak PixPro SP360 4K Action Cam ($450), 360Fly ($400), and the Ricoh Theta S ($350). The 360-degree videos from these devices can be viewed on Alphabet's (GOOG -1.10%) (GOOGL -1.23%) YouTube or inside a VR headset.

GoPro and YouTube previously co-developed the Odyssey for the Jump platform, which delivers professional quality 360-degree videos to YouTube. GoPro often cited that partnership as proof that it would become a major player in the VR market. However, YouTube also recently extended that partnership to Yi Technology, which sells cameras with the same technology as GoPro's high-end devices for about half the price.

GoPro's Omni (L) and Odyssey (R) rigs. Image source: GoPro.

YouTube's embrace of cheaper 360-degree and action camera rigs indicates that it wants mainstream users to upload more VR videos to the site. That would make YouTube a top site for VR videos, and widen its moat against Facebook's (META -4.13%) News Feed videos and Oculus VR.

Why hasn't GoPro launched a spherical camera?

YouTube's strategy conflicts with GoPro's strategy of using Omni and Odyssey to sell more cameras. GoPro realized that YouTube's embrace of cheaper VR cameras could dilute its brand appeal, so it launched its own VR site and app, GoPro VR, in April. But as I mentioned in a previous article, that strategy didn't make sense, since more streaming video viewers likely start on YouTube instead of GoPro's website or app.

The key problem with GoPro's strategies is that they all revolve around selling more action cameras. Its VR rigs are really just accessories, and the Karma drone will likely be a flying accessory to move more GoPro cameras. That's probably why GoPro has been reluctant to launch a spherical device like the Gear 360 -- it would likely cannibalize sales of its action cameras and rigs.

The flaw in that strategy is that companies are integrating cameras into these products at lower price tags. Samsung's Gear 360 and Xiaomi's 4K Mi Drone are both cheaper than the Hero 4 Black, which raises questions about why consumers would buy GoPro's action cameras and VR/drone accessories separately for higher prices. Unless GoPro abandons its accessory strategy and focuses on creating competitive stand-alone devices with integrated cameras, it will likely struggle to remain competitive in new markets like VR and drones.

Samsung leapfrogs GoPro in VR tech

Unlike GoPro, Samsung now has a cohesive platform for capturing and viewing VR video. The Gear 360 clearly complements the Gear VR headset, which Piper Jaffray expects to outsell all other VR headsets this year with 5 million units sold. The combination of the two devices could yield some impressive results if content from the Gear 360 is directly streamed to the Gear VR.

GoPro's VR app and rigs aren't seamlessly linked with each other. It recently teased some footage from a smaller VR camera, but the device seems to be a custom device using GoPro cameras instead of a mainstream product. GoPro hasn't lost the VR race yet, but it must release more head-turning devices to prevent customers from ditching their GoPros for newer cameras like the Gear 360.