Roundtable: Where Will GoPro Be in 10 Years?

GoPro Inc (GPRO -3.39%) recently announced it will shed 15% of its workforce, or roughly 200 full-time positions, as the sports camera maker tries to convince investors it is putting its house in order in the wake of third-quarter results that proved a grave disappointment (year to date, the stock has lost nearly half of its value). For GoPro, this could be a turning point -- but in which direction? To answer that question, we asked three of our contributors: Where will GoPro be in 10 years?

GoPro's media magic is elusive

Keith Noonan: I previously counted myself among those who thought GoPro could leverage its first-mover advantage and brand strength to maintain a lasting position in its space, but I've had to reassess that position in light of the company's ongoing stumbles and limited progress on some of its key goals. I now think it's unlikely the camera maker will be around 10 years down the line, and much of that opinion is due to skepticism about its ability to transition to a media company.

Leading up to the company's 2013 IPO, GoPro put forth the idea that it could build a strong media network component to support camera sales and also shift some of the burden away from a hardware-centric business model, but it's hard to point to substantial material progress on that front. Sure, GoPro has racked up an impressive list of content partnerships, strong social media engagement, and lots of video views, but that apparently hasn't been enough to keep revenues moving in a favorable direction.

Having roughly 1.32 billion video views on YouTube sounds great, but even assuming very strong ad engagement, that likely works out to well under $10 million in lifetime revenues from the platform. Granted, GoPro has its own video network, original content unit, and user video licensing strategy as well, and I agree with the argument that its videos also function as ads for its products, but the social and video growth actually highlights the issue of disappointing hardware sales, and there's not yet evidence that the company's media networks can be meaningful contributors.

GoPro's pitch that its red-hot camera brand could build a media business that not only grew its position in hardware but eventually stood on its own is looking shaky, and the company faces tough odds surviving the next decade without success on that front -- especially with device stumbles like the HERO4 Session and the Karma drone.

Focus is the key to GoPro's survival on its own

Alex Dumortier: There are but three mentions of the term "competitive advantage" in GoPro's most recent 10-K report, the two most significant of which are:

Page 7:

We believe leveraging this content team to help refine existing products and influence future products gives us a competitive advantage.

And, on page 13 (my emphasis):

Many of our current competitors have substantial market share, diversified product lines, well-established supply and distribution systems, strong worldwide brand recognition and greater financial, marketing, research and development and other resources than we do. In addition, many of our existing and potential competitors enjoy substantial competitive advantages...

Keith assessed the first of those propositions in the section above, so I'll reflect on the second. In short, if GoPro believes its competitors have developed substantial competitive advantages, it suggests a misunderstanding of the market. Indeed, even the best-positioned competitors from among those GoPro mentioned in the previous paragraph, Canon Inc and Garmin Ltd., have established limited competitive advantages -- not substantial ones.

Of course, perhaps GoPro was referring exclusively to its potential competitors -- which, not surprisingly, remain unnamed, for they're indeed in a different league, with names including Alphabet, Apple, and Facebook. You want to be very certain of your "competitive moat" if there's a risk you'll have to go to war with those giants.

Ultimately, I don't expect GoPro's content network will provide that sort of moat. As such, I think the best the company can hope for is one of two scenarios: Being acquired by a larger company for its technology or to fill out a product range with a niche offering, or accepting being a niche supplier and single-mindedly focus on serving action sports enthusiasts better than anyone else (in which case, it could become...an attractive acquisition candidate). The alternative -- which is not unlikely, in my opinion -- is the one Keith described: GoPro no longer being around.

GoPro, going strong

Rich Duprey: These days, it isn't easy to say GoPro will have a bright future. Essentially, if it wasn't for the low competitive moat for its industry, there wouldn't be one at all. Yet despite the relative ease with which rivals can -- and do -- enter its space, there's still reason for hope.

GoPro, of course, has become virtually synonymous with the action camera market it created. The rugged, wearable cameras set the standard for what the industry would become, and the success of its recently introduced Hero 5 Black and Hero 5 Session cameras will be important in diagnosing not only its current financial health, but where it can go. Sure, improved smartphone cameras have stolen a bit of the action camera market's action, but there are just too many scenarios where a smartphone isn't appropriate, and that's the void GoPro can fill.

Live-streaming may be just one of several future growth opportunities for GoPro. As we've seen with its popularity on Facebook and YouTube, having an action camera as capable and durable as the Hero that can record the action live for viewers will set it apart from the competition. Of course, others will copy its features, but GoPro's ability to repeatedly achieve first-mover status should serve it well.

And though its debut drone wasn't quite the success it could have been, it does point to one way GoPro is looking forward. Action cameras mounted to drones that live-stream events over the most popular social media networks should be huge. Couple that with the leaps being made in virtual reality, and GoPro should still be able to propel itself forward. If the GoPro VR app could become the industry standard, and with added 360 and stereoscopic video capabilities, it ought to be the must-have gear for capturing and delivering next-generation video.

As the features are developed and consumers' comfort level with live-streaming grows, the desire to capture more and better footage in new and novel ways will increase with it.

GoPro could never remain just a simple action camera maker; it was just too static of a model to succeed. To see where it can be a decade from now requires looking beyond the recent stumbles and seeing the world of video capture through a whole new lens. And it will likely be through a GoPro camera that you'll do it.