A few years ago, a start-up called GoPro (GPRO 3.89%) carved out a high-growth niche in the stagnant camera market with its Hero action cameras. Sales of those cameras surged until 2015, but started sliding after GoPro -- and a growing number of rival camera makers -- seemingly saturated the specialty market.
Today's action-camera makers face two main challenges. First, smartphone cameras are good enough for many mainstream consumers, calling into question the need for stand-alone action cameras. Second, intense price competition and hardware commoditization are driving prices down.
To counter those headwinds, manufacturers are developing next-generation cameras for capturing 360-degree content. These panoramic videos can be viewed by swiping through a video, moving the mobile device, or wearing a virtual reality headset. These "niche within a niche" devices include Samsung's Gear 360, Ricoh's Theta, Kodak's PixPro SP360, and GoPro's upcoming Fusion.
Despite the recent speed bumps, the action-camera market could still keep growing. Research firm Global Market Insights expects the size of the global action camera market to grow at a compound annual growth rate of more than 22% between 2016 and 2023 -- so companies like GoPro could still have room to run.
Offer from The Motley Fool: The 10 best stocks to buy now
Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
*Stock Advisor returns as of 5/1/2017.