For more than a decade GoPro Inc (NASDAQ:GPRO) was all about a single line of action cameras. It sold accessories and made some software, but everything revolved around the action cameras themselves, which all looked nearly identical.

In 2016 the company launched its first drone, which promptly crashed and has never really recovered. This year it's trying to expand into a new market: the 360 video market, which is adjacent to action cameras and very much up for grabs for camera makers. Now that the Fusion 360 camera is officially for sale, GoPro is testing how far it can spread its wings into unexplored territory. 

Tiny world photo of people skydiving.

Image source: GoPro.

Will 360 video be a hit? 

Bringing a 360 video product to market is the right move for GoPro, but it may not be entering a very large market. High-end VR headsets Oculus Rift and HTC Vive have sold less than a million units each, and it's not clear that VR is going to be widely adopted for home use anytime soon. Convincing people to capture their own 360 videos may be a tall order. 

However, while customers may not be demanding 360 video solutions, that was the case for action cameras when GoPro was launched as well. The company created a product that made a new use case for consumers, a new way to capture content they had never been able to capture before. Fusion could follow a similar path, but it will be an uphill battle. 

Fusion is a compelling product offering

Fusion is a dual camera that has some impressive specs for those willing to try it. It can capture 5.2k spherical video at 30 frames per second, or 3k at 60 frames per second. It has image stabilization, 360 audio, voice control, GPS, and a gyroscope, and is waterproof up to 5 meters. 

What'll make the product compelling is the images it can capture. 18-megapixel spherical photos can be edited to create "tiny planet" images (above), and spherical videos can be edited after the fact to capture only the portion of the frame you want to show. This is a concept known as Overcapture, and it could make Fusion a hot device for action sports applications where a traditional GoPro's point and shoot style doesn't always capture the best frame. 

There will certainly be a number of early movers who are willing to try Fusion, share the unique content taken on it, and push more people to try it. Even if VR isn't the massive market GoPro hoped it would be, having a great camera offering is a step in the right direction. 

Why Fusion is a big risk

GoPro's financial struggles lately have been caused by a mismatch between how much revenue and gross margin the company can generate and its operating expenses. Expected 2017 revenue of $1.315 billion with a 40% gross margin would still leave GoPro with a loss after $570 million in expected operating expenses.

Some of those operating expenses are being spent developing products like Karma and Fusion, and I think it's safe to say the development costs for both will be tens, if not hundreds, of millions of dollars. If Fusion isn't able to generate enough revenue or margin to justify the investment it'll leave the company in a further financial hole. That's the challenge facing GoPro with Fusion's launch, and why it's the highest risk product of 2017. 

Travis Hoium owns shares of GoPro. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has a disclosure policy.