GoPro (NASDAQ:GPRO) announced Tuesday that its new HERO9 Black camera has pushed the number of GoPro subscribers past 500,000, and the number is expected to exceed 700,000 by the end of the year. The figure is impressive -- and welcome -- given GoPro's need to find ways to generate recurring revenue from customers and the challenges in its hardware-focused business model.

The question for GoPro and investors is: What's next? 

GoPro HERO9 Black image.

Image source: GoPro.

Subscriber growth is a little misleading

GoPro initially launched the GoPro Plus subscription for cloud storage of photos for $4.99 per month in 2016. Users were limited to 62,500 photos or 35 hours of video (or a combination of the two), but it wasn't really a foothold in the subscription business.

The current GoPro subscription is better than the previous model in both services and price. It's $4.17 per month, and includes unlimited storage, full camera replacement, and 50% off gear at GoPro.com. That's a good deal for anyone using their GoPro regularly.

But here's the kicker, and where the subscriber number becomes misleading. GoPro is pricing the HERO9 camera with a one-year subscription at a lower price than buying the camera without the subscription. Right now, Hero9 Black with a subscription is $349.98; without a subscription, it's $449.99. The company is effectively giving a $100 subsidy to sign customers up for the subscription.

That makes the 500,000 figure misleading, because it's not a true gauge of how many people are paying for it. But it could show GoPro's vision for the future. 

Where is GoPro going?

Giving a discount to customers to sign up for a service they're getting for free for a year seems like it's giving up revenue, but a long-term view is needed here if GoPro is going to be a growth stock again. GoPro has long had problems generating predictable and recurring revenue, so signing customers up to a cloud service, even if they aren't paying for it, may be a way to start building recurring revenue. It also begins building a direct relationship with consumers. 

GoPro could even consider combining hardware and services like cloud storage and photo editing software as a larger subscription package with a camera upgrade cycle. Axon is doing this with body cameras and its cloud services for law enforcement, offering a monthly payment for everything, including the option to add services for a higher price. 

Hardware and software subscriptions would have a couple of benefits for GoPro. First, they would bring in recurring revenue, which would make operations more predictable. But more importantly, they would allow GoPro to plan its camera manufacturing more efficiently. When GoPro has run into financial trouble, it's been because it over-built inventory for the important holiday season and had to write down hundreds of millions of dollars of product. This could reduce that risk in the future. 

GoPro may not have enough to make it alone

I like the strategy change and experimentation from GoPro, and think building relationships directly with customers is the right way to go long-term. But GoPro is still losing money, and this addition of subscription customers who aren't actually paying anything for their subscriptions won't likely change that. 

What GoPro needs to do is find a way to expand its product line to add more value to consumers, or join a company that can leverage the hardware and subscription network GoPro has today. The company has value with its large base of loyal customers, but it's not making money on its own, and may need help from another company to extract its value long-term.