Action camera maker GoPro (NASDAQ:GPRO) recently launched a premium content portal for advertising brands and agencies to license its videos and images. This strategy, which is comparable to programs at Flickr and 500px, lets content creators profit from their work. GoPro hasn't yet announced pricing plans or the percentage of revenue which content creators will receive, but a company spokesman told Engadget that its top priority was to "get money back into the hands" of creators.
GoPro also recently announced that it will launch a new mobile app which lets users trim and share videos directly from their smartphones. Today, most GoPro users use resource-intensive PC editing software to trim down hours of video footage into a few minutes of highlights. Therefore, GoPro's app -- which should arrive by the end of the summer -- could encourage users to upload more videos.
Those two efforts could help evolve GoPro's fledgling media network into a full-fledged business. Let's see how they complement GoPro's past media moves, and how they might shape the company's future.
GoPro's media business
GoPro's media efforts haven't generated any meaningful revenue yet, but they've attracted plenty of viewers. The heart of GoPro's media business is the GoPro Channel, a streaming video channel on Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube, Roku, Microsoft's Xbox Channel, Virgin America flights, and other platforms.
The GoPro Channel hosts both user-submitted and professional video content, and helps connect GoPro owners to each other. It also doubles as a viral promotional platform if its videos are shared across the Internet. On YouTube, the channel currently has over 3.2 million subscribers.
Over the past two years, GoPro has beefed up its media efforts by hiring industry veterans and making strategic acquisitions. In 2013 it hired Adam Dornbusch, the former business development head of Current TV, as its programming chief. Last year, it hired Skype CEO Tony Bates as company president, and former CBS executive Zander Lurie as its senior VP of media. In early July, GoPro hired Charlotte Koh, the former head of original content at Hulu, as its head of original features and stories. Earlier this year, GoPro acquired French start-up Kolor, which develops an app that stitches together videos into 360-degree VR content. Those immersive videos can then be viewed on its app, YouTube, or VR headsets.
The plan is all coming together
GoPro's long-term media plan is shaped by three things -- a strategic shift toward the cloud, new editing tools for sharing content, and a higher dependence on mobile apps.
In June, GoPro launched the Hero+ LCD, the first GoPro device to feature in-camera video trimming for fast editing without a PC. Shortly afterwards, CEO Nick Woodman discussed GoPro's development of a cloud platform, which would automatically backup GoPro videos through a Wi-Fi connection. Woodman wants users to be able to trim videos directly within the cloud to streamline the sharing process. Lastly, GoPro recently launched the GoPro Hero 4 Session, a tiny camera which only has two buttons and no display. Most of the camera's features must be accessed via a mobile app, which strengthens the symbiotic relationship between the two platforms.
The addition of a content licensing portal and a mobile app for trimming videos on smartphones complement those plans by making it easier and potentially more profitable to share content on the GoPro Channel.
Why investors should care
GoPro's growth from action camera sales remains impressive. Last quarter, its revenue rose 72% annually as net income surged 277%. Yet there are concerns that cheaper rivals, like Polaroid's Cube+ or Xiaomi's Yi Action Camera, will eventually lure away GoPro's core customers.
As a result, GoPro must widen its defensive moat and diversify its product portfolio. The GoPro Channel can help accomplish both. The network is already much larger than its competitors' comparable media efforts (like Kodak's PixPro Channel) on YouTube. Making it easier to share content and profit from license sales could help that ecosystem grow faster, which would strengthen the GoPro brand. It's unlikely that content licensing revenue will offset action camera sales on its own, but it could generate enough "meaningful" revenue to be reported on a quarterly basis. That revenue could then complement the launches of new products like consumer drones and VR mounts.
Therefore, GoPro's media expansion isn't just a way to diversify its top line. It's also an ecosystem and marketing play which can guarantee that its brand remains synonymous with action cameras worldwide.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and GoPro. The Motley Fool owns shares of Google (A shares), Google (C shares), and GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.