Twitter's (NYSE:TWTR) Periscope recently announced that it will integrate the iOS version of its live-streaming app with GoPro's (NASDAQ:GPRO) Hero 4 Silver and Black cameras. The new feature will enable Periscope users to switch between their smartphone and GoPro cameras during a single live stream. For example, a skier could start a live stream with a front-facing smartphone camera, then swap to the GoPro once a downhill run starts.

Source: Periscope.

This strategic partnership comes at a time when both companies are struggling with slumping growth. Due to those concerns, shares of Twitter and GoPro have respectively fallen nearly 60% and 80% over the past 12 months and slumped below their IPO prices. Let's see how this partnership could help both companies, and the potential problems that it might encounter.

How this deal helps GoPro
GoPro only expects its sales to rise just 15% annually in 2015 when it reports its full-year earnings on Feb. 3. That's down from 87% growth in 2013 and 41% growth in 2014. Looking ahead, analysts expect GoPro's sales to rise just 0.6% in 2016 due to the commoditization of the action camera market. Over the past year, GoPro tried to expand its mainstream appeal with cheaper devices and a smaller premium device, but sales repeatedly failed to meet the company's own expectations.

When GoPro went public in June 2014, the company claimed that it could grow a media business which would diversify its top line away from action cameras. GoPro has since expanded its video channels to new platforms, inked 360-degree video partnerships with Facebook (NASDAQ:FB) and Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube, and licensed its videos and photos to marketers. However, those initiatives haven't generated any meaningful revenue yet, and mainly serve as viral advertising for GoPro's cameras.

Facebook's 360-degree videos. Source: Facebook.

Partnering with Periscope to deliver live streaming content is an extension of that strategy. Twitter finished last quarter with 320 million monthly active users (MAUs), and Periscope reached 10 million users last August. That user base will complement the users GoPro already reaches on Facebook and YouTube.

The Periscope partnership might also convince owners of lower-end GoPros to upgrade to the pricier Hero 4 Silver and Black, which might support GoPro's sales until its Hero 5 devices finally arrive. Consumers interested in streaming aerial content on Periscope could also be interested in buying GoPro's upcoming Karma drone.

How this deal helps Twitter
In addition to partnering with GoPro, Twitter recently announced the integration of Periscope into the timeline of its mobile app. This means that live videos will likely soon appear directly in the timeline, enhancing Twitter's usefulness as an app for real-time news updates. GoPro is also delivering live Periscope streams from the X Games in Aspen, which highlights Twitter's usefulness as a real-time app for sports updates. This is notably a market which Facebook is trying to crack with its new "Sports Stadium" feature.

Periscope and the six-second video app Vine both represent promising ways for Twitter to expand its presence in online video, which is a more profitable market than traditional display ads. Generating more revenue per active user is important for Twitter, since its MAUs only rose 11% annually last quarter -- its slowest growth rate since going public. By reaching out to GoPro's impressive media following, which includes 3.7 million subscribers on YouTube, Twitter might tether more users to its ecosystem.

Twitter's partnership also gives it a foothold in the virtual reality market. Since GoPro's VR rigs and upcoming 360-degree camera can be used to film panoramic videos for VR headsets, the Periscope partnership establishes a foundation for the delivery of live VR content from GoPro cameras to Twitter's timeline.

The potential pitfalls
GoPro's partnership with Twitter benefits both companies, but investors shouldn't overlook its shortcomings. First, the deal doesn't really increase GoPro's appeal among mainstream consumers who prefer to use smartphone cameras for Periscope instead of action cams. Second, Twitter could ink similar deals with other action camera makers, or drone king DJI Innovations, which would eliminate GoPro's exclusive advantage. Lastly, the integration only works on two of GoPro's six cameras, and doesn't work on Android, which greatly limits its reach.

Therefore, the GoPro-Periscope deal represents baby steps in the right direction, but it certainly won't solve GoPro and Twitter's growth problems overnight. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.