On June 1, GoPro filed a regulatory notice disclosing “substantial doubt about the company’s ability to continue.” The culprit? A deadly combination of increased competition, plummeting sales and soaring memory prices. It seems scarcely believable that the firm that essentially invented the action camera should be struggling, but there’s been a long road to get to this point.
GoPro’s origin story is almost comically Californian. Founder Nick Woodman started the company in 2002 with a loan from his parents and a surfer’s frustration at not being able to capture what he was doing out on the waves.
Woodman’s first product was a wrist strap designed to hold a camera, but by 2004 he was selling his own branded cameras, designed specifically for action sports photography. In 2012, GoPro accounted for more than a fifth of all digital camcorders sold in the US. A year later, Woodman would become a billionaire.
GoPro’s 2014 IPO was the high watermark for the company. GoPro wasn’t just a camera maker by that point, but a full-on lifestyle brand. It had democratized the hero shot and put cinematic self-shot footage within reach of anyone who owned a surfboard, a mountain bike or a pair of skis.
Where things started to go wrong
Suddenly, problems arrived quickly and from multiple directions. In 2016, GoPro launched its Karma drone to considerable fanfare, only to recall every single unit within weeks after some begun to lose power and drop out of the sky. The drone made a brief reappearance in 2017 before being quietly canned; margin pressures were cited, but the reality was that the China-based DJI already had the consumer drone market sewn up in a way that left almost no room for a late entrant.
GoPro’s ventures into virtual reality with the Omni and Fusion followed a similar faltering trajectory. Meanwhile, smartphone cameras were getting capable enough to satisfy the casual end of the market, while DJI and Insta360 were building serious action camera competition at the top. GoPro found itself squeezed from both sides.
A bold pivot toward a direct-to-consumer model and subscription service helped stabilize things for a while, with subscriber numbers growing sharply through 2020 and 2021. But revenue kept trending the wrong way, while the competitive pressure never let up.
An unexpected blow
The latest twist in this tale is that GoPro’s current crisis hasn’t been caused by a rival outmaneuvering it or a botched product launch. Instead, the AI infrastructure boom has generated a voracious demand for memory chips at the datacenter level, pulling supply away from consumer electronics and sending prices soaring; memory reportedly more than doubled in cost in some cases during the first quarter of this year. Pair that with weaker sales through April and May, and the regulatory filing starts to make sense.
GoPro was already running on thin margins, so these rising AI-driven costs come at a terrible time. The company’s own warning states that without new financing or a strategic transaction, it may be required to “significantly reduce, restructure, or cease operations.” No specific plans along those lines have been announced as the time of writing.
What it means for you
There’s a cruel irony in the timing. GoPro launched its Mission 1 range just weeks ago — a trio of cameras that represent a genuine step forward for the brand, with 8K capture, impressive stabilization, and enough versatility to appeal well beyond the traditional action camera crowd. We have an in-depth review on the way, but our early impressions suggest that the Mission 1 is a great piece of engineering, and that the company that still knows what it’s doing when it comes to hardware design. The filing, however, shows that it may be running out of time to prove it.
And if the worst happens and the brand does exit the market, there could be some major consequences for consumers. GoPro is the Coca-Cola of action cameras: the brand that everyone reaches for first and the name that defines the category in mainstream consciousness. Rivals like Insta360 and DJI make excellent products, and they’d continue to push each other forward without GoPro around. But its loss would mean losing the market’s default reference point, and losing the brand that competitors have spent years measuring themselves against. It’s the sort of presence that doesn’t get replaced easily, and its absence rarely works out in the consumer’s favor.
Nothing is written in stone yet, and GoPro may yet turn things around. But the notice feels like the sort of document that tends to mark a turning point, one way or another. We’ll be keeping an eye on developments, and will bring you more news on what happens next for GoPro.
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