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Week 8 - GOPRO Written Case 2

GoPro was founded in 2002 and pioneered the action camera market, becoming highly successful through a viral marketing strategy that encouraged users to share videos. However, increased competition from smartphones and other cameras hurt sales. A failed drone launch and software issues damaged the brand further. To recover, GoPro acquired editing companies, launched an improved camera and cut costs, but faces challenges regaining market share from cheaper rivals.

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Britney Bissambhar
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77 views3 pages

Week 8 - GOPRO Written Case 2

GoPro was founded in 2002 and pioneered the action camera market, becoming highly successful through a viral marketing strategy that encouraged users to share videos. However, increased competition from smartphones and other cameras hurt sales. A failed drone launch and software issues damaged the brand further. To recover, GoPro acquired editing companies, launched an improved camera and cut costs, but faces challenges regaining market share from cheaper rivals.

Uploaded by

Britney Bissambhar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GOPRO: CONTENT MARKETING UNLEASHED

During an earnings report in 2017, GoPro CEO Nicholas Woodman announced that the
company was laying off hundreds of staff and reducing the pay of its CEO in a bid to address its
fragile financial condition. The company had been shedding jobs since the start of 2016 and the
announced layoffs were just the latest sign that GoPro was losing ground in the competitive
action camera market. The company’s stock price was also a fraction of what it was since GoPro
went public in 2014. How did the company that virtually created the market for action cameras
end up in this position? More importantly, what strategies should GoPro executives adopt to
turn things around and ensure future profitability?

COMPANY HISTORY
Following two entrepreneurial failures, GoPro was founded by Nicholas Woodman in 2002 in
response to his desire for a camera system that allowed him to take pictures while surfing.
Using personal savings and funds borrowed from his parents, Woodman spent the next two
years working tirelessly to convince surf shops and specialty sports retailers to stock a
prototype of his digital camera. The GoPro camera was eventually introduced to the mass
market in September 2004 and proceeded to carve out a new niche: the action camera. From
the start, the company focused on innovations such as transitioning from film to digital and
allowing audio recordings, thereby letting consumers fully capture their daily activities. Over
the next decade the company enjoyed phenomenal success, releasing several increasingly
sophisticated versions of its digital cameras.
By 2014, GoPro dominated the action camera industry, with approximately 47 per cent of
market share, and the company was valued at $3 billion when it went public that year. Many
observers credited the company’s approach to marketing for its success. Rather than
promoting its products directly, GoPro encouraged owners of its camera to upload content to
social networking sites such as YouTube, Facebook and Instagram. This became an easy way for
consumers to share high-quality videos of their extreme sporting activities as well as interesting
moments from their daily lives. GoPro thus reached an audience of not only sports enthusiasts
but everyday consumers who wanted to share interesting content.
Additionally, GoPro launched contests and awarded prizes to encourage its customers to
upload impactful videos to social media and bought the rights to the best content, which was
then prominently displayed on its website. The consumer response to these initiatives was
overwhelmingly positive and attracted many online viewers to the extent that by the end of
2018 the company had signed up more than 6.5 million subscribers to its YouTube channel. This
strategy not only slashed marketing expenses but in effect, converted GoPro’s customers into
its most effective advertisers.
The popularity of the GoPro brand allowed it to create partnerships with entities such as the
NHL and ESPN, which used GoPro cameras during live broadcasts. In addition, GoPro partnered
with prominent professional athletes to upload videos of their daily routines and offer glimpses
of their training regimens. The company also targeted consumers who were not interested in
extreme sports activities by collaborating with Mariott hotels to offer complimentary cameras
to guests staying in the hotel’s Caribbean properties. These amateur filmmakers were then
encouraged to upload and share interesting videos about their Caribbean vacation.

CHALLENGES
In an ironic twist, the year after GoPro’s successful IPO in 2014, marked the start of a bumpy
period for the company. One reason for this was the entry of big-name competitors like
Polaroid, Sony and Panasonic into the action camera market with products offering more
advanced features than existing GoPro models. This period also saw increased competition
from sophisticated smartphones with high-end cameras, which offered a cheaper and more
convenient way to take pictures and videos.
Apart from increased competition, the release of camera models at premium prices led to
disappointing sales in a market cluttered with competing action cameras at lower prices. The
lack of consumer research and relatively weak investments in marketing only added to the
brand’s struggles. In an effort to turn things around, in 2016 the company invested significant
resources in R&D and staff to develop and launch its Karma drone to compete against the
popular DJI Phantom, and DJI Mavic. The entry into the drone market seemed like a natural fit
for the company since a significant number of GoPro cameras sold were being attached to
drones.
Unpredictably, the first drones malfunctioned on a major scale and the company was forced to
recall the product immediately after launching, before putting it back on the market in 2017.
The Karma recall caused consumers to lose confidence in the company and sales of the
reintroduced drone were sluggish. This setback was a costly one and caused GoPro stock to
plummet to less than 10% of its IPO value of $93.85 per share in 2014. The company also faced
consumer complaints about the software used to edit and share footage recorded by its
cameras which discouraged them from buying GoPro devices.

REVIVING THE BRAND


In late 2016, in an attempt to return to profitability, GoPro acquired two video editing software
businesses and launched its HERO5 camera with an upgraded software package. The camera’s
advanced features found widespread market appeal and it soon became the best-selling digital
camera in the United States. The company also announced it would cut about 15 per cent of its
workforce and refocus on a streamlined set of products. Although the HERO5 was a success, the
company’s stock price continued to decline and analysts questioned whether GoPro could
regain its dominant position in the market and fend off low-cost competition. The fact that the
global action camera market was forecasted to continue showing strong growth however,
made Woodman optimistic that there was an opportunity to turn things around.

ASSIGNMENT QUESTIONS
1. What factors accounted for GoPro’s success in disrupting the video camera market and its
eventual decline?
2. What actions can the company undertake to make a comeback?

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