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GoPro faces tough competition as consumers spend less on cameras

tech Updated: Oct 30, 2015 12:39 IST
GoPro’s shares fell 15% on Thursday, a day after the company forecast lower-than-expected revenue for the crucial holiday quarter. (Reuters)

With demand from action junkies drying up, GoPro Inc has a mountain to climb as it vies with the iPhone and other sharpshooting smartphones to win over thrifty customers in the mainstream market.

For a company which quickly became synonymous with its helmet- and body-mounted cameras, recent product launches have failed to click with consumers who rely more on smartphones than traditional cameras to make high-resolution video.

GoPro’s shares fell 15% on Thursday, a day after the company forecast lower-than-expected revenue for the crucial holiday quarter.

“There’s just not a lot of demand for cameras,” Oppenheimer & Co analyst Andrew Uerkwitz said.

GoPro’s answer is to increase spending on marketing campaigns, primarily television advertising, from the current quarter through 2016.

For over a year, the company has shunned TV ads, relying instead on the hype generated by GoPro users who upload videos of their exploits on YouTube. Some popular videos, such as “Superman with GoPro”, have garnered more than 18 million likes.

“Performance is still good, demand for GoPro is still strong, but admittedly we took our foot off the gas from a marketing perspective in the second and third quarter,” Chief Executive Nicholas Woodman said in an interview with CNBC.

Pricing has been an issue: the San Mateo, California-based company slashed $100 off the price of its HERO4 session camera only two months after its launch in July, citing lower-than-expected demand.

Analysts said customers in the Americas, by far the company’s biggest market, appeared unwilling to shell out more money on relatively expensive cameras. The market is also nearing saturation, they said.

“As a result, I would expect growth rates to decelerate a bit,” said S&P Capital IQ analyst Angelo Zino, adding that this was “probably the biggest issue we have seen” since GoPro became a publicly traded company in June 2014.

Recent advancements in video-shooting capabilities of smartphones, such as Apple Inc’s iPhone 6 range, have made competition tougher.

But some analysts said the renewed focus on advertising could help to revitalise sales next year.

“The company will ramp up marketing significantly and immediately, which will weigh on near-term earnings, but should restore some momentum around the product category and the brand heading into 2016,” JPMorgan analysts wrote in a note.

GoPro’s shares closed at $25.62 on Thursday. They have lost about half of their value since the launch of the HERO4 session.

First Published: Oct 30, 2015 12:39 IST