GoPro has announced it has begun to pivot to a direct sale distribution model and cut more than 200 of its staff in response to COVID-19. GoPro will spend the rest of this year changing its model and, although this move seems to have been spurred by the ongoing pandemic, it does not appear that GoPro will reverse its decision after the virus has passed.
Last year, GoPro's website received 7 million visitors and it made around 20% of its revenue online in both the USA and Europe. This has grown in Q1 of 2020 and has been given as one of the reasons for the change in the model.
We've reported on GoPro's undulating finances, including in the past 6 months a fall of revenue of 54% in the third quarter of 2019 and then a bounce-back of 40% in Q4 following the release of its Hero 8 camera. GoPro's shift to a more consumer-direct approach includes the following expense reductions:
- $100 million reduction in non-GAAP operating expenses in 2020 and plans to further reduce operating expenses into 2021 to $250 million
- Workforce reduction of over 200 employees, or more than 20%
- Office space reductions in five geographies
- Sales and marketing expenditure reductions in 2020 and beyond
- Additional reductions in spending across the business
Nicholas Woodman, GoPro's founder and CEO, will forego the rest of his salary for 2020 and the Board of Directors have also volunteered to forego their cash compensation for the rest of the year. Woodman said: "GoPro's global distribution network has been negatively impacted by the COVID-19 pandemic, driving us to transition into a more efficient and profitable direct-to-consumer-centric business over the course of this year. We are crushed that this forces us to let go of many talented members of our team, and we are forever grateful for their contributions."
GoPro says that the change in model will not affect its 2020 releases, which are set to include new hardware, software and subscription products. The move to direct sales is expected to cost the brand $31 million to $49 million.
More information,
here.
FTFY
But your point is spot on in relation to many other larger companies who are now crying with their hands out for a bailout. Marriot hotels for example paid dividends to shareholders o around $600M dollars over the last year and spent $2.3 Billion on stock buy backs all of which simply enrich the shareholders of the company, boost the stock price, and likely mean big bonuses for executives. Almost three billion dollars out the door last year and now we are bailing them out. It really is a f*cking joke when you think about it. And Marriot not at all the only company guilty of this. The corporate welfare is basically the norm across all industries. I just happened to read an article today specifically about Marriot so the numbers were fresh in my mind.
When they ran their IPO they were touted as the next big thing, the stock grew huge, but so did expectations. They priced in (and hired/planned around) drones, cameras, a media conglomerate, etc. The reality is that they did not deliver on those expectations, for a variety of reasons, and are now worth a fraction of their IPO valuation.
Their business has refocused on cameras, but its a hard market for sure and they face market share loss each year. With a DTC strategy, they will have more money to spend on R&D and make the product better and put them back into a growth phase. It's also easier to manage inventory and way less headache around dealer sales and support.
Well... looks like no more yetis for you!
They were spending 360 million in R&D back in 2019 and only turned 460 million in gross profit. That's not a tenable situation to be in. I think I prefer the redbull business model.
It could be that increased competition and declining appetite for a pretty specific camera is also a factor. How many YT content creators are there, and when is their current model good enough?
Conspiracy Alert: Maybe COVID is the excuse to lay off all that retail sales channel, have someone else pay the costs and go DTC by choice?
For instance, I have been to China several times the last few years. In 2017, I went to the open markets and they had the red iPhone fakes within a few months.
Just a few decades ago, China was way behind and extremely archaic. Manufacturing was horrible and only producing simple products.Fast forward to now, outsourcing has fast tracked China to world class levels in light speed. China would never be an advanced world class country in such a short time without advanced countries outsourcing to China and handing over their intellectual property. It is unbelievable how much has advanced there in such a short time.
www.google.com/search?q=nintendo+company&rlz=1C1GCEA_enUS819US819&oq=nintendo+company&aqs=chrome..69i57j0l7.4746j0j7&sourceid=chrome&ie=UTF-8
en.wikipedia.org/wiki/Nintendo
if you care to learn more, prettttty interesting: www.youtube.com/watch?v=1qa1tGmi5g4
... and I discovered another photography Podcast!
I can guarantee that this was on the books to happen WAY before COVID-19 came around.
And yeah, lots of people buy gopros and film boring stuff on them, and lots of you posers buy I9 wheels and kashima forks and are still dogshit riders, so hold off on the judgement of other people’s buying habits.
shotcut.org/features
Combine that with an overpriced ecosystem, and it is not hard to see why they failed. I guess they heavily relied on overpriced accessories to keep their business afloat, but reality is that most people just bought Chinese "compatible" stuff...
After a while, it sure feels good to just turn it all off, including Strava, and going for a ride, while forfeiting the potential dopamine cheap shot of a "like"
You know, some people shoot pictures and video to bring back the memories of the great times they've had. Not everything ends up on youtube.
So far..I have a new XTR drivetrain, new wheelset, a Fabric 3d printed carbon saddle and $100 Paul polished dropper lever.
Going to both lbs to shop tomorrow. Think I'll pick up a new pair of Five Ten. Then head to the other shop and pick some tools I think.
Markets. Keep in mind brands generally pay for a branded presence in store, special display, advertising fees and the brands are usually paying for any promo dollars off retail or at least protecting margin. So there’s lots of money to regain control over... but yeah, I doubt consumers will see much of it.
I guess everybody is doing badly and GoPro may win just by being the only action camera left.
There are tons of companies that own portfolios of durables consumer brands, Dorel being one many people here would know about. Then there’s others like Jarden which owns Coleman, k2, US Playing Cards, canning products. GoPro is a strong brand, especially with younger demographics... it’s almost the default name for compact action cameras a la Kleenex vs facial
Tissue. When they get the balance sheet cleaned up it would be an attractive buy with lots of opportunity in product management, customer service and add-on services to grow.
Fortune through a sale. It didn’t happen in an ipo. His last chance is by being acquired. I agree the company isn’t overly attractive for a fund. There are congolmerations who may want it though... but only if they establish a viable DTC channel they could exploit on other owned brands.
GoPro tried to differentiate by creating an ecosystem with the Karma, online storage platform, lifestyle branding etc. but it hasn't worked - people don't want that stuff enough to pay more for it. Trying to compete on price will be a non-starter, so I think their only choice now really is to differentiate on quality instead (e.g. iPhone vs the cheaper Chinese phones), i.e. pivot back to 'pro' end of prosumer. At that end of the market people are willing to pay more.
Prosumers will know that GoPros give the best performance and that they have the features that production professionals need and they will know to find them online. Those types of buyers wouldn't have bought a camera in BestBuy, so changing to a direct sales model and culling out a lot of unnecessary cost from the business makes a lot of sense to me.
I don't see this as the end of GoPro, it's just a case of focusing the business on a new and narrower market.
I wouldn't necessarily hold for buying a GoPro waiting for lower prices though. If they do push towards the higher end it's likely that prices may rise. Red cameras and the pro end of the Apple computer line up are good examples of the "reassuringly expensive" pricing approach!
Much sympathy to the staff who have lost their jobs though, you've done a lot to raise the awareness of extreme sports and the marketing bought in big sales that drove the development of the great tech we have in GoPros today.
- Great video quality on phones
-Waterproof phones
-Terrible editing interface that crashes
- Their own file format that needs adapting for mainstream use
-The fact that the footage never looks as good or as fast as it does in real life
-The fact that trails on videos never look as steep or as rough as in real life
-Trail footage is boring
-Once we got to 4k noone really wanted to go any higher
-Cheaper chinese knock offs doing HD for £5 - Jeez I picked up a HD knock off as a free gift for a 20 buck purchase of something else.
As many have said, they went from novelty to Niche.
Unless they're making some kind of (super-bold) "traditional retail is dead" claim because of COVID, it's pretty clear that model wasn't making them money. I wonder what the real problem was? Just the cost and effort to get into those stores and support such a huge retail network? Disappointing sales from that network? Or do they see the only future for their products being one with lower margins that they can only support from a direct-sales model?
Will be interesting to see what the direct-to-customer model will mean to the customer. With absolutely zero personal understanding, i would imagine one of three scenarios:
1. Going DTC means they can now lower the prices on their products. "Good times"
2. Going DTC means they *can* lower their product prices, but they choose not too. "Bad times"
3. They still have to sell their products for the same prices, but the reduction in their own costs by going DTC means they can survive as a business and not go bust.
If the scenario 3 is the outcome. They really need to look at what needs to change within their business. They have a good product that, although niche, people do want. You can literally see their product demand on any given day at a ski resort. Go pros are everywhere.
I think we can all agree that within the consumer market of MTB (as well as other 'action' sports), there is a sizeable portion that will spend on 'want', rather than 'need' (think people buying the factory model componentry/frames where the product tech far exceeds the consumer's ability).
£400 for a camera means it would be a very expensive toy for me. But given what people spend on other products throught the market, it seems that that is a clearly affordable price tag of someone wants it - i.e. people have the money for it.
On top of this, Average Joe spending £400 on a GoPro means that Average Joe gets exactly the same bit of kit proffesional filmmakers are using. In other words, for this specific product at least, pros can't get a better bit of kit and Average Joe gets the same product at a price they can afford.
This is a fairly unique position for a company to be in and i don't know what the answer is for them to really capitalise on this.
Other commenters have mentioned that the effort to produce some worthwhile footage is offputting. I'd agree. I have a go pro (bought 2nd hand off a mate who really digs the filming and editing - he always puts together great videos of our snowboarding holidays). I can't be bothered to do much with the mediocre footage i captured. Maybe this is an avenue for them to explore - make it easier to produce great footage/videos and maybe people will be more inclined to either invest in the product and/or continue to invest in the latest iterations.
I've literally forgotten where i was going with this and i can't be bothered to go back and read what i was on about. So... submit comment regardless.
Nothing is clear in the apps, like is my camera uploading to the cloud, is my edit uploading from my phone? Then you go on their support forums and it's all laid bare, the people barely know their own products, or at least that's how it seems to me.
I like having fun rather than filming, don't have time to edit, and I'm not good at filming! But I do know some people that really enjoy the hobby of filming and they have continued to support GoPro this upgrades to there cameras.
GoPro and the action camera market is niche that had a brief flash into a mainstream consumer product, but it seems they still are niche. Same with the high end drones (which GoPro crashed and burned in). A realignment of expectations here was just reality catching up with them.
Oh wait.
Employee: Tell it to my fam...
Do these companies not get any funding during covid times???
youtu.be/0Rc6mr8zjEE