In 2002 (12 years old) GoPro started out as a small consumer electronics company and has since then flourished into one of the most recognizable brands in America. Earlier this year GoPro went through its initial public offering process and first began trading at $24 per share. Currently there stock is trading around the mid 70 dollar range showing a 200% increase since trading began, and reaching a 52 week high of 98 dollars earlier this fall. This sharp increase in stock price stems mainly from the increasing popularity of GoPro products. However, more recently, GoPro has started to explore the possibility of entering the social media market.
This endeavor by GoPro is due to their increasingly popular presence online from both their company website and YouTube channel. According to the company there are over 6000 new videos filmed with unique cameras every day and uploaded online by users hoping to become the next “GoPro Star.” This trend has given the company hundreds of hours of free publicity every week, which in turn has helped spread their brand worldwide. In addition to this, since the creation of their YouTube page 4 years ago they have gained over 2 million subscribers, with an additional 521 million views on their website.
The massive quantity of online video fans has not only helped increase company revenues and brand recognition but has also allowed for GoPro’s transformation into social media. Currently GoPro has yet to set up a social media platform that only promotes company specific content, but they are taking steps in the right direction. As of late GoPro has begun to reward customers with varying dollar amounts when their submitted videos reach a certain views milestone. In addition to that they have started to collaborate with small amounts of users by helping with video editing and quality enhancements that allow global promotion for both the company and the user.
Even with a shift towards more company controlled video content, GoPro’s increasing online fan-base trend has not faltered. The growing rate of daily uploaded content and views per video has pushed GoPro into the social media spotlight, however there is only one question on investor’s minds. How and when will GoPro start to monetize its online social media presence? With a user base like that of GoPro’s there is tremendous potential for a new revenue channel based off video content monetization. A good example of how publicly made video content can be developed into a new revenue stream is Amazon’s $1.1 billion dollar purchase of twitch, a company that provided users the ability to watch people play video games. The size of this purchase by Amazon can be used to calculate twitch’s value at $20 per user.
With a value per user amount like this it is not hard to tell that if GoPro develops a monetization strategy for its video content they could potentially add multi-millions of dollars to its current market capitalization. However, in order for GoPro to continue increasing user growth and expanding its social media presence they need to formulate a monetization strategy that does not turn away the average viewer. If the company can find a happy medium there is a great future opportunity for not only GoPro but investors as well.
3 comments:
This article, which Scott shared, caught my attention specifically because I have been holding the GoPro stock in the interactive brokers stock market game for the majority of the semester. It is incredible that the stock has increased 200% since the beginning. The fact that GoPro is thinking about entering in the social media market and their approach to doing it seems like a great idea. With GoPro’s already dominate presence on YouTube, it has helped increase company profits as well as giving GoPro a huge brand recognition. I think that their possibilities for reaching out to more social media channels are endless. I think their approach to the social media platform is definitely pointing them in the right direction. Rewarding their customers with money after reaching a certain milestone on views for their videos is a great step into helping promote their product even more. Not only are they using that approach but they are also helping them with video and quality enhancements. Since these YouTube videos have been so popular as of recent it is only natural to assume that GoPro has been pushed into the social media spotlight. This is something that I have noticed and is something that I believe GoPro will take much advantage of in the months to come. I feel as if GoPro were to take advantage of it in a monetary manner then they would have to do it through Amazon’s approach with Twitch, as Scott mentioned in the blog. I agree indefinitely that if GoPro were to develop a monetization strategy for its video content then it can add multi-millions of dollars to its already successful market capital. This is something that I belive GoPro can incorporate in the next month or two, especially because winter sports are just around the corner. If GoPro were smart they would be on their way to finding out a strategy on how to approach this idea right now.
Both Scott and Vince have touched on GoPro implementing an online video monetization strategy as a next step for this company. Both have cited the strategy as having great potential for GoPro’s next revenue stream. I agree that the strategy would be effective, if implemented properly. Digital usage now accounts for about 57% of daily media time globally. This shift to digital usage has to be accompanied by a shift to more personalized advertising. As illustrated by the article, GoPro does not have as narrow a customer base as one might initially assume. Everyone from pro athletes to new parents are using the cameras to create videos which document the best moments of the human experience. Parsing through these moments and using data analytics to determine which advertising should go where is key. Someone watching a video of a baby falling asleep is not the same customer as someone watching a motorcyclist drive on the highest road in the world. For GoPro to succeed in a video monetization strategy, it will have to dig deep into the data that surrounds its videos on its website and on YouTube. The link to the blog below outlines further the importance of personalization in video content monetization.
http://blogs.imediaconnection.com/blog/2014/08/12/marrying-advertising-and-content-the-future-of-online-video-monetization/
GoPro is such an interesting company. It has made almost all of its revenues from its sale of the Hero camera which offers users an experience unlike any other. It success has come from the sheer differentiation this camera offers is customers. To venture into the realm of digital media is a bit of a risk for GoPro. With so many video processing platforms already on the market GoPro will be playing a game of catch up. It has never seriously faced competition in its duration as a business and that is exactly what it will be doing. There is hardly anything wrong with applications like FinalCut and iMovie, and therefore I feel as if consumers will maintain the mindset of "why fix what's not broken". In order for GoPro to continue its success it will have to innovate, that is for certain; however I am unsure if the digital media stage is the correct way.
A lot has happened with GoPro since this post was written. It has been met with large negativity over the past month as its stock price has plummeted by almost -30% . This can be accredit to an incredible overreaction by the market to GoPro's value. Recently there has been speculation of a possible acquisition from tech giant Google. GoPro has also encountered its first true competitor in the rekindled Polaroid cube. Polaroid offers almost an entirely identical product at almost 1/5 the price. I think through competitive forces GoPro will be forced to lower its absurdly expensive price tag due to a loss in market share.
It will be interesting to see how camera sales do over the holiday period, I can imagine it will be under thousands of christmas trees across the world. I think it may be a "buy the hype, sell the news" kind of scenario which many could take advantage of. GoPro is currently trading at almost 67 times its forward earnings estimates. These figures show the stock's apparent inflation.
It will be interesting to watch how CEO Nick Woodman acts after his mandatory lock-up period expires in late December. I'd keep an eye on this event as the stocks price is sure to move drastically in reaction.
http://www.marketwatch.com/story/why-gopros-stock-keeps-crashing-2014-12-09
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