GoPro, which makes small and rugged cameras known for capturing surreal footage of action sports and other adventures, also fashions itself a media company. Its just-released IPO filing helps explain what that means.
“We are investing to scale GoPro as a media entity,” it claims early in the prospectus. But reading further, it’s clear that by media, GoPro really means something a little different. (See my initial notes from the filing on Glass.)
The company made $362 million last year, pretty much all of it from selling hardware: its Hero cameras and the accessories required to mount them in precarious places. It hasn’t generated a dime from the GoPro Network, which includes its wildly popular YouTube channel and profiles on all the major social networks. In fact, GoPro loses money on its media arm by commissioning professional videos shot with its cameras.
More recently, the GoPro Network has expanded to include a channel on Virgin America’s in-flight entertainment system. The channel, essentially an endless loop of the best GoPro videos, is mesmerizing and addictive. On a recent flight across the US, I chose it over more standard fare from tried-and-true media companies.
But GoPro gives away the content to Virgin for free, according to its prospectus. The company plans to start selling advertising on its Virgin and YouTube channels in the current quarter. It will also soon debut an Xbox channel that could include advertising and the option to buy GoPro products, with Microsoft taking a cut of the revenue.
Still, it’s all very small beans—now and in the future. “We expect to continue to derive the substantial majority of our revenue from sales of cameras and accessories for the foreseeable future,” the company writes in the prospectus. Revenue from the GoPro Network won’t be “material” this year. Meanwhile, GoPro generated 13% of its revenue last quarter from US electronics retailer Best Buy.
None of which is surprising, but it puts into focus what GoPro means when it says “media.” The company has enjoyed enormous success from the viral spread of videos shot with its cameras. “GoPro videos” have become their own genre, capturing a certain first-person aesthetic with energy that traditional videography often lacks.
There is indeed a “virtuous cycle” between distribution of those videos and sales of GoPro cameras, as the company argues in its prospectus. Correlation may not imply causation, but still, there’s something to this image from GoPro’s IPO filing:
What that describes is “marketing,” which is media, yes, but a very specific kind. GoPro may one day make money licensing video and selling advertising like a traditional media company. It would certainly prefer potential investors in its IPO to think that. But by its own admission, GoPro is and will likely remain a hardware company. Media is just how it communicates.