January 13, 2016

GoPro Cutting Jobs After Slow Holiday Sales & Pricing Mistake on HERO4 Session

GoPro HERO4 Session Cluster
Following lower-than-expected revenue in Q4, GoPro is reportedly planning to lay off 7% of its workforce.

While we don't often share financial results for these companies, there is an interesting aspect of this whole topic that's worth discussing. First off, GoPro's stock has taken quite a tumble since an August 2015 high of over $60, closing today at just $14.61, nowhere near its all-time high of over $80 (or it's IPO of $24). Analysts and GoPro were both expecting revenue well over $500 million, but it's looking like Q4 revenue will be somewhere around $435 million, with full reports coming next month. That's quite a bit off the mark, and part of the reason the stock has dipped — though most tech-related stocks have taken a tumble recently. 

The most interesting (and obviously unfortunate) part of this situation is the reason why GoPro is cutting about 7% of its 1,500 person-strong workforce. Re/code obtained an email sent to GoPro employees (h/t to The Next Web) explaining that a pricing mistake caused weak sales in the GoPro HERO4 Session (we've written about the previous price drops of the HERO4 Session here, and here)

Today’s announcement reflects the issues we faced in 2015, largely related to our launch and pricing of HERO4 Session. While we clearly made a mistake pricing Session at $399 (more specifically I made the mistake, it was my decision), I’m proud of how we responded. We recognized the problem, price adjusted to $299 … recognized that wasn’t enough and price adjusted again to $199 which positioned Session as the best entry-level product we’ve ever made.

There's obviously more to the layoffs than just this pricing mistake, but it's unbelievable how many people are now being affected by the cost of just one product in a wide-ranging lineup. The HERO4 Session seemed on the higher side when it was first announced, as it had lower specs and less features than similarly-priced GoPro cameras at the time. It also doesn't help that due to its small size, there is no removable battery, which makes it nearly useless for a lot of productions, unless you're connecting it to an external battery source on set (and if you do that, you're losing much of the size advantage in the first place). 

Whenever new products are announced, people tend to focus on price right off the bat, and in this case, it seems that the general public felt the same way. It's worth considering that pricing decisions are not easy, and not necessarily about squeezing every dollar out of the consumer. Just because a product could theoretically be sold for less, doesn't mean that's the best way forward, and on the other hand, if a product is truly overpriced, people won't buy it. 

Smaller public companies like GoPro are greatly affected by missing revenue expectations, and it's part of the reason that even larger film-related businesses choose to stay private. After some adjustments, hopefully GoPro can get back on track, and continue trying to innovate with their highest-end products.      

Your Comment

19 Comments

Market is probably saturated. Maybe 6K would spark sales.

January 13, 2016 at 11:04PM, Edited January 13, 11:04PM

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They should make a cinema camera already.

January 13, 2016 at 11:30PM

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Vincent Gortho
none
976

They've said they don't really have any intention of doing this, and honestly, with how many cinema cameras are already out there, what could GoPro really do better?

An interchangeable lens GoPro would be interesting, but coming from GoPro it would likely be vastly more expensive than any of their current cameras, and only have a tiny, tiny fraction of the market compared to their other cameras.

January 13, 2016 at 11:42PM

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Joe Marine
Camera Department

They could offer a camera with cineform raw. Yes there are tons of cameras but every affordable one is cripled by stupid bs firmware, low bits and bitbrates.

January 14, 2016 at 12:55AM

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cee dee
273

Kinefinity already makes really inexpensive cameras with Cineform RAW, and all of RED's cameras use compressed RAW that's exactly like Cineform.

Blackmagic has also started to incorporate compressed RAW into their dirt cheap cameras.

All of these cameras have their issues, and if GoPro made a large-sensor camera for cheap, expect the same issues, if not more.

Making cinema cameras is also not a great business to be in if you're primarily a consumer company that deals in low-cost, high-volume. GoPro took in $1.6 billion in revenue in 2015, and that was way lower than expected. A cinema camera would be a fraction of that, and there is a crazy amount of competition unless they could sell it for practically nothing and still make a little.

It's the same reason Apple stopped caring about professionals. There's a lot more money in iPhones and iPads.

January 14, 2016 at 2:06AM

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Joe Marine
Camera Department

The Kinemax is quite an interesting camera. They put a lot of great quality in a comparatively very low price. It looks like you have to go to a high end camera to find color science better than it.

January 14, 2016 at 8:11AM, Edited January 14, 8:12AM

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This is a great analysis of the market Joe. Just because you have an idea doesn't mean it will be commercially viable.

It's really easy to say "should do" to others. But every product is an extra burden.

That said, I'm still deeply disappointed in Apple. I've gone from a new high end laptop every year to one every four years or so. No iPhones. Very little app store.

Apple's abandonment of the pro segment costs Apple about $10K/year of our business and lots of unmade recommendations. The weird thing is that it still works for Apple although the pro rebound will gradually be felt over the next few years (probably just starting to bite now in terms of Mac Pro sales).

January 15, 2016 at 9:58AM

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Alec Kinnear
Creative Director
439

although protune is not a true raw format it offers the same degree of gradability

January 15, 2016 at 6:59PM, Edited January 15, 6:59PM

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Andrew Kierans
Digital Cinema Technician
222

So they're firing 105 people (one hundred and five people!!) for what has admittedly been the mistake of one?

January 14, 2016 at 1:03AM

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Welcome to the real world. Thats totally normal if a higher paid person makes any mistake, the lower employees will pay for it.

January 14, 2016 at 1:35AM

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Nico Saiger
Indie Filmproducer
251

We've come so far into the wrong way to consider this "normal". But this debate doesn't belong in nofilmschool.

January 14, 2016 at 2:29PM

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Give or take, but their sales were also slower than expected overall.

January 14, 2016 at 1:47AM

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Joe Marine
Camera Department

Because of said pricing mistake.

January 14, 2016 at 2:51AM

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Sebastian Kammonen
Filmmaker
426

Ethics in business is a fantasy.

January 14, 2016 at 3:48AM

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Luke Neumann
Cinematographer/Composer/Editor
2696

That's exactly what caught my attention, shame we accept it as normal.

January 15, 2016 at 4:30AM

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Kayode
1107

It is easy to say it is just a pricing mistake.
Although it is interesting to see they could still cut 50% of the price and still make money. But gutting a sales price in half often means you need at least sell 4 times (or more) the amount to make the same profit, since the production costs per unit stay the same.
So the whole revenue expectation was based on selling a lower number at a higher price. Blaming it on pricing only is a mistake as well.
DJI entered their market as well...

January 14, 2016 at 6:22AM

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WalterBrokx
Director, DOP, Writer, Editor, Producer
9089

This isn't surprising. They can't dominate this market forever and this is basic economics. Not a big deal.

January 14, 2016 at 8:27AM

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esso
Filmmaker
88

I suspect that within a period of time this will disappear and later appear as a single sentence in a financial report as a; product mistake. There is nothing wrong with it, per se, but with 3 products already in the lineup that do great things, this looks like a compromise on them, even at $200.

January 14, 2016 at 11:08PM

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devtank
photographer
60

If they would just get rid of the fisheye I would buy another one. I'm waiting for a flat lens action camera to use for shots not worth risking my main camera.

January 16, 2016 at 12:36AM

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Ryan Gudmunson
Recreational Filmmaker
657