GoPro, an American technology company that manufactures action cameras, surpassed 750,000 subscribers, according to its recent annual report. Last fall, GoPro’s goal was to reach between 600,000 and 700,000 subscribers by the end of 2020. In total, GoPro exceeded this goal and grew its subscriber base nearly 150% from 2019 to 2020.
The company initially launched its subscription service in 2016. For just $4.99/month, subscribers had access to almost 63,000 photos and almost 40 hours of video on cloud storage.
Now, GoPro offers a highly elevated bundled subscription. For $49.99/month, subscribers are entitled to unlimited cloud storage, up to two total camera replacements per year (no questions asked), and up to 50% off GoPro gear from the company’s website. Customers are also offered a discounted price for the company’s newest camera, HERO9 Black, if bought together with the subscription.
“GoPro’s shift to a more subscription-centric, consumer-direct model is resulting in a simpler, more profitable business with materially better cash generation,” said Nicholas Woodman, GoPro’s founder and CEO.
Yet, while the company’s subscriber numbers are rising, GoPro’s annual revenue has been decreasing. The company and growth experts are digging into market data to figure out precisely why.
Subscribers Are Up, but Revenue Is Down?
GoPro’s first camera was officially launched in 2004, two years after the company was born. What started out as a small film camera sold for just $20 has evolved into the company’s latest camera, HERO9 Black.
After HERO9 Black made its debut during the fall of last year, its success generated a surge in subscribers, transcending the company’s milestone of 500,000. “Thanks to a stellar global launch of HERO9 Black, our paid GoPro subscriber count is ahead of where we expected to be at this time,” said Woodman in a press release.
With GoPro’s subscription numbers exceeding expectations, shouldn’t revenue be doing the same? The company could say yes and no. Revenue in Q4 2020 was 28% higher than Q3 2020, amounting to a $77 million increase. On the other hand, the overall year saw a 25% decrease, from $1.19 billion in 2019 to $892 million in 2020.
The majority of 2020 was spent indoors, as stay-at-home orders were enforced due to the Covid-19 pandemic. The need for documenting travels and adventures decreased, simultaneously lowering the risk of breaking/replacing cameras. It wasn’t until the summer of 2020 that people started utilizing the outdoors after months of staying inside.
These surprising figures could also be in part due to the subscription bundle that is seemingly “throwing revenue away,” according to Digital Camera World. Customers can buy the HERO9 Black camera for $349.98 when purchasing a year subscription and save a total of $170. If customers want more, they can receive a magnetic swivel clip, spare battery, floating hand grip, 32GB SD card, and a camera case for an extra $50.
In comparison, GoPro’s HERO8 Black camera is the same price, whether you purchase a year subscription with it or not.
The company is generously offering discounted cameras when customers decide to purchase a subscription on top of it. Offering a discount to new, or even repeat, customers is a great way to establish “a long-term relationship with your brand,” according to SUBTA.
It’s expected with the past health crisis and changes in price points that revenue will dip. But the benefit GoPro will see is a more steady and consistent, long-term subscription-based revenue that will allow the company to focus on digital products as opposed to releasing physical products more often.
GoPro is making a smart and strategic start in solidifying a recurring revenue stream and building strong relationships with customers by investing in subscription approaches. While there seems to be a small loss to start with, it’s short-lived in comparison to the long-term gain. Customers are hopefully going to continue subscribing and build a strong community within the GoPro brand, reducing the chances of churn.
The “demand” for new cameras “and the GoPro subscription at GoPro.com are accelerating our shift to a more direct-to-consumer business,” said Woodman.
Key Takeaways:
- GoPro exceeded its subscription expectations by reaching over 750,000 subscribers.
- The company saw a 150% increase in subscribers from 2019 to 2020.
- Even though subscriber numbers are up, GoPro saw a 25% decrease in annual revenue in 2020.
- GoPro is investing its resources in subscription methods to better shift to a DTC business model.
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