GoPro Finally Giving Up on Entertainment Plans

By Markets Fool.com

Will a more focused GoPro Inc (NASDAQ: GPRO) be a better GoPro?

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That's what management and investors are hoping for after the company announced 200 job cuts, amounting to 15% of the workforce, and $24 million to $33 million in restructuring charges. The big move is eliminating the entertainment division, which never really got off the ground in the first place. Is GoPro now in a better position to succeed? That's the big question facing the company today.

Image source: GoPro.

Where GoPro got entertainment wrong

GoPro has lauded itself as a budding media company since it went public. But it was never actually a media company because it didn't own the content that consumers filmed and put on video and social media platforms. Sure, GoPro was a big brand on those platforms, something management has reminded us of over and over again, but fundamentally, there wasn't a way to make money.

GoPro, in turn, tried to build a media business, although it never really got off the ground. In doing so, though, it put itself at odds with other media platforms. Why go to a GoPro content ecosystem when other platforms are more widespread?

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The GoPro VR app is an example of this. It was a way to house video within the GoPro ecosystem, but it kept GoPro from integrating more fully with better-established photo, video, and VR platforms that others are building. And that may be the opportunity going forward.

Where GoPro can get entertainment right

What GoPro does have is an industry-leading set of cameras from action cameras to its VR rig. And leveraging that hardware with the leading software platforms to share content is where GoPro should be heading.

The Capture app should be combined with Quik and Splice to make it seamless to offload and edit photos and videos from GoPro devices and upload them to sharing platforms. Quik's sharing feature doesn't even include Instagram or YouTube, a huge weakness for an app built for quick editing and sharing of content.

GoPro could also find ways to partner with emerging platforms in VR to be a preferred supplier. And not being in the media business itself could provide the right incentive to be a good partner with platform companies.

A more focused GoPro could be a good thing

Time will tell if this ends up being the right move for GoPro, but given the company's challenges with the Session camera last year and the Karma drone this year, it may be better to focus on what the company is good at instead of moving into uncharted territory. GoPro needs to let someone else handle building the media empire and focus on figuring out a way to add enough value that media partners will find their devices desirable. This announcement was a step in that direction.

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Travis Hoium owns shares of GoPro. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.