3 Smart Ways GoPro Is Investing in the Future

Image source: GoPro.

Concerns about GoPro's(NASDAQ:GPRO) future prospects helped push the stock to all-time lows in May. The stock has since increased by over 70% as confidence has increased in the direction management is taking the company as it focuses on launching new products, engaging with virtual reality, and building a better user experience. By honing in on these three key areas, GoPro should be able to boost sales and continue to bring new customers into the brand.

New products

Management made a big mistake by not launching any new products prior to the holidays in 2015, missing out on something that has historically provided a significant sales boost. Revenue in the fourth quarter of 2015 was down 31% year-over-year, to $436.6 million.GoPro isn't making the same mistake this year and is planning to launch two major products -- the HERO5 action camera and the Karma drone -- just in time for the holidays. According to founder and CEO Nicholas Woodman, the two products "will contribute to the largest introduction of products in our history, all in time for what we believe will be GoPro's most exciting fourth quarter, ever -- a quarter where we expect to return to profitability."

The company increased its R&D spending 59% in 2015, to $241 million, and it looks like a sizable portion of that was focused on these two new products, since GoPro originally intended to launch the products earlier in 2016. While increased R&D spending doesn't guarantee sales, if the new products contain the features and technology consumers want, the two products could easily beat sales expectations -- and lead to a greater profit in the fourth quarter.

Few details have been released about the HERO5's new features, but the company said it will be "the most connected and convenient" camera GoPro has ever made.This leads me to believe it'll be the first GoPro camera that provides 4G connectivity, a feature available on some competitors' products, and would allow users to broadcast directly to YouTube.Like the HERO5, very little detail has been released about the features of the Karma drone, except that it will be backward-compatible with GoPro's older products, which most likely means any GoPro camera can be attached to the drone.This could encourage current GoPro owners to purchase the new drone.

Virtual reality

GoPro Omni rig with HERO4 cameras Image source: GoPro.

GoPro is also increasing its focus on virtual reality, or VR, products. Earlier this year, it launched the Odyssey, a VR rig that uses 16 HERO4 Black cameras and is priced at $15,000. While its price limits potential customers, the product is already being used by some major media outlets.GoPro's other VR rig, the Omni, requires six HERO4 Black cameras and is priced at $1,500, or $5,000 with the six cameras and other accessories. Like the Odyssey, it is intended for professional users and is available for pre-order now with an expected ship date in September. Video captured via cameras in the Omni is intended to be viewed on VR headsets like Facebook's (NASDAQ:FB) Oculus Rift or HTC's (NASDAQOTH:HTCCY) Vive. GoPro also launched GoPro VR, a new platform to view and share content. It allows users to experience immersive 360-degree video on any screen.While the price of its VR rigs could limit potential customers, they will help GoPro continue to position itself as a leader in the growing virtual reality field.

Building a better user experience

GoPro launched GoPro Care in the second quarter, a warranty service that costs $39 to $99, depending on the camera. The service doubles the camera's warranty to two years and provides accidental damage coverage, "premium" customer support, and access to resources that help create better photos and videos. The service is currently only available to U.S. customers, but I expect the company to roll it out to other major markets in the next year.GoPro is also focusing on providing better editing solutions to its customers. Earlier this year, it acquired Replay and Splice, mobile editing apps that have a combined 3.7 million active monthly users and 37 million cumulative downloads. According to Woodman, "Splice, Replay and GoPro will combine to deliver what we believe will be the fastest and most enjoyable mobile editing experience." The improvements in GoPro's editing software could encourage new customers to purchase cameras as it becomes easier than ever to create, edit, and share footage.

There is still some uncertainty over GoPro's future, but it is focusing on the right areas to continue growing.

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Ben Estep owns shares of GoPro. The Motley Fool owns shares of and recommends Facebook and 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.