The pounding waves of the public market have battered and bruised GoPro. In the last 12 months, its stock has dropped more than 70%, erasing billions of dollars in market capitalization and leaving customers and investors wondering if the San Mateo, Calif.-based company, whose action cameras defined an entire electronics category, is a one-hit wonder.
On Monday, GoPro's CEO Nicholas Woodman, tried to reverse the tide by announcing that his company had made strategic acquisitions to address one of its product's largest problems: video editing. GoPro's founder told FORBES that his company paid $105 million in cash and stock to buy the two companies behind Replay and Splice, video editing applications that allow users to cut and publish footage on their mobile phones.
While GoPro has sold cameras to customers on the grand vision that they can look like pro athletes or "heroes," the reality is that users often find it arduous to upload and sift through hours of skiing or scuba diving footage to put together a beautiful video. Woodman has acknowledged as much, calling editing an "inconvenience" during the company's fourth quarter earnings call earlier this month.
"Video editing has been a big deal and a challenge not just for GoPro but for every company involved in this business," he said to FORBES on Monday. "It’s not an easy developmental hurdle and there have been constraints in mobile."
Replay, designed by Paris-based Stupeflix, allows users to select clips and photos and then automatically combines them into a complete video with transitions, effects and music. Splice, which is developed by Austin's Vemory, provides a manual video editing tool. Woodman declined to say how much GoPro paid for each and remained cagey on how they would be integrated into his company's current software offerings.
"The Splice and Replay experiences will be incorporated and merged into the GoPro experience, he said, when asked if the apps will continue to exist in their current independent forms. "For the consumer, in the future, it will be impossible to miss that this is a GoPro experience."
Both teams will join GoPro and remain in their respective cities, though Woodman declined to say how many people would be joining his company. Stupeflix's website currently displays a list of 26 employees, while it is unclear how many people are at Vemory. Last month, GoPro said it would be cutting 7% of its workforce after poor holiday sales numbers largely due to the inability of its new cube camera, the Hero4 Session, to catch on with consumers.
The acquisitions also represent a divergence in past thinking for Woodman, who noted that users of the apps will still be able to continue to edit footage captured on mobile phones and possibly even integrate them with GoPro clips. In the past, Woodman has shied away from enabling collaborations between his products and mobile phones, which many critics see as devices that could cannibalize GoPro's video and image capture market.
"It’s a recognition that 'enabling great content' means 'enabling great content,' not just great content captured from one specific device," said Woodman. "Who are you to tell me what I can and cannot put into my own video."
GoPro is also hoping that the move, which represents a significant chunk of its $474 million in cash, cash equivalents and marketable securities as of the end of 2015, will show the company is proactively addressing its problems. As of late the company has been hammered by investors for everything from the departures of executives like CFO Jack Lazar and COO Nina Richardson to its underwhelming financial results and projections. For 2016, the company said it expects revenue between $1.35 billion and $1.5 billion, below the average of $1.6 billion that analysts had originally predicted.
As for whether GoPro can still innovate, Woodman maintained that his own company had been working on similar apps internally, but required more developers to execute. In Apple's App Store on Monday, Splice was ranked no. 22 under the free photo and video apps category. GoPro's own app was the 59th most popular app on the list, while Replay was no. 121.
"We had been building this in house... but we realized [we had] a shared vision of the future," he said. "The next logical question is, whether than reinvent the wheel, should we all get together and build a car? A car can take us many more places than a wheel can."
