Which brings us to the recognition piece of the content cycle. Once user-generated videos become part of a structured network, the company can create more elaborate incentive systems for its customers to do ever more and better work. GoPro already dabbles in these kinds of incentives by, for instance, selecting the coolest user videos to be included in television ads. But the GoPro network will create opportunities for users to get paid for the number of views or shares their videos get on YouTube. Users could agree to run pre-roll video or overlay ads that link to GoPro, for instance. And in the process, GoPro would essentially turn its users into a massive worldwide sales force.
Suddenly the question of how GoPro tracks and maximizes the revenue impact of the content produced on its cameras becomes less fuzzy. In 2011, the company saw its revenue per user from YouTube-generated traffic double. Once more of the user videos actually link to GoPro and users have an incentive to send the company traffic, it's not hard to see that number growing quite a bit faster still.
There's one other piece of evidence that GoPro's content operation directly boosts sales: those point-of-purchase displays, each of which is topped with a flat-screen TV showing GoPro highlights. Walk into your local REI, and you're likely to see someone standing there just staring at the screen. "They've increased sell-through at the store level five times over," says Dana. "We call them our GoPro ATM machines."
Last May, Woodman broke his pledge not to take on venture capital. On the same day GoPro announced it was entering all Best Buy stores, it announced a "substantial" strategic investment from five firms, including Steamboat Ventures, the VC arm of Disney. Woodman says GoPro hasn't touched the money; it's there as a war chest. As the company widens its market, it's increasingly possible that the larger digital imaging companies will move into the space and risk turning awesome little point-of-view cameras into a commodity.
The best way to protect against that, Woodman says, is to build a moat around the company in the form of its content ecosystem. "At a certain point, the services that you build around the hardware become more important than the hardware itself," he says. The company's new investors have deep connections in the technology and entertainment landscape, and they are helping GoPro advance its relationships with media companies. The impending YouTube partnership is part of this initiative, as are other relationships in Hollywood and beyond.
Among filmmakers, GoPro cameras are already a standard piece of most production kits. Lucasfilm used GoPro cameras for the upcoming film Red Tails, about World War II pilots, and countless Discovery Channel productions and news shows use the cameras to film wildlife, rescues, and storms. "It's been a game changer for us," says Ernie Montagna, equipment manager for Original Productions, the company that produces reality-TV hits such as Deadliest Catch, Ice Road Truckers, and Ax Men. His crews attach GoPro cameras to crab pots underwater or to the sides of ships in rough seas.
One of the most innovative media partnerships so far was spurred by a skunkworks project that Schmidt, the media group manager, created for ESPN's X Games. Using the same technology that allows two cameras to be strung together to shoot in 3-D, Schmidt designed a 48-camera array that captures "time slice" images. Picture a video of a skateboarder on a halfpipe ramp, but when he does a midair trick, the motion stops, and the shot pans around to show the athlete from all angles. The effect previously cost at least $100,000 to pull off and required a crane and hours of setup; Schmidt's camera array can pull it off for a few thousand dollars (the price of that many cameras), with one person operating it.
Once again, it comes back to GoPro thinking about its audience. Rather than relying solely on user-generated content, it's betting that slickly produced videos of pros using its cameras to do amazing things will inspire regular people to get out there even more. The company recently started a sponsorship program for extreme-sports athletes and hired a former top Red Bull marketing executive, Paul Crandell, to head the effort. There are about 70 athletes signed up so far, and the idea is that GoPro not only will enable them to pull off jaw-dropping stunts (by helping fund them) but also provide the platform for people around the world to gawk at them. Schmidt is thinking about other ways to string multiple cameras together to create unique effects for partners (imagine hundreds of synced cameras positioned throughout a stadium during a concert, for instance). Woodman is looking forward to GoPro's new Wi-Fi plug-in enabling live streaming of events. Crandell is already looking beyond athletes and thinking about signing up surgeons, scientists, and security companies. And the content wheel spins ever faster.
