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As its hardware sales have begun to flag, GoPro is looking at enhancing its software to survive
The market has not been kind to tech stocks so far this year, and that is particularly true of GoPro. The company has lost over 34 percent of its value so far in 2016, and has lost 50 percent of IPO price since going public in June of 2014. It has seen its sales slide big time.
So what is the company to do to get itself righted again? Apparently spend a huge amount of money to beef up its editing equipment.
The company announced on Monday that it has acquired two mobile editing startups, Replay, an app developed by Stupeflix in Paris, France company and Splice, which was developed by Vemory in Austin, Texas. Both teams will maintain operations in their respective locations, and will still be available on iOS, with Android releases planned for later this year.
Though the financial terms of the deal were not initially disclosed, Nicholas Woodman,founder and CEO of GoPro, told Forbes that the company had spent a combined $105 million for the two apps.
Replay lets its users to take pictures and films, select them, add music and texts, and tell their story in a video. It also enables its users to change the theme of the video to give it a different look and feel.
Stupeflix also operates a series of other apps, including Legend, a app that animates text speech; and Steady, a camera app. It does not appear that GoPro has acquired any of these other apps in the deal.
Splice, meanwhile, is a mobile editor that gives its users effects such as trim, crop, effects, titles, speed, Ken Burns, transitions, music, and sound effects. Users can also add and overlay multiple tracks. The app currently has millions of users.
"Splice, Replay and GoPro will combine to deliver what we believe will be the fastest and most enjoyable mobile editing experience," Woodman said in a statement. "We believe the accessibility, speed and efficiency of mobile will make it the predominant editing platform of the future."
These acquisitions come at a crucial time for GoPro, as it has to ward off investors who are now wondering if the company was not simply a flash in the pan success. It's most recent earnings report did nothing to aswage those fears, as GoPro reported revenue of $437 million, a 31 percent decrease year-to-year.
Even worse is that the company only expects to make between $160 and $180 million in the first quarter of 2016, or a decline of 63 percent from the previous quarter.
These numbers are especially disheartening for the company as it highlights the failure of its most recent camera, the Hero4 Session, which was released in July of last year, and has never taken off as GoPro had hoped.
In an conference call following the earnings report, Woodman made it clear that though GoPro made its mark with its hardware, that he sees software as a big part of the future of the company.
"In January we reduced our workforce by 7% and reallocated resources to accelerate software and hardware development that will improve the convenience of the GoPro experience. In software you'll see the beginning stages of this new experience in the March release of our entirely new content management application, GoPro for Desktop. GoPro for Desktop represents a breakthrough in convenient offload, access and editing of GoPro content," he said.
He also touted "an entirely new editing experience slated for release later this year will make it easy to create strikingly good edits in a matter of minutes." Obviously that is where Replay and Splice come in.
Despite his touting of software, Woodman made sure to be clear that GoPro is in no way giving up on its hardware development.
"Any advancements in software will be matched at the hardware level," he said.
Replay and Splice could be two big steps toward getting GoPro back on track, if indeed software is what will save the company, but, It should be noted, $105 million is nearly a quarter of the company's entire revenue from Q4. That's an awfully steep price to pay.
VatorNews reached out GoPro, Splice and Replay for further comment. We will update this story if we learn more.
(Image source: shop.gopro.com)
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