GoPro Camera grew its user base as a result of direct network effects, and effectively fended off well-funded competitors as a result of indirect network effects.
GoPro was founded in 2001 by Nick Woodman in an attempt to provide surfers the ability to capture memories on the water. GoPro’s original product was a 35mm camera enclosed in a waterproof shell, worn using the proprietary wrist strap. The camera is GoPro’s “platform.”
Surfers usually ride in groups, and talk about their experiences when they get back to shore. With the advent of the GoPro, surfers were now able to re-live the group experience even after it ended. However, having just one GoPro wasn’t enough. As the number of surfers with GoPro cameras increased, the more vividly groups of surfers could re-live their experiences. The group was better off when their experience was captured at different angles and through different perspectives. Surfers quickly took to the GoPro, which sold over 350k worth of cameras in its first year.
As sales skyrocketed for surfers, GoPro began to focus on other social sports with similar network effects, such as snowboarding, biking, and skydiving. The more people in the group who used GoPro, the richer the entire group’s experience became. The direct effects increased GoPros revenues four times, to $36 million, from 2008 to 2009.
GoPro invested heavily in improving their platform. They moved from 35mm cameras to digital in 2007, introduced the wide angle lense in 2008, moved to HD in 2010, and ended with 4k resolution in 2013.
As the number of users grew, and the platform improved, GoPro increased its value added to manufacturers of GoPro “accessories” and “mounts.” Additional mounts such as the helmet, car, and bike mount, allows users to utilize the GoPro platform in a variety of sports and activities. Accessory and mount manufacturers had a large user base to sell to, which incentivizes them to develop a variety of products. To date, there are over 88 accessories you can purchase for your GoPro platform.
Defending Against Competition
Due to the large variety of accessories and mounts, users are more inclined to use GoPro than the competitor. Along the way, several large and well funded competitors, such as Cisco, attempted to steal market share from GoPro. At the time Cisco came in (2009), GoPro already had many users and many manufacturers for their platform, making it very difficult for the “FlipCam” to succeed. Other competitors, such as Sony’s Action Cam have appeared more recently, with little success. Again, the GoPro platform maintains its success due to the indirect and direct network effects that GoPro has been utilizing since 2001.
In order for a competitor to truly succeed against GoPro, they will need to utilize a lot of capital re-creating both sides of the GoPro platform. To date, we see no competitor even come close. GoPro has recently gone public, with a valuation of approximately 3 billion USD.