Financial problems have led action camera company GoPro to announce that they are exiting the drone business. The report came along with its January 8 earnings report and coincides with the announcement that they will be laying off hundreds of employees and reducing the salary of their CEO to $1.
The layoffs mark GoPro’s fourth time laying off employees in the last 2 years and comes following a disappointing 4th quarter performance in which the company fell much short of their already low projections of $470 million revenue, bringing only $340 million revenue over the holiday season.
Part of this they attribute the difficulty they have faced finding success in the drone business which they call an “extremely competitive market”. Their current model, the Karma drone, where first released in 2016, but quickly faced a recall due to a power malfunction, hurting their credibility in the fast-growing industry.
The Karma was viewed as expensive and unfinished, leading to poor consumer reception and the company losing more than $370 million in 2016.
Despite this, GoPro has continued to produce the drone, which retails at $799, until its announcement today that the Karma would halt production. The company did say, however, that after they finished selling their inventory of drones they would continue to provide support and service to their customers indefinitely.
GoPro did manage to bounce back from the initial poor performance of the Karma, and the drone managed to become the second most popular product in its market in 2017, but the company feels like this was not enough to sustain them.
Aside from the competitiveness of the drone market, GoPro has also cited concerns over new regulations in Europe and the United States, which could reduce the size of the market in the coming years, as another reason for exiting now.
CEO Nicholas Woodman expressed that the move to bow out of the drone market is one step they are taking to enforce their commitment to turning the business around this year. They are moving to fall back on the products that made them successful in the first place while lowering operating costs.
While it seems the drone market isn’t going anywhere soon, GoPro will not be a part of it.