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Why GoPro Is Delving Into Virtual Reality, Drone-Based Cameras

GoPro, the maker of iconic head-mounted cameras and aspiring media company, is developing products that promise to deliver even more visceral you-are-there video experiences.

According to CEO Nick Woodman, the company plans to deliver a camera-outfitted “quadcopter” — more commonly referred to a drone — in the first half of 2016 (though he declined to provide pricing). The company also is slated to ship a six-camera VR-capture device in the second half of 2015; no pricing was offered for that either.

Drones together with GoPro cameras have been “one of the most democratizing combinations in terms of enabling people to capture professional-quality content and see themselves in their environment in a way they’ve never seen before,” Woodman said Wednesday at the Code Conference in Rancho Palos Verdes, Calif. Woodman, 39, added that he was a huge radio-controlled plane buff as a kid.

Wall Street likes the overall story: GoPro stock jumped more than 7% in early trading Thursday, giving the company a market capitalization of about $7.7 billion.

But do the new forays make sense? In a nutshell: The expected moves by GoPro into VR and drones are no-brainers.

In 2015, shipments of consumer drones will reach 4.3 million units, amounting to a $1.7 billion market (up 167% year over year), according to an estimate from Kleiner, Perkins, Caufield and Byers analyst Mary Meeker. Even if you believe that’s wildly optimistic, it’s still a space that GoPro, given its user base, will need to play in.

VR is perhaps more of a wild card; it’s anyone’s guess how the nascent space will ultimately play out. Some observers are extremely bullish: The virtual-reality market could reach $30 billion in revenue by 2020, according to Digi-Capital, a VR and augmented-reality consulting firm (so take that with a grain of salt).

But again, even if you’re skeptical about what the VR arena looks like in the next few years, consider that Facebook last year plunked down a cool $2 billion for Oculus VR — with its consumer headset slated to ship in early 2016 — while Microsoft, Google, Sony and Samsung are also in the virtual-reality mix. So for GoPro, it’s clearly a safe bet, if not an imperative, to at least plant a flag in VR.

Working in GoPro’s favor is that its financials are in good shape. In the first quarter of 2015, GoPro shipped 1.3 million units — up 58% from 852,000 a year earlier. The company posted revenue of $363.1 million (up 54%) and net income of $16.8 million (up 52%).

At the end of the day, GoPro is a content enabler for multiple video platforms, not a media destination, Woodman said. “Everybody’s watching YouTube,” he said. “YouTube is a user-generated megatrend… We don’t have to be the platform itself.”

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