gopro innovation case study

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University blogs, the million dollar challenge: a case study of how gopro creatively leverages user-generated content marketing.

My previous blog post introduces you to the concept of Electronic Word of Mouth (eWOM) and its different strategies. Among those strategies was user-generated content marketing. In this blog, you will learn from an inspiring story of how GoPro promote their new cameras by integrating user-generated content marketing seamlessly with their branded content marketing.

About GoPro

GoPro is a leading American technology manufacturer and seller of action cameras, camera accessories, and its software. Action cameras are wearable and mountable cameras which you might already have seen or used one before.

What was the campaign?

October last year, GoPro launched its new cameras, HERO8 Black and Max. Traditionally, to promote a new product, technology companies would produce product-focused videos internally. GoPro, on the other hand, put the task in the hand of its community through the Million Dollar Challenge.

How did they do it?

Setting objectives.

As technology advances within the consumer electronics industry, a daunting challenge facing technology companies is to communicate various technical features in an engaging manner. The challenge for GoPro was to promote awareness and boost demand for the newest cameras that have so many new features.

Katie Marylander, GroPro’s global social marketing manager, mentioned that the objective was to deploy a social media marketing campaign that will generate conversation while simultaneously educating (technical) and inspiring (the UGC campaign) their consumers.

The three-stage strategy

Stage 1: creating social buzz.

Two-and-a-half weeks prior to the launch day, the company released three teaser videos hint at the new cameras and its key features. Thanks to GoPro’s extensive digital marketing channels, the videos were able to create excitement, anticipation and buzz among GoPro community members and the press which perfectly set the stage for the next strategy. 

View this post on Instagram 10.01.19 #ThisIsAction A post shared by GoPro (@gopro) on Sep 30, 2019 at 6:05am PDT

Stage 2: The Feature Thrillers

The “Feature Thrillers” refers to a series of video GoPro released on the launching event and consequently on their channels. The series includes two videos, one for each product that is educational and product-focused but with energetic and thrilling characteristics. This type of video is traditionally released for every new GoPro flagship product which pleases the longtime GoPro fans.

View this post on Instagram 📷 Meet #GoProHERO8 Black, the most versatile + unshakable HERO camera ever. ✔ Streamlined design ✔ Modular Accessories ✔ HyperSmooth 2.0️ ✔ TimeWarp 2.0 ✔ Digital Lenses ✔ Capture Presets ✔ On-Screen Shortcuts ✔ LiveBurst + more. • Get your hands on a #GoProHERO8 Black. Tag a friend 👇 for the opportunity to snag VIP bundles. • Pre-order now. Tap the product tag in post or link in our bio. #ThisIsAction #GoPro #HyperSmooth #TimeWarp #SuperPhoto #LiveBurst A post shared by GoPro (@gopro) on Oct 1, 2019 at 6:00am PDT

Stage 3: The Million Dollar Challenge

Days after letting the community enjoy and engage with the educational thrillers, the finale came. The Million Dollar Challenge is a user-generated content initiative inviting HERO8 users to submit their videos for a chance of splitting $1,000,000 using the new GoPro cameras. Moreover, the winners’ clip will also be featured on the next promoting video which will be seen by people from around the world. 

Result Analysis

Over 4 months, 42,000 clips were submitted and by creators from 170 countries. The 45 winners were awarded last month. For a multi-billion dollar company like GoPro, this UGC was extremely successful as it benefited the company in many folds.

Firstly, it directly boosts the sale as participants were required to buy the new camera to shoot the video. 

Secondly, the winning clips were put together to create a product promotion video that won a Shorty Award for Best User-Generated Content. The video has been translated into more than 10 languages reaching people worldwide and exceeded three million views in over a month. 

Thirdly, the press covered both the launch and the innovative UGC campaign for free. Ironically, the fact that a university student from Thailand writing a blog post about it is another proof of its success.

Lastly, many participants, some are the top influencer in their field, upload youtube vlogs and social media posts about their journey of creating the video with the GoPro camera. As a result, GoPro was able to directly reach filmmakers, photographers and extreme sports athletes and adventure-seekers which are all target customer for the product. “How I won the GoPro Million Dollar Challenge” is one of the videos which itself alone reaches more than 2 million views. (See below)

Looking from the metrics-based result, this was the most successful product launch for GoPro. The social response was positive:

• The whole campaign reaches more than 857 million people evoked 70 million engagements. The engagement rate is 8.1 per cent making it the highest record.
• The UGC video has been shared more than 57,000 times.
• A user journey analysis shows that the social media campaign has made more sales conversions than any previous one. (did not specify how much)
• With a total of 42,000 videos submitted, it shows that the campaign successfully called for GoPro community engagement.

The key takeaways

One thing that appears consistently in every good eWOM marketing case is planning. In this case, the evidence of planning was obvious right from the objective setting. Even if it was not written explicitly, the complex three-stage strategy of this campaign could be an even better proof of a plan. Another key takeaway is the importance of performance tracking. The metric-based results show that the whole marketing campaign was monitored in meaningful ways. Tracking the results also helps diagnose of negative eWOM early, hence a better chance of limiting its effects. (Kirby, Marsden 2006)

Click here to learn how to plan for digital marketing campaigns using SOSTAC. (Chaffey and Smith, 2013)

(Hennig-Thurau et al., 2004) 

Stage 1 and 2, despite being a typical branded content marketing campaign, were included in this UGC blog post because they demonstrate that in real life, eWOM campaigns can be implemented with other marketing strategies. Firstly, stage 1 helped build up anticipation and also allow GoPro to test the waters. Stage 1 gives enough time for the product news to reach people. Without it, this campaign risks not getting enough attention.

Secondly, stage 2 ensures the success of the final UGC campaign. The obvious is that it educates people about the new features which are important for any buyers not only the ones that will participate in the UGC campaign. The less obvious is that the tradition is when GoPro launches new products, it always releases a top-notch promoting video which the long-time fans are expecting. Without the videos from stage 2, the fans might feel neglected which will generate negative social sentiment setting off stage 3 on a bad note. See “ Work From Hawaii ” case where an advertisement helped kick-started a successful UGC campaign. 

Looking at the case from a macro point of view, GoPro certainly understands the risks of eWOM very well. For example, lie behind the exciting surface of a challenge invitation a tight term and conditions mitigating legal risks occurred in the case of Chang v. Virgin Mobile. (2009).

Finally, GoPro seems to recognize the fundamental of eWOM that, at the end of the day, the best strategy to generate positive and limit negative WOM derive from the product, the company practice and the customer experience. If you provide something that exceeds customers’ expectations and share-worthy, you will naturally generate WOM. On the contrary, if your customers feel like they just got ripped off, no marketing campaigns would help. They are only going to make the matter worse.

You can learn more about other risks from the following studies:

• Restricted control over the negative WOM (Lomax, Stokes 2002)
• Fast spreading and highly influential ability of negative WOM (De Pelsmacker et al. 2007; Kirby, Marsden 2006)
• Fake online identities and WOM (Litvin, Goldsmith and Pan, 2008) (Dellarocas 2003) (Cavazza and Guidetti, 2014)

Cavazza, N. and Guidetti, M. (2014). Fake online reviews: A study on eWOM influence when suspicions arise. PSICOLOGIA SOCIAL, 9(1), pp.71-82.

Chaffey, D. and PR Smith (2013). Emarketing Excellence: Planning and Optimizing your Digital Marketing. [ebook] Taylor & Francis Group. Available at: http://ebookcentral.proquest.com/lib/ubrighton/detail.action?docID=114376 [Accessed 5 Feb. 2020].

Chang v. VIRGIN MOBILE USA, LLC, Civil Action No. 3: 07-CV-1767-D (N.D. Tex. Jan. 16, 2009).

Dellarocas, C. (2003). The Digitization of Word-of-Mouth: Promise and Challenges of Online Feedback Mechanisms. SSRN Electronic Journal.

De Pelsmacker, P., Geuens, M. and Van den Bergh, J., 2007. Marketing communications: A European perspective. Pearson education.

Hennig-Thurau, T., Gwinner, K., Walsh, G. and Gremler, D. (2004). Electronic word-of-mouth via consumer-opinion platforms: What motivates consumers to articulate themselves on the Internet?. Journal of Interactive Marketing, 18(1), pp.38-52.

Kirby, J. and Marsden, P. eds., 2006. Connected marketing: the viral, buzz and word of mouth revolution. Elsevier.

Litvin, S.W., Goldsmith, R.E. and Pan, B., 2008. Electronic word-of-mouth in hospitality and tourism management. Tourism management, 29(3), pp.458-468.

Stokes, D. and Lomax, W. (2002). Taking control of word of mouth marketing: the case of an entrepreneurial hotelier. Journal of Small Business and Enterprise Development, 9(4), pp.349-357.

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TheBigMarketing.com

Gopro Marketing Strategy 2024: A Case Study

In this article, we will delve into the marketing strategy of GoPro, a powerhouse brand known for its innovative action cameras. We’ll explore the effective marketing methods that have propelled GoPro’s success, including digital marketing tactics, advertising tactics, and brand promotion strategies. By analyzing GoPro’s market analysis and successful marketing campaigns, we can gain valuable insights into how the company has become a leader in its industry.

Key Takeaways:

• GoPro has established itself as a market leader through its successful marketing strategies .
• Digital marketing plays a crucial role in GoPro’s brand promotion and market outreach.
• The brand’s advertising tactics have effectively showcased the capabilities of its action cameras.
• GoPro’s market analysis highlights its understanding of consumer preferences and demands.
• By analyzing GoPro’s marketing strategy, businesses can learn valuable lessons for their own marketing efforts.

Essential Tips for Effective Video Marketing

Effective video marketing can be a game-changer for your brand, helping you reach and engage your target audience in a dynamic and memorable way. To make the most out of your video marketing strategy, here are some essential tips to follow:

• Create high-quality videos: Investing in good camera equipment and paying attention to editing can significantly enhance the production value of your videos. High-quality visuals and crisp audio contribute to a professional and polished look, capturing viewers’ attention and maintaining their interest.
• Craft engaging content: To stand out in the crowded digital landscape, focus on producing engaging and compelling video content. Whether it’s storytelling, educational tutorials, or entertaining visuals, aim to captivate your audience from the start. By offering both valuable information and entertainment, you can keep viewers engaged and drive them to take action.
• Optimize for SEO: To ensure your videos are discoverable by search engines, optimize them for SEO. Use relevant keywords in your video title, description, and tags to increase visibility and improve organic search rankings. By incorporating targeted keywords, you can attract a relevant audience, leading to higher engagement and conversion rates.
• Promote on social media: Leverage the power of social media platforms to extend the reach of your videos. Share your videos on social media channels relevant to your target audience, such as Facebook, Instagram, and YouTube. Incorporate compelling captions and hashtags to encourage shares and drive engagement.
• Track video analytics: To refine your video marketing strategy, it’s crucial to analyze key metrics and track engagement. Utilize video analytics tools to gain insights into viewer behavior, such as watch time, click-through rates, and audience retention. By understanding what resonates with your audience, you can optimize future videos and focus on creating content that performs well.

By implementing these essential tips, you can create an effective video marketing strategy that not only generates brand awareness but also drives meaningful engagement and conversions. Remember, producing high-quality videos, crafting engaging content, optimizing for SEO, promoting on social media, and tracking video analytics are all integral elements of a successful video marketing campaign.

Real-World Examples: How the Pros Do It

When it comes to successful video marketing campaigns , several brands stand out as industry leaders. Red Bull, GoPro, and BuzzFeed have perfected the art of creating inspiring content that captivates audiences and drives engagement. Let’s take a closer look at how these brands excel in video marketing:

Red Bull: Adrenaline-Pumping Videos Featuring Extreme Athletes

Red Bull has built its brand around extreme sports and adventure, and their video marketing campaigns reflect this energy and excitement. Through stunning visuals and heart-pounding action, Red Bull showcases adrenaline-pumping moments that resonate with their target audience. Their videos feature daredevil athletes pushing the limits, capturing the attention and awe of viewers worldwide.

GoPro: Showcasing the Capabilities of Action Cameras

GoPro has mastered the art of showcasing the capabilities of their action cameras through video content. Their videos capture thrilling adventures and incredible moments, all shot with their cutting-edge cameras. By highlighting the versatility and ruggedness of their products, GoPro inspires their audience to capture their own epic experiences. Through their captivating videos, GoPro has created a loyal community of adventure enthusiasts passionate about their brand.

BuzzFeed: Creative and Viral Videos that Engage Audiences

BuzzFeed has made a name for itself through its unique and highly shareable video content. From entertaining quizzes to eye-opening documentaries, BuzzFeed captures the attention of millions with their creative approach. Their videos often tap into humor, emotion, and trending topics, resonating with a wide range of viewers. By consistently delivering engaging content, BuzzFeed has cultivated a dedicated and active audience.

These brands set an exemplary standard for successful video marketing campaigns. They understand their target audience and find innovative ways to connect with them through inspiring content. As marketers, we can draw inspiration from their strategies and apply similar techniques to create impactful video marketing campaigns.

Let’s dive deeper into this topic and see how GoPro’s marketing strategy propelled the brand to success in Section 4.

Brand Comparison in Video Marketing

Gopro’s rise to the top: a marketing success story.

GoPro’s success in the action camera industry is a result of its well-executed marketing strategies. The brand has continuously focused on providing a superior customer experience, placing customer satisfaction at the forefront of its marketing efforts. By understanding the importance of customer-centricity, GoPro has positioned itself as a leader in the market, gaining a substantial share.

One of the key factors contributing to GoPro’s rise to the top is its effective advertising campaigns. The brand has successfully established a strong market presence through innovative and captivating advertisements. GoPro’s advertising efforts have resonated with its target audience, effectively showcasing the capabilities of its action cameras and inspiring consumers to capture their adventures.

Market Share:

GoPro’s relentless focus on providing exceptional customer experience has helped the brand gain a significant market share in the action camera industry. By consistently delivering high-quality products and catering to the unique needs of its target audience, GoPro has secured a strong foothold in the market. Its market share continues to grow as consumers recognize the value and reliability that GoPro offers.

Customer Experience:

GoPro’s commitment to customer experience is evident throughout its marketing efforts. The brand prioritizes customer satisfaction by designing products that are user-friendly and durable, ensuring that customers can capture their adventures with ease. GoPro also offers excellent customer support, providing timely assistance and resolving any issues that may arise. By investing in customer experience, GoPro has built a loyal customer base and established long-term relationships with its users.

Marketing Mix:

GoPro’s marketing mix plays a crucial role in its success. The brand has effectively balanced its product lineup, pricing strategy, and distribution channels to meet the needs of its target market. GoPro offers a diverse range of action cameras and accessories, catering to the varying requirements of its customers. Its pricing strategy reflects the premium quality of its products, positioning GoPro as a top-tier brand in the industry. Additionally, GoPro utilizes online sales channels and leverages social media platforms to maximize its reach and engage with its target audience.

By carefully considering these elements of the marketing mix, GoPro has successfully positioned itself as a leader in the action camera market.

The Marketing Mix: Product, Price, and Place

GoPro’s marketing strategy encompasses a careful balance between its product lineup, pricing strategy, and distribution channels. By focusing on these core elements, GoPro has successfully positioned itself as a leader in the action camera industry.

Product Lineup

GoPro offers a diverse range of action cameras and accessories, catering to the unique needs and preferences of its consumers. From entry-level models to professional-grade cameras, GoPro ensures that there is a product for every adventure enthusiast. This extensive lineup allows users to choose the camera that best suits their requirements, providing them with optimal functionality and performance.

Pricing Strategy

GoPro’s pricing strategy reflects the premium quality and cutting-edge technology embedded in its products. The brand positions itself as a top-tier option in the market, appealing to consumers who seek unrivaled performance and durability. By setting premium price points, GoPro reinforces the perception of its cameras as high-end, coveted devices.

Place (Distribution Channels)

GoPro recognizes the significance of online sales channels in reaching its target market effectively. The brand leverages its website and e-commerce platforms to seamlessly connect with consumers, providing them with direct access to GoPro’s product lineup. This online sales approach allows GoPro to streamline the buying process and reach customers worldwide.

Additionally, GoPro utilizes social media promotion to enhance its online presence and engage with its audience. By leveraging platforms like Instagram, Facebook, and YouTube, GoPro showcases stunning visuals captured by its cameras, thereby inspiring prospective buyers and creating a community of loyal enthusiasts.

GoPro Cameras and Accessories

Table: GoPro Cameras and Accessories – showcasing a range of GoPro products with their descriptions and prices.

Spectacular GoPro Marketing Campaign Examples

GoPro has executed several spectacular marketing campaigns that have resonated with their target audience. These campaigns showcase the power of user-generated content, collaborations, and social media engagement in GoPro’s marketing strategy.

#HomePro Challenge: Harnessing User-Generated Content

One standout campaign by GoPro is the #HomePro challenge, which took place during the pandemic. This initiative encouraged users to share creative home videos captured with their GoPro cameras. The campaign not only spread positivity during a challenging time but also showcased the versatility of GoPro cameras in capturing unique moments in everyday life. By leveraging user-generated content, GoPro fostered a sense of community and engagement among its audience, establishing the brand as a leader in the action camera industry.

Collaborations with Athletes and Brands

GoPro’s collaborations with renowned athletes and partnerships with influential brands have played a crucial role in their marketing success . Athletes like Shaun White have showcased the capabilities of GoPro cameras in extreme sports, capturing awe-inspiring moments from their unique perspectives. These collaborations not only drive social media engagement but also inspire and attract a wider audience who aspires to engage in similar activities. Additionally, partnerships with brands like Red Bull have enabled GoPro to tap into an existing fan base and create captivating content that resonates with adrenaline-seeking enthusiasts.

These examples demonstrate how collaborations with influential personalities and brands can amplify GoPro’s marketing reach and create captivating content that resonates with their target audience.

In conclusion, GoPro’s marketing campaigns leverage user-generated content, collaborations, and social media engagement to create maximum impact. By encouraging users to showcase their creativity, partnering with influential athletes, and collaborating with compatible brands, GoPro continuously pushes the boundaries of marketing innovation . Through these initiatives, GoPro has not only solidified its position as a leader in the action camera industry but has also created a passionate community of brand advocates.

4 Marketing Strategies To Inspire Your Own

GoPro’s marketing strategies can inspire your own marketing efforts. By utilizing high-quality user-generated content, you can create a sense of community and excitement around your brand. Implementing a talk trigger, such as a unique feature or experience, can create word-of-mouth marketing and generate buzz. Developing an iconic slogan can help define your brand’s identity and resonate with your target audience. Lastly, delivering content and distribution strategies that cater to your audience’s preferences can enhance brand authenticity and engagement.

1. Harness the Power of User-Generated Content

Encourage your customers to create and share their own content featuring your brand. By showcasing user-generated content, you establish social proof, authenticity, and create a vibrant community around your products or services. GoPro’s marketing success is largely attributed to its ability to tap into the creativity and passion of its users, who share stunning footage and experiences captured with their cameras.

2. Create a Talk Trigger that Gets People Talking

Develop a unique feature, experience, or offer that sets your brand apart from the competition. By creating a talk trigger, you can spark conversations and generate word-of-mouth marketing. GoPro’s rugged and versatile cameras serve as a talk trigger, as they allow users to capture breathtaking moments in extreme conditions, setting the brand apart as a leader in the action camera industry.

3. Craft an Iconic Slogan that Leaves a Lasting Impression

Develop a memorable and impactful slogan that encapsulates your brand’s values and resonates with your target audience. GoPro’s iconic slogan, “Be a Hero,” captures the essence of adventure, empowerment, and capturing extraordinary moments. A well-crafted slogan can help differentiate your brand and leave a lasting impression on consumers.

4. Deliver Audience-Centric Content and Distribution Strategies

Understand your audience’s preferences and tailor your content and distribution strategies accordingly. GoPro has successfully leveraged social media platforms to reach its tech-savvy and adventure-seeking target audience. By delivering compelling content through the right channels, you can enhance brand authenticity, engagement, and build a loyal customer base.

GoPro’s Business Strategy: Empowering Adventurers Through Innovation

GoPro’s business strategy revolves around empowering adventurers and capturing extraordinary moments. The brand is dedicated to innovation and the creation of durable, easy-to-use cameras that can withstand extreme conditions.

GoPro’s commitment to storytelling and customer empowerment has resulted in a diverse product lineup and strategic partnerships with influencers and athletes. By providing software and tools for content creation, GoPro has made storytelling accessible to a wide range of users, fostering a sense of community and belonging.

This approach is reflected in GoPro’s product diversification, with cameras designed specifically for various adventure sports such as surfing, mountain biking, and skiing. These innovative features allow users to capture their experiences in ways never before possible.

By enabling adventurers to document and share their journeys, GoPro has not only established itself as a leader in the action camera industry but also created a global community of like-minded individuals who seek to push their limits and explore the world.

GoPro’s marketing strategy has played a crucial role in establishing the brand as a leader in the action camera industry. Through effective video marketing techniques, GoPro has successfully captured the attention of its target audience and built a strong online presence. By leveraging user-generated content, GoPro has fostered a sense of community and authenticity around its brand, leading to increased engagement and brand loyalty.

In addition, GoPro’s strategic partnerships with influencers, athletes, and brands have contributed to its success. These collaborations have not only expanded GoPro’s reach but also generated captivating content that showcases the capabilities of their products. By choosing the right partners, GoPro has been able to create compelling narratives that resonate with their audience and inspire adventure.

Furthermore, GoPro’s focus on customer experience, innovation, and storytelling has been key to its market dominance. By continuously improving their cameras and introducing innovative features, GoPro has stayed ahead of the competition and solidified its position as a premium brand. Additionally, their dedication to storytelling has allowed users to create and share their own remarkable moments, establishing an emotional connection with the brand.

By analyzing GoPro’s marketing strategy and adopting their successful tactics, businesses can learn valuable lessons. The importance of effective video marketing, user-generated content, strategic partnerships, and a customer-centric approach cannot be overstated. Furthermore, staying innovative and embracing storytelling can help brands establish a strong market presence and engage their target audience effectively.

What is GoPro’s marketing strategy?

GoPro’s marketing strategy focuses on providing a superior customer experience, establishing a strong market presence, and gaining a significant market share. They prioritize customer satisfaction and implement effective marketing techniques.

What are some essential tips for effective video marketing?

To create an effective video marketing strategy, focus on creating high-quality videos, craft engaging content, optimize for search engines, promote on social media, and track engagement and key metrics with video analytics tools.

Can you provide real-world examples of successful video marketing campaigns?

Yes, Red Bull, GoPro, and BuzzFeed are prime examples of brands that excel in video marketing. Their strategies focus on showcasing unique and engaging content that resonates with their target audience.

How has GoPro achieved success in the market?

GoPro’s success can be attributed to their commitment to customer experience, innovation, and storytelling. They have created a strong brand presence, engaged community, and strategic partnerships with influencers and athletes.

What is GoPro’s marketing mix?

GoPro’s marketing mix revolves around its diverse product lineup, pricing strategy that reflects premium quality, and distribution channels that utilize online sales and social media promotion.

Can you provide examples of GoPro’s successful marketing campaigns?

Yes, GoPro’s #HomePro challenge during the pandemic and collaborations with athletes like Shaun White and brands like Red Bull are examples of successful marketing campaigns that utilized user-generated content, collaborations, and social media engagement.

What marketing strategies can businesses learn from GoPro?

By utilizing high-quality user-generated content, creating talk triggers, developing iconic slogans, and delivering audience-centric content and distribution strategies, businesses can learn valuable lessons from GoPro’s marketing strategies.

What is GoPro’s business strategy?

GoPro’s business strategy centers around empowering adventurers and capturing extraordinary moments. They focus on innovation, creating durable cameras, and providing software and tools for content creation to foster a sense of community.

How has GoPro achieved marketing success?

GoPro’s marketing strategies have contributed to their success as a leading brand in the action camera industry. They employ effective video marketing techniques, leverage user-generated content, establish strategic partnerships, and focus on customer experience, innovation, and storytelling.

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Home » Video Gear » The Rise, Fall, and Rise Again of the Illustrious GoPro

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The Rise, Fall, and Rise Again of the Illustrious GoPro

As GoPro celebrates the launch of their tenth product, it’s time to look back at the rollercoaster ride of their last twenty years.

If you picture a Californian tech entrepreneur, you might think of Steve Jobs of Apple or Jim Jannard of RED cameras , but would you think of Nicholas Woodman, founder of GoPro? He actually started the company in 2002 with a typical California backstory and a loan from Mum and Dad. 

Woodman took the company to their IPO in 2014 when annual revenues topped nearly 1.5 billion dollars. But, a number of unsound investments in drone technology with their Karma product, virtual reality with their purchase of a French VR company, and chasing the 3D market maybe took their eye off selling the basic GoPro camera product.

Woodman was also a big fan of refreshing his entire product line—he did it twice. But, ultimately, sales began to slide even though innovation within the product was constant.

Were the lifestyle or action videographers turning their back on the brand that started it all off? Was the smartphone just too damn smart and ubiquitous?

2020 wasn’t a good year for anybody, but especially a brand that essentially needed you to go outside to use it. Revenue was down 25% from 2019 at $891,925.

However, a complete restructuring of the business has now turned GoPro into a direct-to-consumer retailer and it’s paying dividends.

The Surfer Businessman

In a nutshell, the story of the camera was actually the story of a camera strap to start with. Woodman was a surfer dude complete with his VW bus, but frustrated with the lack of photography tools for his passion. He wanted the “hero” action shots out on the ocean where the drama was. He also harbored ambitions of turning pro and was buoyed by his surfer friends’ encouragement to find a solution.

His first photographic product wasn’t actually a camera, but a wrist strap for a camera. It would attach to the camera, then hinge up when you wanted to take a photograph. You just pushed it back onto your wrist when you were finished.

Woodman’s initial thought was to rely on customers to use their own camera, but was soon in negotiations with Chinese manufacturers to make one for him. It was to be a basic 35mm film model, with a strap in a waterproofed plastic case as a package. (You can still buy the package on eBay today).

Not a Great Camera But a Great Concept

He sold the first GoPros in 2004 and ended the year with revenues of $150,000, the next year was $350,000 after he started selling on the QVC shopping channel.

Through the next few years, after finally launching a digital video camera, the GoPro HERO3 became the standard for capturing action sports.

In fact, according to IDC data, in the first half of 2012, GoPro was responsible for 21.5% of digital camcorders in the U.S., up from 6% the previous year. At the time, GoPro was America’s fastest-growing company.

No wonder by 2013 Woodman had reached billionaire status and became the darling of Silicon Valley, with investors clamoring to buy a piece for themselves—they didn’t have long to wait.

But, the fact was that the first few GoPro cameras weren’t great products. The concept of owning your own action camera, however, was a game-changer. People bought them in multiples and the sports-action genre exploded. Nobody seemed to mind that the quality of the cameras weren’t the best, they were too busy having fun and recording it on the slopes.

The first ones looked like a compact stills camera housed in a waterproof plastic housing. It was claimed to work down to 60m. Once in the housing, you couldn’t use the audio inputs or the HDMI output. Also, there were only two buttons—one a power/mode button and the other a select/record button.

The colorimetry of the HERO2, for example, wasn’t something you’d call cutting edge. But, GoPro had doubled the resolution from the HERO1 with an 11MP sensor from the 5MP of the first model. Of course, image quality wasn’t really why people bought these cameras. Everyone bought in to the lifestyle that Woodman was peddling and sales rocketed.

Going Public

In the third quarter of 2014, GoPro went public. They posted revenue in the third quarter of 2014 of $280 million, up 45.7% compared to the $192.1 million reported in the third quarter of 2013. They’d introduced GoPro 4 earlier in the year with a 4K resolution and a 2.7K option at 50 and 60p. But, going into 2015, sales started to dip.

GoPro’s answer was to refresh the product line with the HERO4 Black as the ultimate model, but below would be cheaper versions down to the HERO at only $129.99. The HERO4 Black retailed for $499.99. 

The headline figures saw a 31% drop in sales for the last quarter of the year—the all important Xmas holiday season. From the company’s point of view, there were reasons for the difference in revenue, like the trimming of the product range and the tooling charges involved with that. They also had excess inventory of the models that they’d dispensed with. 

There were no real worries about the market performance as the next year would see the arrival of their drone—Karma was on the way.

The Value of Karma

2016 saw a continuation of slipping sales, but worse was to come. After a triumphant launch, their much-vaunted new Karma drone was recalled , all 2,500 of them. Apparently, in a small number of cases, Karma units lost power during operation. All units sold were sent back for full refunds. “Shipments of Karma would resume as soon as the issue is resolved,” commented GoPro.

But, come 2017, Karma was canned even though it made a re-appearance in February of that year. The official line was: “The product faces margin challenges in an extremely competitive aerial market.” The unofficial line was— DJI . The company also went through a restructuring, losing over 200 employees.

But, HERO cameras kept coming with two in 2018. An entry-level HERO for $199 and the HERO7 was launched with the first appearance of HyperSmooth stabilization and the TimeWarp stabilized time-lapse function. Revenue was down over the year but was blamed on the costs for killing Karma.

Perhaps the most interesting figure in the investor’s media pack was that the website, gopro .com , now represented more than 10% of revenue in Q4 2018, growing more than 50% year-on-year.

Setting up Shop

In 2019, GoPro enhanced their PLUS subscription model and the service became integrated in the checkout experience. For $4.99 a month, you now received damaged camera replacement, unlimited cloud storage, and 50% off mounts and accessories.

In an investment statement, you could almost hear Woodman licking his lips at the site’s potential. “We continue to see consistent global PLUS subscriber growth, and by giving our customers the ability to subscribe to PLUS when buying a camera at gopro.com, we expect to accelerate that growth,” he said to investors.

In fact, he made the company’s transition to a direct-to-consumer model official in May 2020. It gave the company a substantially reduced operating expense model, improved gross margin, and provided “a significantly lower threshold to profitability.”

By the end of the first quarter of 2020, there were 355,000 paid subscribers. By the end of the second quarter of 2021, GoPro subscribers were up 211% to 1,160,000. Overall revenue was up by 86% with gopro.com earning 35% of that with $88 million.

Pandemic Bounce

You can now tell that all marketing efforts from GoPro are targeted at cultivating even more subscriptions. If you buy the new HERO10 Black camera at gopro.com, it’ll cost $399.98 and include a one-year GoPro Subscription. If you don’t want the subscription, you pay $499.99. Basically a no-brainer purchase as you can cancel the subscription after the free year and still save $100.

So, for all you GoPro owners, the good news is that the company seems to be operating on firmer ground. The new camera has followed the drip-feed of new innovation that’s been the hallmark since the early 2000s.

GoPro certainly pivoted in 2020 and 2021 due to the pandemic, and their recent figures show a certain bounce due to lockdowns and continuing high infection rates. However, GoPro is on the rise again, and we salute them for it.

A few more inspiring articles for you:

• Should You Carry a GoPro (or Two) in Your Filmmaking Kit?
• Stabilizing GoPro Footage with the Unique ReelSteady GO App
• Royalty Free Music and Video Assets for GoPro Videos
• DJI Releases the New Mini SE Drone for Under $300
• DJI Announces New Smaller Air 2S Drone That Shoots 5.4K Video

Cover image via GoPro .

Never second-guess again. The new Creator License covers personal projects online and on social media

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GoPro: Brand Extension

In early 2017, camera manufacturer GoPro stunned investors by reporting its first recorded annual profit loss and a revenue forecast that sharply missed analyst estimates. What had once been widely heralded as one of the biggest initial public offerings of 2014, tripling in price in just over three months following the June IPO, the stock had tumbled 90.7 percent by the end of 2016. A series of camera pricing mistakes, altered product release schedules, and lower marketing spend, set against a backdrop of relative market saturation, negatively impacted demand for GoPro cameras. In fiscal year 2016 alone, units shipped and revenues both declined by nearly 30 percent, a remarkable reversal from the early days, when revenues more than doubled each year following the company’s 2004 launch.

While sales of GoPro cameras declined, its brand remained one of the most revered in the world. As a result, Tony Bates, director and former president of GoPro, mulled over ideas for leveraging the brand beyond the camera. For Bates, this meant potentially launching a new product using the existing GoPro brand in a different category. While it seemed easy enough, GoPro had to consider where to extend the business in a way that made sense for the company’s core demographic. GoPro also had to determine whether to license the brand to others or partner with another company. Given the consumer-centric roots of the company and the evolution of the brand, there was a lot to consider.

This case examines the challenges facing GoPro in the face of falling sales, and how best to leverage its increasingly popular brand. It provides a brief background of the company, the evolution of the brand, a description of early attempts to grow the brand, models for licensing the brand, how best to implement a licensing model, the need to protect the brand, as well as two case studies using Red Bull and Virgin Group as examples of successful brand extensions.

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The GoPro Rollercoaster -The Rise, The Fall, and a Resurgence!

Once a role model of entrepreneurship, GoPro hasn't had a perfect picture over the last few years. The rise and fall and the resurgence being attempted teach us invaluable lessons of resilience.

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The GoPro story started in 2002 when an avid surfer Nick Woodman went on a surfing trip and quickly realized that there was no way to film himself while in the water. While most photographers shooting surfing images usually used DSLRs with long tele lenses from the beaches, buying these lenses and equipment and hiring photographers was an expensive affair.

This led to the birth of the desire to shoot professional images in dire situations and adventure sports. To help people capture and share their lives' most meaningful experiences in immersive and exciting ways.

Nick wanted the “hero” action shots out on the ocean where the drama was. He also harbored ambitions of turning pro and was buoyed by his surfer friends’ encouragement to find a solution. And that led him first to develop and launch a wrist strap in 2003. It was designed to be attached to a regular digital camera, then hinge up when you wanted to take a photograph. You just pushed it back onto your wrist when you were finished.

But while testing his first makeshift models on a surf trip to Australia and Indonesia, Nick realized that he would have to manufacture the camera, its housing, and the strap altogether. Woodman, after saving up money with his wife by selling seashell jewelry and belts out of their old Volkswagen van in California, together with $235,000 that he borrowed from his mom and dad, started the camera company - Woodman Labs (only to be renamed GoPro later on).

In 2004, GoPro started selling its first-ever camera, named HERO. A small, handy 35 mm compact film camera inside a waterproof plastic housing with a hand-sewn wrist strap. There were only two buttons - a power/mode and a select/record button. What set the GoPro 35mm Hero apart from the rest of the point-and-shoot cameras was its ruggedness. Priced at just $20, it was an outstanding deal for photo enthusiasts and families.

GoPro ended the year with revenues of $150,000 and the following year in 2005 with $350,000 after Nick started selling on the QVC shopping channel. From QVC, Nick managed to get the product into Recreational Equipment, Inc. (REI) — one of America’s largest outdoor recreation retail groups. The product then took off as extreme athletes such as racecar drivers, skydivers and skateboarders purchased the cameras for filming themselves. Point-of-view videos shot by GoPro cameras attached to surfboards, ski helmets, bike frames, and pets suddenly became ubiquitous and viral on YouTube. Nobody had ever seen footage like this; it was a new, dizzyingly personal, and mesmerizing art form. At the same time, Go Pro finally made it into the ‘mainstream’ when it landed on the shelves of Best Buy.

The concept of owning your action camera was a game-changer. People bought them in multiples, and the sports-action genre exploded. Everyone bought into the lifestyle that Woodman was peddling and the sales rocketed. Things started ramping up with GoPro in 2006 when the first-ever Digital Go Pro Hero was introduced, and revenues hit over $800,000. The year after, 2007 saw a massive revenue leap, with GoPro hitting the $3.4 million mark.

GoPro continued to launch new variants through incremental refinements in features and functionalities such as digital, video resolution, sensor size, durability, etc. As time passed, the world around changed, and so did GoPro. It kept on improving and innovating its product line . These technological advancements, along with some savvy marketing and social media strategy, enabled GoPro to build an engaged community of users - a recipe for fostering a virtuous growth cycle.

Over the years,  GoPro became the standard for capturing action sports. Just as the word Xerox had become synonymous with Photocopier machines after the inventors named and trademarked their process under that name, action cameras were at one point known as GoPros.

It grew phenomenally, riding on the wave of its popularity. Revenues skyrocketed to $234 million in 2011, then grew to $526 million in 2012, $986 million in 2013, and $1.4 billion in 2014. GoPro was the talk of the town, one of the fastest growing companies.

And this growth coincided with Foxconn, one of the world’s largest electronics manufacturers, buying a $200 million stake in GoPro for roughly 9% of the company in 2013. Then, GoPro made its public debut in the third quarter of 2014 to raise $427 million at a $2.96 billion valuation, the biggest consumer electronics IPO in about 20 years. This reflected its strong position as a popular product segment even as smartphones continued to decimate the camera industry at large.

And the stock surged more than four fold to $98 within three months of its debut.

The purpose-driven and customer experience-centric business model and the stellar business performance of GoPro also attracted Salim Ismail and others who were researching several startups, scaleups, and incumbents through the lenses of the Exponential Organization (ExO) success formula. And GoPro got featured in the list of Top100 ExOs released in 2015.

However, the love affair with the market (customers and shareholders) and the success story GoPro experienced in the first decade of its existence between 2004 and 2014 started falling apart. After peaking at $1.62 billion in 2015, revenues dropped to $1.16 billion in 2016 and then plateaued at $1.17 billion in 2017 and $1.14 billion in 2018.

WHAT WENT WRONG?

The Dwindling Core - In its core camera business, the HERO - GoPro started feeling the heat from mobile phones and cheaper alternatives. With a smartphone, everyone had a camera in their pocket, and GoPro’s USP of being handy and powerful was becoming redundant. And then, smartphones also became waterproof and much more rugged. GoPro's unique selling propositions – ruggedness and being small and handy- were not ‘unique’ anymore.

Also, the GoPro product segment, after gaining immense popularity, started seeing competition from Chinese players giving the same functionality as the GoPro albeit at a lower price. GoPro's most significant challenge perhaps came when Google entered the wearable camera market with a $249 wireless smart camera (compared to GoPro's equivalent offerings, which were priced around $400 upwards). Google Clips used artificial intelligence to automatically capture several-second motion clips when its algorithms detect something photo-worthy. Unlike GoPro cameras, which require dedicated mounts to affix to a helmet, bicycle, or body, Google’s camera was designed so one could clip it to the shirt, a stroller handle, or wherever else one might be able to clip something.

Further, GoPro's pricing strategy (indicating that it perhaps misjudged the market and its brand appeal) ended up seeing the company slashing the prices of its new cameras almost by half within a few weeks of launch on a fairly regular basis. This led to confusion and disengagement in the minds of its customers and even cannibalization instead of growth.

Lastly, while GoPro had started as a niche catering to adventurers, surfers, and travelers, over time, its primary customer base had emerged as skaters, skiers, holidaymakers, and just about any average person. So, while GoPro promoted its products using professional athletes and adventure sports enthusiasts, it didn't focus on showcasing how an ordinary family man or woman could use their product, too, creating a disconnect with the mainstream market. While GoPro had a stronghold among adventurers and extreme sports enthusiasts, other cameras targeted the mainstream. They soon gained momentum, challenging the leadership and iconic position of GoPro that it had established over the years.

GoPro had to expand its horizons and create new verticals for financial stability and growth. But, it wasn't meant to be.

The Pivoting that went Sour - In late 2014, GoPro started transforming itself from being only a camera seller into a media entity, from a hardware to a software company. GoPro's strategy made sense in 2014. Videos from GoPro users dangling off helicopters or diving with sharks racked up millions of views on YouTube. Amazon and Netflix had recently begun their original content push. Even Red Bull, a brand closely associated with GoPro, had just introduced an Apple TV channel. For GoPro, it also meant proving to Wall Street that its business had the potential to be more than just selling cameras to a niche audience of sports enthusiasts.

To kickstart those efforts, it launched an Xbox Live channel and made a deal with Virgin America for in-air entertainment. Its website also acted as a media portal, collecting top photos and videos. The entertainment unit, led by former Skype CEO Tony Bates, initially focused on gaining followers on YouTube and other social media platforms. The sporty hardware company made a series of high-profile hires to bolster its entertainment division in 2015, including the former head of Hulu Originals programming Charlotte Koh, and HBO sports executive Bill McCullough. It briefly produced original content and created a licensing and revenue-sharing platform for content creators.

But, the high-profile efforts were undermined by costly productions amid the tough tradeoffs of a company trying to salvage its core business. The newly formed content team at the entertainment division began spending more and more on their video shoots and production. Budgets went from $10,000 a shoot to $100,000 a shoot. It wanted to come across as a series player, not wanting to cut any corners. It perhaps crossed the line and ended up splurging. The entertainment division developed over 30 TV series and had ideas for releasing their streaming platform. But, most of the shows never made it out of production, and the streaming platform was never launched.

With the core business dwindling and no signs of the entertainment division becoming a profit center on its own, the entire unit was eventually shut down in November 2016. It was not the only tech company that had gotten excited about Media but ended up having a painful exit. Yahoo took a $42 million write-down in 2015 for its investment in shows like Community. The difference was that GoPro didn't have the deep pockets to afford the misadventure.

The Drone Disaster - In September 2016, just in time for the festive season, GoPro made a triumphant launch of its drone, Karma with a dedicated slot for the Hero action cameras. Karma was an outcome of a project initially announced in December 2014 after noticing the success of DJI's drone, the Phantom. But, the project Karma got marred with delays amid a shift from a joint venture with the specialist 3D Robotics to an in-house start-from-scratch research & development effort costing almost $96 million.

But, it soon found competition within a week when DJI launched its line of compact Mavic Pro and Spark drones with more robust features, smaller designs, and lower prices. And to add to the challenge, within three weeks after the Karma devices went on sale, some owners complained about losing power mid-flight, causing the GoPro drone to plummet uncontrollably to the ground. GoPro had to announce a complete recall and take the product off the shelves when it was discovered that the device was losing power during operation. And this was the beginning of the end of Karma. While it relaunched the product in February 2017, it had lost the holiday season opportunity and the momentum and could never recover. GoPro announced the shutdown of Karma in January 2018.

The Organization and Culture - Before the IPO, GoPro had been a relatively simple operation, with sales, marketing, engineering, and design teams working on the company's products. But after the IPO, as GoPro tried to build new businesses, the company unconsciously shifted to a more siloed structure, where multiple divisions - software, hardware, media - ran as separate business units. Individual teams began to embrace tools that worked best for them. Because each team used its arsenal of tools, organization-wide cross-team communication, collaboration, and visibility started becoming challenging and bred bureaucracy.

Previously, GoPro had held quarterly all-hands pep rallies, called hangs, but as it grew in size and geographically, the company moved towards what can be considered a more subdued monthly affair, with Nick Woodman and the other senior leaders giving a speech in front of a few hundred employees (while the rest watched online).

The Leadership! - While paradoxical, Nick, who was undoubtedly the central brain and the hustler behind GoPro's stellar growth, also potentially ended up becoming a bottleneck.

In the early years of GoPro, Nick is known to have driven up and down California’s beaches selling his necklaces from his 1971 Volkswagen to make the cash he needed to pursue his passion. And, when not selling necklaces from a VW, he would work on a sewing machine borrowed from his mother. He would design different straps and test what worked best. At night he would stay up late to speak with factories in China regarding camera parts. He was hustling and working up to 18 hours a day, seven days a week, for months.

Fast-forward 10 years. After the successful IPO in 2014, Nick became an instant billionaire. In a matter of months, his wealth had hit the $3 billion mark, and he had become the highest-paid CEO in America. Over the years, while amassing his wealth, Nick bought a 180-foot yacht, a Gulfstream G5 jet, homes in Montana and Hawaii, and a fleet of vintage sports cars over the years. And, somewhere, GoPro as a company had been adopting its founder's flashy lifestyle.

While hindsight is always 20:20, Nick admitted during an interview with Inc magazine in late 2018 that " We went from being thrifty and scrappy and efficient and wildly innovative to being bloated and–what’s the opposite of thrifty? It was deconstructing everything we had built. "

A RESURGENCE IN PROGRESS!

GoPro's Founder and CEO Nick Woodman, during an interview with the Inc magazine in 2018 said "When things are going well, you can be lured into thinking that everything’s easier than it is. Just because you’re a World Series-winning pitcher doesn’t mean you can go play quarterback."

After nearly four years of struggling performance after its IPO - GoPro pivoted once again in 2018 and shifted gears to focus on profitable growth and declared that it would go back to what it does best and feels strongly about - action cameras.

In 2018, GoPro announced many upgrades to its Hero camera and also the launch of a new spherical camera called Fusion, which could pull out any still or moving image from the spherical footage - a feature called OverCapture that essentially made it possible to shoot in multiple directions at once and frame one's photo or video after shooting. This was undoubtedly considered by the technology pundits and the market as a true innovation and potentially the beginning of the company coming back on track. GoPro has kept introducing innovations and an improved range of products and accessories over the last four years and has been acknowledged in the form of different awards, including CES Innovation Awards Honoree, CHIP Photo Awards, PCMag Best of the Year, amongst others.

GoPro's innovations have also been targeted toward shifting the product mix to the high-end premium camera segment. Its>$400 average selling price cameras account for nearly 80% of the revenues in Q2 2022 compared to only 40% in 2018. Think iPhone!

Also, GoPro has been expanding its direct-to-consumer (DTC) business and its footprint in emerging markets while scaling up its customer relationship management and engagement efforts with frequent new product launches acting as tailwinds. So, while retail used to account for nearly 90% of its sales in the pre-2018 era, now it accounts for only 60%, with DTC accounting for 40% of its latest reported financial numbers, also helping improve margins from low 30% to nearly 40% now.

The company also re-launched its subscription and service model GoPro PLUS. The service provides subscribers with significant savings on cameras and accessories, an assured replacement for damaged cameras, but more significantly, unlimited cloud storage, the capacity to upload footage to the cloud directly from GoPro cameras, premium editing tools in the Quick App, and a private streaming platform to enable storytelling and immersive sharing - going back to its roots and its purpose.

By the end of the second quarter of 2021, GoPro subscribers were up from a small 355,000 in the first quarter of 2020 to 1.16 million, and in the recently announced results for Q2 2022, these had increased further by 71% to 1.91 million.

On the internal organizational front as well, GoPro has been investing in building a collaborative environment. Earlier, the internal beta testing at GoPro was typically done for small groups of people closest to the product, and the feedback loop was primarily between just the testers and the product team. Now, the company has extended the reach of the feedback loop, increasing engagement for a broad set of employees and even building internal hype around the new product introduction efforts. Further, GoPro has been leveraging technology to empower and capture the collective personal retail experiences of its global workforce to report on the status of more than 27,000 global POP (point of purchase) retail displays, to choose what questions management will address at all-hands meetings, and for myriad other ways that help the GoPro workforce feel connected, empowered and prideful for what they represent to the global community of GoPro users.

These revival efforts have perhaps arrested the decline GoPro had started experiencing between 2015 and 2018, with GoPro delivering revenues of $1.16 billion in 2021 but certainly better profitability with adjusted EBIDTA standing at $168 million compared to only $22 million in 2018. However, the street doesn't seem to be convinced yet. From the peak market capitalization of $11.8 billion in September 2014, GoPro is valued at a paltry $900 million as of the beginning of September 2022.

GoPro aspires to be a force for positivity, celebrating all things awesome while inspiring people to pursue their passions. It has an opportunity to leverage its purpose, values, brand-appeal and social media reach to sustain the momentum it has garnered over the last few years.

Will it be able to regain the glory of the first decade of its existence? Will it be able to bounce back and deliver sustainable and profitable growth? We will be watching closely.

This article on GoPro is part of a SPOTLIGHT series on some of the TOP100 Exponential Organizations to map their journey over the last eight odd years since the list was initially published in 2015.

To get insights from the successes and debacles, read the stories of other ventures which have thrived, but also some which didn't

DUOLINGO https://insight.openexo.com/startup-success-the-duolingo-way/

3D HUBS https://insight.openexo.com/dont-just-be-part-of-the-change-pioneer-the-future-the-3d-hubs-success-story/

TUMBLR https://insight.openexo.com/why-tumblr-tumbled/

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With more than 25 years of experience in driving transformation initiatives, Chander is pronounced with a passion for delivering sustainable 10X impact through inspiring, engaging & enabling people.

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GoPro: Brand Extension

By: Michael Marks, Jaclyn C. Foroughi

In early 2017, camera manufacturer GoPro stunned investors by reporting its first recorded annual profit loss and a revenue forecast that sharply missed analyst estimates. What had once been widely…

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• Publication Date: Apr 1, 2017
• Discipline: Strategy
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In early 2017, camera manufacturer GoPro stunned investors by reporting its first recorded annual profit loss and a revenue forecast that sharply missed analyst estimates. What had once been widely heralded as one of the biggest initial public offerings of 2014, tripling in price in just over three months following the June IPO, the stock had tumbled 90.7 percent by the end of 2016. A series of camera pricing mistakes, altered product release schedules, and lower marketing spend, set against a backdrop of relative market saturation, negatively impacted demand for GoPro cameras. In fiscal year 2016 alone, units shipped and revenues both declined by nearly 30 percent, a remarkable reversal from the early days, when revenues more than doubled each year following the company's 2004 launch. While sales of GoPro cameras declined, its brand remained one of the most revered in the world. As a result, Tony Bates, director and former president of GoPro, mulled over ideas for leveraging the brand beyond the camera. For Bates, this meant potentially launching a new product using the existing GoPro brand in a different category. While it seemed easy enough, GoPro had to consider where to extend the business in a way that made sense for the company's core demographic. GoPro also had to determine whether to license the brand to others or partner with another company. Given the consumer-centric roots of the company and the evolution of the brand, there was a lot to consider. This case examines the challenges facing GoPro in the face of falling sales, and how best to leverage its increasingly popular brand. It provides a brief background of the company, the evolution of the brand, a description of early attempts to grow the brand, models for licensing the brand, how best to implement a licensing model, the need to protect the brand, as well as two case studies using Red Bull and Virgin Group as examples of successful brand extensions.

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Provide students with an opportunity to evaluate a potential brand extension.

Apr 1, 2017

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United States

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Consumer electronics

Stanford Graduate School of Business

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Integrated Marketing Campaign Analysis: GoPro: Be a Hero

GoPro. One of the biggest brands in wearable cameras to date, announcing a revenue of $204 million in the first quarter of 2021, according to investor.gopro.com . GoPro’s first camera, the GoPro 35mm Hero was introduced in September 2004 at San Diego’s Action Sports Retailer Trade show. The company has come a long way since then, with a massive line of cameras, with its HERO line on its 10th iteration, the HERO 10.

“GoPro frees people to celebrate the moment, inspiring others to do the same. From cameras to apps and accessories, everything we do is geared to help you capture life as you live it, share the experience and pass on the stoke. We believe that sharing our experiences makes them more meaningful and way more fun.” – GoPro’s About Us page.

GoPro’s be a hero campaign includes consistent marketing direction across multiple platforms. The most notable channel for GoPro would be their YouTube account. This account boasts 10.5 million subscribers, and frequently posts organic and paid content of users ‘capturing life as they live it’, whether it is catching some waves, shredding the powder on a ski slope, flying over a volcano, or diving into coral reefs. This has allowed GoPro to become one of the biggest brands on YouTube, with almost 6000 videos a day being posted to YouTube with GoPro in the title. Organic content posted by users makes the brand feel genuine, and its live demonstrations of the product, which is one of the perks of being a camera company.

To get their organic content, through the Be a Hero Challenge, all you have to do is shoot a video, submit it, and then receive awards from GoPro.

The videos also have the benefit of being really cool and interesting, as they are frequently recordings of users doing stunts most watchers would never be able to do or exploring beautiful places.

GoPro also posts videos for their causes, such as this one about reforesting the ocean. It sheds a light on the impact of human consumption on our environment, which is authentic for GoPro to be a supporter of since the company makes money off of users recording themselves enjoying the outdoors.

GoPro’s marketing utilizes so much organic content, while staying interesting and authentic, and I think many brands can look at GoPro as an example of integrated marketing done right.

Which companies could take a page from GoPro and be more authentic?

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GoPro SWOT Analysis: How Innovation Leads to Success

Last Updated: Apr 17, 2023 by Abdul Momin Filed Under: SWOT Analysis , SWOT Examples

If you have a habit of scrolling on social media, you must have seen many videos and pictures shot from a POV angle. I find such content very cool because it helps you connect with what’s happening.

At times it feels like you are experiencing everything that is going on. However, for the longest time, I had no idea how these POV shots were taken until I got aware of the GoPro.

GoPro is a technology company that specializes in making action cameras that are widely used to capture adventurous and action shots. Besides the action cameras, GoPro is also known for providing mobile apps and video-editing software.

GoPro is not one of the pioneers in the camera industry. However, it has made a name for itself as if it was around from the start. GoPro cameras are widely used in sports, trekking, racing, swimming, and other activities.

Since GoPro is considered the pioneer of action cameras, today we have decided to conduct a GoPro SWOT Analysis. However, before we move toward the SWOT analysis, let’s look at the exciting journey of GoPro.

The GoPro traces back to 2002 when a guy named Nick Woodman founded GoPro because he wanted to film himself while surfing. Since Nick indulged in many sporting activities like surfing, skiing, and motorsports. He always felt that no camera could capture what he was experiencing.

To fulfill his wish to film himself in action, he created a company that manufactured action cameras. Unfortunately, it took him two years to sell his first camera. However, as digital cameras hit the camera industry, Gopro shifted its operations and made GoPro’s first all-digital, video-ready product in 2006.

In between, iPhone diverted GoPro’s customers by offering the iPhone 3GS with a good camera quality in 2009. However, a year later, GoPro launched a 1080p wide-angle lens. In 2011, GoPro carried out its first acquisition by acquiring Cineform .

The action camera brand announced going public in 2014. It sold 17.8 million of its shares through IPO. In addition, GoPro acquired a couple more companies in the coming years to increase its market share.

In 2021, GoPro generated $1.16 billion in revenue. However, the brand is experiencing a fall in its sales currently. GoPro reached maximum sales of 6.58 million units in 2015. However, in 2021 GoPro sold only 3.15 million units.

Since GoPro is not experiencing a boom in demand, it has also laid off many employees. The maximum number of employees that GoPro ever hired was 1,552 in 2016 . Whereas currently, it only employs 766 people.

Now that we have discussed the history of GoPro and how it evolved over the years to reach where it is today let’s conduct a GoPro SWOT analysis. However, before doing that, you should know what SWOT analysis is .

A SWOT analysis is a technique professionals use to analyze the internal and external factors that impact an organization’s operations. A SWOT template reflects the organization’s strengths, weaknesses, opportunities, and threats.

The results of a SWOT analysis help us make future policies by looking at the factors that affect an organization’s operations. Now that you are well aware of what a SWOT analysis is let’s proceed further and carry out a GoPro SWOT analysis.

Strengths of GoPro

Strengths are the strong points of an organization that helps it in competing with other organizations. The success of an organization is dependent upon the number of strengths it possesses. Let’s have a look at what strengths GoPro Possesses.

1. Strong Brand Value

Any brand would try to have a strong brand value because it leads to higher revenue and increased profit margins. However, It is not easy to attain strong brand value.

GoPro is the name that became synonymous with high-action, extreme sports. It was the first company to bring first-person perspective and POV action to viewers across the globe with its near-indestructible mini cameras. This capability and a great marketing strategy ensured that GoPro was featured in many heart-racing scenes.

In 2019, GoPro was the most popular consumer electronics brand in the US, with 93.8 million cross-platform actions on social media brand content, leaving PlayStation behind .

2. Diverse Products

Brands often look to produce diverse products to attract different audiences. This helps them in increasing their customer base, as well as their revenue.

The GoPro range of action cameras is wide and varied. GoPro’s hardware range is extensive, from ruggedly built models capable of submersion in water and being thrown down a rocky cliff to high-tech drone equipment and image stabilizing gear. Its software capabilities are also incredibly powerful.

3. Online Sales

As the world is getting technologically advanced, people are switching from physical shopping to online shopping . Since customers find it more convenient, suppliers have to follow their lead. Looking at this trend, along with many brands, GoPro also established its online store.

Establishing an online store is turning out to be fruitful for GoPro since its revenue through online sales is increasing daily . This will motivate the brand to pay more attention to its online store.

Weaknesses of GoPro

Every brand has some weaknesses that keep it from achieving its true potential. However, weaknesses must be converted into strengths if a brand wants to grow. This section will highlight some of the weaknesses of GoPro.

1. Low Revenue

Businesses are always trying to increase their revenue because it is essential for a business to do financially well to stay in the market in the long term.

Although GoPro has been operating in the market for quite some time now. However, it generates a low revenue. In 2021, the brand generated revenue of $1.16 billion. However, in the same year, its competitor, Nikon, generated revenue worth $4.74 billion .

GoPro needs to increase its revenue by increasing its sales, or it can face serious financial problems.

2. Low R&D Expenditure

Innovation is very important for all businesses because that’s what differentiates the product of one business from the other. However, to innovate, it is essential to spend money on R&D.

GoPro is a technology company that makes products for the action sports industry. Its main differentiator is its technology, which has kept it ahead of competitors. However, to further consolidate its position in the market, GoPro has to increase its R&D expenditure. In 2021, GoPro spent $123 million on R&D.

3. High-Priced Products

Brands try to keep the prices of their products at a reasonable level so that people buy their products. Although it varies from product to product. Some brands target the high-paying class, which is why they keep their price above average.

GoPro is a premium brand with a premium image, meaning it can charge more for its products. This is great for consumers who are willing to pay more for high-quality products, but it doesn’t work so well for consumers who don’t want to spend as much money on their cameras.

Opportunities Present For GoPro

Every business gets opportunities from the market to expand and grow its operations. Some businesses act timely and make the most out of such opportunities. While others fail to grab them and struggle in the future. Let’s take a look at what opportunities are present for GoPro.

1. Start Manufacturing Smartphones

The smartphone market is growing at a daily pace. In 2020, the revenue generated from the global sales of smartphones was $409.1 billion . On the other hand, GoPro is operating in the camera industry, where its sales revenue is constantly falling.

Since GoPro has experience in technology and manufacturing, it can try its luck by launching a smartphone. Moreover, GoPro has a lot of experience in the camera space. With its existing offerings, GoPro should be able to compete in the smartphone industry. This will give GoPro an advantage over other smartphone manufacturers.

2. Increase The R&D Expenditure

To make their place in the market, every brand must innovate. However, innovation can only be done by spending on R&D. GoPro currently spends an insignificant amount of money on R&D.

However, it now has an opportunity to increase its R&D expenditure. This will help the brand in innovating and increase its revenue.

3. Expand Operations To Developing Economies

Businesses move their operations to develop economies to cut down their operating costs. By doing so, they manage to enjoy high profits. Since GoPro is observing a fall in sales and looking for ways to cut down its expenses, this is an excellent opportunity for GoPro to shift its operations in a developing economy.

Operation in a developing economy will cut down the costs of GoPro. As a result, the brand will experience higher profits.

Threats Faced By GoPro

Threats are the worries through which businesses have to deal . The threats received by a business are from the external environment. This section will analyze some of the threats faced by GoPro.

1. Global Recession

After the pandemic and the conflict between Russia and Ukraine, the world is expected to experience a global recession. Recessions are always painful for businesses. It lowers people’s living standards, and the sales of businesses fall. 

If a recession occurs anytime soon, GoPro may have to exit the market because the current financial situation of GoPro is already a lot weak.

2. Conflict Between Countries

Business always prospers in political stability. However, if there is political instability and countries are cutting off trade with each other, like recently, many countries have imposed sanctions on Russia. In such cases, businesses suffer.

Since the political temperature has been boiling up after Russia invaded Ukraine, GoPro feels threatened by the current political scenario. In case of political instability, GoPro operations will suffer since it might lose customers from a region.

3. High Competition

Businesses always try to avoid operating in markets with high competition because competition leads to price wars, resulting in the loss of profits. Like any other industry, the camera industry is also very saturated and competitive.

GoPro has to face a lot of competition from all directions. The action camera brand has to compete with brands like Nikon, Kodak , Sony , etc. While competing, GoPro has to constantly innovate, or else the rival brands can snatch GoPros market share.

GoPro SWOT Analysis: Final Word

Today’s article would have been a treat for our tech-savvy and camera-lover readers because, in today’s article, we talked about one of the most innovative action camera brands, GoPro.

This action camera brand joined the industry 20 years ago, and today it’s competing with some of the giants of the industry. GoPro is known for its various action cameras, video-editing software, and mobile apps.

Recently, the demand for GoPro cameras increased significantly when people realized how cool it looks to record an adventurous video while doing a sport or any other activity. Soon after discussing what GoPro is known for, we learned about the history of GoPro and discussed how it evolved over the years.

Then, we shed light on what SWOT analysis is and the purpose of conducting one. Then, after giving our readers some clarity, we proceeded further and carried out the GoPro SWOT analysis.

Through SWOT analysis, we learned about the strengths, weaknesses, opportunities, and threats faced by GoPro. Moreover, the SWOT analysis also highlighted some of the internal and external factors that are responsible for impacting the operations of GoPro.

The results obtained from the SWOT analysis can also be represented with the help of a SWOT matrix . Now that we have reached the end of this article, I hope you have enjoyed reading it since this article discussed the operations of GoPro with you and also made you aware of how to conduct a SWOT Analysis .

Although you shouldn’t be confused, if you feel the need to revisit the concept of a SWOT analysis, do look at more examples .

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GOPRO INC 2017: Failing With Initial Strategy or Just Poor Execution? An Illustrative Case Study with Analyses

2019, American Based Research Journal

This paper is an instructional secondary research case study of Go Pro Incorporated. It has been developed for a business policy/strategic management course as well as a course in entrepreneurship and/or technology management in order to illustrate how a student would conduct a strategic analysis of a firm. The case includes a discussion of the firm’s mission/vision, strategic approach to the market, industry and SWOT analyses, value chain analysis, financial analyses and recommendations. The case also includes brief explanations of the theories and techniques in question so that students can review content material they have covered in class. It is recommended that this case is employed toward the end of the semester so that students understand the tools and processes associated with implementing a firm’s strategic vision but before an assignment of a comprehensive case (secondary and/or primary) so that they have a model in which to base their analyses upon. GoPro, Inc. was a pioneer in the action camera market. The company, GoPro Inc. was founded by Nick Woodman in 2003 and went public in December 2012 at $24 per share (https//gopro.com/about-us). The company developed action cameras that were easily mountable and wearable and enable users to capture image and videos of their personal events easily. GoPro first moved into the market by creating distinct key features that differentiated their camera- and, i.e., action camera with mountable and wearables. However, with its innovative characteristics, GoPro not only differentiated their products but also targeted customers segments such as sports enthusiasts, bikers, adventurers, etc. GoPro excelled as a differentiator given its high brand equity and a strong reputation for its quality of the footage. Some competitors started to target the same segment with better quality products or with similar quality products at a lower price. The impact of this competition and loss of momentum was evident in the firm’s eroding financial performance. GoPro’s stock price on October 23, 2018, was $6.82 per share with a P/E ratio of -3.17 (https://www.marketwatch.com/investing/stock/gpro). The question students need to address is how GoPro can recover.Measures discussed include corrective strategies such as turnaround, retrenchment, diversification, conglomerate diversification, and liquidation. Instructors may want to delete the alternatives that are discussed so that their students can develop their own recommendations rather than agree or disagree with the recommendations of the authors.

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GoPro Case Analysis

GoPro, Inc. (marketed as GoPro and sometimes stylised as GoPRO) is an American technology company founded in 2002 by Nick Woodman. It manufactures eponymous action cameras and develops its own mobile apps and video-editing software. Founded as Woodman Labs, Inc, the company eventually focused on the connected sports genre, developing its line of action cameras and, later, video editing software.

It developed a quadcopter drone, Karma, released in October 2016. In January 2018, Karma was discontinued and the company hired JPMorgan Chase to pursue options of selling the company. However, a month later, the CEO denied this. Gopro has continued it’s business in manufacturing action cameras.

Gopro Case Study Examples

Gopro innovation case study.

Californian native and keen surfer, Invented the GOP after a surf trip to Australia in 2002. It is small and non-descriptor looking, deceptive really, however is a wearable camera and camcorder. Its size means it can be mounted almost anywhere with ease, whilst also having the capacity to shoot videos and stills in full HAD. […]

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Marketing Process Analysis

Segmentation, targeting, positioning, marketing strategic planning, marketing 5 concepts analysis, swot analysis & matrix, porter five forces analysis, pestel / pest / step analysis, cage distance analysis international marketing analysis leadership, organizational resilience analysis, bcg matrix / growth share matrix analysis, block chain supply chain management, paei management roles, leadership with empathy & compassion, triple bottom line analysis, mckinsey 7s analysis, smart analysis, vuca analysis ai ethics analysis analytics, gopro: the disruptive innovator faces challenges pestel / pest / step analysis & solution / mba resources.

• GoPro: The Disruptive Innovator Faces Challenges
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Definition of PESTEL / PEST / STEP Analysis

What is PESTEL / PEST / STEP Analysis? How you can use PESTEL Analysis for GoPro: The Disruptive Innovator Faces Challenges

At EMBA PRO , we specialize at providing professional PESTEL analysis & other strategic management MBA resources. GoPro: The Disruptive Innovator Faces Challenges case study PESTEL analysis includes macro environment factors that impact the overall business environment – Political, Economic, Social, Technological, Environmental, and Legal factors. GoPro: The Disruptive Innovator Faces Challenges case study (referred as “Gopro Confidence” for purpose of this article) is a Harvard Business School (HBR) case study covering topics such as Sales & Marketing and strategic management. It is written by Rishi Dwesar, Geeta Singh and shed light on critical areas in field of Sales & Marketing, Financial management, Innovation that the protagonist in the case study is facing. Managers at Gopro Confidence need to examine three inter-related environments in order to come up with an effective strategy. The three inter-related environments are – industry environment in which the company operates in, the geographic market or country in which company operates, and wider socio economic / macro environment. PESTEL analysis is mainly the assessment of macro environment factors.

Case Description of GoPro: The Disruptive Innovator Faces Challenges Case Study

GoPro, Inc. was an American action camera and software manufacturer founded in 2002 by a young entrepreneur. The company introduced innovative action cameras and became a successful brand with the help of content marketing. It continued its innovative spree for more than a decade and was the market leader in the industry. However, in March 2017, the company faced challenges due to product failures and increased competition, and the introduction of new products in the market. GoPro's stock price dropped as a result of a loss of confidence by both consumers and investors. What strategies could the company adopt to regain its competitive strength and revive confidence in its brand? What could it do to be more innovative and successful, and in doing so, fend off the low-cost competition? Rishi Dwesar is affiliated with ICFAI Business School-Hyderabad.

Case Authors : Rishi Dwesar, Geeta Singh

Topic : sales & marketing, related areas : financial management, innovation, case study solution & analysis of gopro: the disruptive innovator faces challenges, swot analysis of gopro: the disruptive innovator faces challenges, urgent - 12hr.

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Importance of PESTEL Analysis in Strategy Management & Planning Process

Strategy planning process often requires five steps – 1. Choosing the vision, mission and the reason of existence for Gopro Confidence. 2. Analyze the Gopro Confidence external competitive environment to identify opportunities and threats. PESTEL analysis is critical to understand the external threats & opportunities arising because of the macro environment developments. Changes in macro environment forces can impact the Porter Five Forces & industry attractiveness. Thus significantly impacting the ability of Gopro Confidence to build sustainable competitive advantage 3. Analyze Strengths and Weaknesses of Gopro Confidence. 4. Developing strategies that can capitalize on Gopro Confidence strengths and help mitigate weaknesses and impact of threats of macro-environment. 5. Execution of the strategy and building a feedback loop, using which managers at Gopro Confidence can fine tune processes and strategies going forward. The Industrial Organization (I/O) approach advocates that for sustainable competitive advantage external factors are as important as internal factors of the Gopro Confidence. According to Michael Porter organizational performance is to large extend determined by various industry forces.

What are Political Factors in PESTEL / PEST Analysis

The political factors play a huge role in not only investment decision by transnational corporations but also by companies such as – Gopro Confidence. Political environment and other factors not only impact the cost of doing business but also long term sustainability. Some of the political factors are – governance system, democracy & institutions, military coup chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact GoPro: The Disruptive Innovator Faces Challenges

- International Trade & Other Treaties – The country has a good record of adhering to international treaties it has done with various global partners. The government of each party has adhered to the treaties done by previous governments, so there is a consistency in both rule of law and regulations.

- Role Local Governments Play – Local governments are highly influential in the policy making process and implementation as most of the policies and regulations are implemented by the local government as enforcement agencies mostly report to local government in their own states regarding various laws.

- Political Governance System – Based on the information provided in the GoPro: The Disruptive Innovator Faces Challenges case study, it seems that the country have a stable political system. Gopro Confidence can make strategies based on the stable political environment.

- Judiciary Independence – In the matter of commercial and business decisions, judiciary of the country is independent to a large extent. Business do face problem when the conflict is between public interest and proprietary technology similar to ruling in South Africa where government & judiciary allowed generic AIDS drug irrespective of patents of global companies.

- Regulatory Practices - The regulatory practices are streamlined with global norms which have helped the country to improve its “ease of doing business” ranking.

- Unrest within the Country & Chances of Civil Unrest – We don’t think that Gopro Confidence business operations are facing any dangers from any kind of civil unrest or internal militant operations in the country.

- Role of Non-Government Organization, Civil Society & Protest Groups – The country has a vibrant civil society community and Gopro Confidence should build bridges with them and seek out areas of co-operations. Civil society groups are influential not only in policy making but also in building a society wide narrative.

- Segregation of Political Responsibilities between Different Government Agencies – There are numerous government agencies which reduces the risk of overwhelming pressure by one agency. But on the flip side it does increases both time and cost of doing business and getting certifications and clearances.

What are Economic Factors in PESTEL / PEST Analysis

Economic factors of a country and region have a direct impact on the potential attractiveness of a given market. Some of the economic factors that Gopro Confidence should evaluate both in the present market and one in which it wants to enter are – inflation rate, GDP growth rate, disposable income level etc.

Economic Factors that Impact GoPro: The Disruptive Innovator Faces Challenges

- Consumer Disposable Income – The household income of the country has increased constantly in the last decade and half, compare to the USA market where household income is still below 2007 levels and not increased in real terms since early 1980’s. Gopro Confidence can leverage this trend to expand the market beyond its traditional customers by employing a differentiated marketing campaign.

- Inequality Index / Ranking on Gini Index – Gini Index and level of inequality are a great barometer for harmony and development of a society. If there is huge income inequality in the society then the likelihood of conflict and crime increases. It can lead to uncertainty and suppression of consumption in both short term and long term.

- Foreign Exchange Rate – Number of companies have incurred losses in past few years because of forex risk in – Venezuela, Brazil, and Argentina. Gopro Confidence should be careful about the history of forex risk before entering new market. Many US companies have incurred losses in Mexico in regular forex crisis in that country.

- Demand Shifts from Goods Economy to Service Economy – The share of services in the economy is constantly increasing compare to the share of manufacturing, goods, and agriculture sector.

- Employment Rate – If the employment rate is high then it will impact Gopro Confidence strategies in two ways – it will provide enough customers for Gopro Confidence products, and secondly it will make it expensive for Gopro Confidence to hire talented & skillful employees.

- Inflation Rate – The inflation rate can impact the demand of Gopro Confidence products. Higher inflation may require Gopro Confidence to continuously increase prices in line of inflation which could lead to lower levels brand loyalty and constant endeavors to manage costs. Cost Based Pricing could be a bad strategy under such conditions.

- Financial Market Structure and Availability of Capital at Reasonable Rates – The quantitative easing policy of Federal Reserve has led to liquidity flooding all across the global financial markets. Gopro Confidence can borrow cheaply under such circumstances. But this strategy entails risks when interest rate will go up.

What are Social Factors in PESTEL / PEST Analysis

Social factors such as demography trends, power structure in the society, women participation in workforce etc have immense impact over not only the country's economy but also on workforce talent availability and level of consumer demand.

Social Factors that Impact- GoPro: The Disruptive Innovator Faces Challenges

- Attitude towards Leisure – Gopro Confidence should conduct an ethnographic research to understand both attitude towards leisure activities and choice of leisure activities. Experience economy is one of the fastest growing segments both among millennials and among baby-boomers.

- Attitude towards Savings – The culture of saving in US and China is totally different where savings rate in China is around 30% , it is well below 15% in United States. This culture of consumption and savings impact both type of consumption and magnitude of consumption.

- Immigration Policies and Level of Immigration – What are the immigration policies of the country, what is the level of immigration, and in which sectors immigration is encouraged. This will enable the Gopro Confidence to determine – if required can it hire talent globally to work in that particular market.

- Birth Rate – Birth rate is also a good indicator of future demand. USA has avoided the European Union style stagnant economy on the back of slightly higher birth rate and higher level of immigration.

- Power Structure in Society – Gopro Confidence should carefully analyze both - What is the power structure in the society? How it impacts the demand in the economy. For example the power structure in US economy is slowly moving towards the older generation as that generation has higher disposable income compare to the younger generation.

- Nature of Social Contract between Government & Society – Before entering into a market Gopro Confidence needs to understand the nature of social contract between government and society. For example it has been extremely difficult for US companies to enter UK health market as UK health system is a nationalized system and everything goes through contracts at national level.

- Attitude towards Authority – Various cultures in different part of the world have different attitude towards authority. In Asia authority is respected while in west it is something to rebel against. Gopro Confidence should carefully analyze the attitude towards authority before launching a marketing campaign for its products and services.

- Gender Composition in Labor Market Gopro Confidence can use gender composition of labor market to understand the level of liberal nature of the society, women rights, and women’s say in matter of societal issues and consumption decisions. The gender composition of labor market is a good indicator of disposal income of household, priorities of the households, and related needs.

What are Technological Factors in PESTEL / PEST Analysis

Technology is fast disrupting business models across various industries. Some of the technology trends that are impacting the macro environment are – developments in artificial intelligence, use of machine learning and big data analytics to predict consumer behavior, growing importance of platforms over service providers etc.

Technological Factors that Impact GoPro: The Disruptive Innovator Faces Challenges

- Cost of Production and Trends – Gopro Confidence should assess - What are the cost of production trends in the economy and level of automatization. We at EMBA Pro believe that in near future the sector most disrupted by technological innovation is manufacturing and production.

- Mobile Phone & Internet Penetration – Gopro Confidence should assess the level of internet and mobile phone penetration in the country as it will it in building a requisite business model based on local needs and realities.

- Transparency & Digital Drive – Gopro Confidence can use digitalization of various processes to overcome corruption in the local economy.

- Integration of Technology into Society & Business Processes – Uber failed in China because it tried to enter before smartphone were widespread in China. Gopro Confidence should build a strategy that can integrate societal values, infrastructure, and Gopro Confidence business model.

- Level of Acceptance of Technology in the Society – Gopro Confidence has to figure out the level of technology acceptance in the society before launching new products. Often companies enter the arena without requisite infrastructure to support the technology oriented model.

- Research and Development Investment Levels – If there is high level of investment in technology development sector then there are high chances of building a self sustaining ecosystem that drives innovation. Gopro Confidence can leverage such a situation to hire the best people in business.

- Property Rights & Protection of Technology Oriented Assets – Gopro Confidence should analyze the legal status of various property rights and intellectual property rights protections that are common in US.

- Likelihood of Technology Disruption – If the country is hub of technology companies then there is a high chance of technology disruption among various industries. Gopro Confidence has to assess whether it can live with the fast pace of technology disruption in its industry.

What are Environmental Factors in PESTEL / PEST Analysis

Environmental factors are fast gaining traction not only among consumers but also among regulators and policy makers. Climate change and changing ecosystem is leading to the extinction of more than 20% of species on the planet by the turn of this century.

Environmental Factors that Impact GoPro: The Disruptive Innovator Faces Challenges

- Corporate Social Responsibilities Culture – Are Gopro Confidence present CSR efforts applicable in the new market or does it needs to have new initiative to cater to the prospective market.

- Influence and Effectiveness of Environmental Agencies – The role of environment standards enforcement agencies is critical in safeguarding norms. But often in emerging countries these agencies delay the process as a tactic to extract bribes. Gopro Confidence should be aware of presence of such practices in a country.

- Environmental Regulation Impacting Absolute Cost Advantage Dynamics in the Industry.

- Recycle Policies – What are the recycle policies in prospective market and how Gopro Confidence can adhere to those policies.

- Per Capita and National Carbon Emission – What is the per capita carbon emission of the country and what is the overall level of carbon emissions of the country. This will help in better predicting the environment policy of the country.

- Level of Consumer Activism Regarding Environmental Concerns – Gopro Confidence needs to know the level of consumer activism regarding environmental concerns is. It will help Gopro Confidence in both developing environmentally friendly products and thwarting PR stumble blocks.

- Focus & Spending on Renewable Technologies – How much of the budget is spend on renewable energy sources and how Gopro Confidence can make this investment as part of its competitive strategy.

What are Legal Factors in PESTEL / PEST Analysis

Legal factors often govern – conditions to enter the market, laws to operate in the market, and procedure to resolve any dispute with other stakeholders. If the legal system is not strong then Gopro Confidence can face numerous challenges – from consumer petitions to shakedowns from authorities.

Legal Factors that Impact GoPro: The Disruptive Innovator Faces Challenges

- Intellectual Property Rights Protection – Gopro Confidence should assess the level of protection that intellectual property rights get under the legal system of the country.

- Securities Law – What are the securities law in the country and what are the conditions to list the company on national or regional stock exchange.

- Health & Safety Laws – What are the health and safety laws in the country and what Gopro Confidence needs to do to comply with them. Different countries have different attitude towards health and safety so it is better for Gopro Confidence to conduct a thorough research before entering the market.

- Business Laws – Before entering into new market – Gopro Confidence has to assess what are the business laws and how they are different from home market.

- Consumer Protection Laws – Gopro Confidence needs to know what are the consumer laws, what is the rate of enforcement, what is the attitude of authorities towards consumer protection laws, and what is the role activist groups in enforcement of consumer protection laws.

- Adherence to Common Law – Is the country following common law which is uniform for all parties – whether domestic or international. If there is arbitrariness in the judicial process then Gopro Confidence can’t be sure of the judgments.

- Employment Laws – What are the employment laws in the country and are they consistent with the business model of Gopro Confidence. For example Uber employment system is not consistent with French laws and it is facing challenges in the country.

5C Marketing Analysis of GoPro: The Disruptive Innovator Faces Challenges

4p marketing analysis of gopro: the disruptive innovator faces challenges, porter five forces analysis and solution of gopro: the disruptive innovator faces challenges, porter value chain analysis and solution of gopro: the disruptive innovator faces challenges, case memo & recommendation memo of gopro: the disruptive innovator faces challenges, blue ocean analysis and solution of gopro: the disruptive innovator faces challenges, marketing strategy and analysis gopro: the disruptive innovator faces challenges, vrio /vrin analysis & solution of gopro: the disruptive innovator faces challenges, pestel / step / pest analysis of gopro: the disruptive innovator faces challenges, case study solution of gopro: the disruptive innovator faces challenges, swot analysis and solution of gopro: the disruptive innovator faces challenges, references & further readings.

Rishi Dwesar, Geeta Singh (2018) , "GoPro: The Disruptive Innovator Faces Challenges Harvard Business Review Case Study. Published by HBR Publications.

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Open Access

Peer-reviewed

Research Article

Digital economy, innovation factor allocation and industrial structure transformation—A case study of the Yangtze River Delta city cluster in China

Roles Supervision, Writing – review & editing

Affiliation School of Finance and Economics, Jiangsu University, Zhenjiang, 212013, China

Roles Formal analysis, Methodology, Software, Validation, Visualization, Writing – original draft

* E-mail: [email protected]

Roles Writing – review & editing

Affiliation Pakistan Air Force Karachi Institute of Economics and Technology, College of Management Sciences, Karachi, Pakistan

• Xinfeng Chang, 
• Zihe Yang, 

• Published: April 10, 2024
• https://doi.org/10.1371/journal.pone.0300788
• Peer Review
• Reader Comments

The attainment of regional high-quality development necessitates the critical role of the digital economy in facilitating the transformation of industrial structures. This study intends to investigate the effect of the digital economy on industrial structure transformation from the perspective of innovation factor allocation using a panel dataset of 41 cities in the Yangtze River Delta region for the period from 2011 to 2020. This paper considers four dimensions to measure the level of industrial structure transformation i.e. industrial structure servitization, industrial structure upgradation, service industry structure upgradation and industrial interaction level. The results of the study suggest that the digital economy can significantly improve industrial structure transformation. The results remain consistent even after several robustness checks. Further, the analysis of the mechanism of action shows that the digital economy can promote industrial structure transformation by optimizing the innovation factor allocation. The study provides several policy implications for the digital economy and its role in the promotion of industrial structure transformation.

Citation: Chang X, Yang Z, Abdullah (2024) Digital economy, innovation factor allocation and industrial structure transformation—A case study of the Yangtze River Delta city cluster in China. PLoS ONE 19(4): e0300788. https://doi.org/10.1371/journal.pone.0300788

Editor: Jianhua Zhu, Harbin Institute of Technology, CHINA

Received: August 25, 2023; Accepted: March 5, 2024; Published: April 10, 2024

Copyright: © 2024 Chang et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the manuscript and its Supporting Information files.

Funding: This research was supported by the College Student Scientific Research Project of Jiangsu University (Project No. 22C089).

Competing interests: The authors have declared that no competing interests exist.

1. Introduction

At present, China ’s economy is at an important node in the transition from high-speed growth to high-quality development. In the new stage, China is facing multiple challenges from home and abroad, such as the impact of the COVID19 and anti-globalization. The contradiction between the traditional low-end locked industrial structure and the new stage is becoming increasingly prominent. Therefore, it is the only way for China ’s high-quality economic development to continuously promote the evolution of the economy from factor-driven to innovation-driven and promote the balanced optimization of industrial structure. At the same time, the economies around the globe are transforming from traditional to digital economies that use artificial intelligence, blockchain, cloud computing and big data as a new economic model. The change has penetrated into all aspects of the economy from production to sales [ 1 ]. Digital economy can promote the flow of resource elements, reduce resource mismatches, enable the upgrading of traditional production factors. According to the data, the scale of China ’s digital economy will reach 50.2 trillion yuan in 2022, and the proportion of digital economy in GDP will reach 41.5%. Digital economy is gradually becoming a key force driving a new round of scientific and technological revolution and industrial transformation. Further, it is worth noting that the Yangtze River Delta city cluster is the only world-class city cluster in China. It is a metropolitan area covering 41 cities, with a GDP of $427 million, an area of 350,000 square kilometers and a population of 235 million. The dataset from the Yangtze River Delta cities seems adequate for this study as it has a high degree of openness and strong innovation ability.

Industrial structure transformation remains an interesting domain for the researchers and academicians. The extant literature on industrial structure transformation can be categorized into three main domains i.e. connotation, measurement and the driving factors. Previous studies have used the theory of economic growth stages proposed by Austrian economist Walte that has laid its theoretical foundation. Scholars suggest that industrial structure transformation is an important tool to promote economic transformation [ 2 ]. Several studies argue that the transformation of industrial structure is the evolution process that moves from low to high added value [ 3 , 4 ]. Further, the measurement of industrial structure transformation domain can be divided into two categories i.e. single index measurement and multi-index measurement. The single index measurement includes industrial structure advance coefficient, Moore value, industrial structure level coefficient, output value ratio, the proportion of output value of each industry and the sum of product of productivity [ 5 , 6 ]. Moreover, the multi-index measurement measures the transformation of industrial structure from two aspects i.e. rationalization and advancement [ 7 ]. Portes and Evans [ 4 ] used the degree of industrial structure optimisation and the speed of industrial structure transition to measure. Ganadded the perspective of industrial integration development in the measurement [ 8 ]. Moreover, past studies suggested different factors that contribute to the industrial structure transformation such as industrial policies [ 6 ], capital investment [ 9 ], technological innovation [ 10 ], and financial development [ 11 ].

The digital economy and its effect on the industrial structure transformation has gained the attention of many researchers recently. Past studies have explored the internal mechanism of a digital economy and its effect on industrial structure transformation from several paths. First, several scholars argue that the digital economy can significantly promote the transformation of industrial structure. For example, digital economy has a positive spatial spillover effect on upgradation of the industrial structure[ 12 , 13 ]. Second, scholars struggled to find how digital economy promote industrial structure transformation and suggest that urbanization [ 14 ], technology innovation[ 15 ], labor efficiency (Wu, 2022) and factor allocation [ 16 ] help in industrial structure transformation.

In summary, the existing literature has conducted in-depth research on digital economy and industrial structure transformation from different perspectives, but there are still the following limitations: (1) the existing literature focus on how digital economy affect the industrial structure transformation. However, few studies have discussed how internal mechanism of digital economy helps in transforming the industrial structure from the perspective of innovation factor allocation. (2) Majority of the past studies have considered macro factors for the measurement of industrial structure transformation i.e. the ratio of the added value of the tertiary industry to the added value of the secondary industry, while ignoring the impact of labor within the industry, industrial integration and lacks systematic research on upgradation of the industrial structure. (3) It is worth noting that in China ’s development plan, the city and county levels are more instructive in the specific implementation of the policy [ 17 ]. Previous studies have provided evidence from the perspective of province, few studies have been conducted from the level of prefecture-level cities to grasp the intra-regional connections.

By analyzing the shortcomings of the existing literature, this paper focuses on the effect and mechanism of digital economy on industrial transformation from the perspective of innovation factor allocation. The contributions of this paper are: (1) We incorporate digital economy, innovation factor allocation and industrial structure transformation in a single framework. We have considered digital economy as the basis of industrial transformation and analyzed the intermediary role of innovation factor allocation in the promotion of industrial structure transformation by digital economy. (2) we extended the literature by using a comprehensive measurement of industrial structure transformation that considered its four dimensions which are industrial structure servitization, industrial upgradation, service industry structure upgradation and industrial interaction level. (3) This paper extends the existing literature by providing evidence from the perspective of the Yangtze River Delta city where the digital economy is developing rapidly. The rest of the article is structured as follows: section 2 highlights the theoretical analysis and research hypothesis, while sections 3 and 4 deal with methods and data, and results and discussion, respectively. Lastly, section 5 presents the conclusion and recommendations.

2. Theoretical analysis and research hypothesis

Some studies have found that although the evolution of the economic structure measured by increasing the proportion of the service industry shows that China ’s economy is moving towards a higher level, the structural problems within the industry have caused the benign interaction of the industry to be hindered [ 18 ]. This kind of economic servitization will make the economy face the risk of moving from the real to the virtual, and there will be excessive servitization. Based on the background of high-quality development, this paper defines the transformation of industrial structure: The change in the proportional relationship between macro industries based on the optimization of factor composition and ratio within microenterprises and the upgrading of technology and products within meso-industries is the endogenous basis of industrial structure transformation. This paper will explain the impact of the digital economy on the transformation of industrial structure from the four dimensions of industrial structure servitization, industrial structure upgradation, service industry structure upgradation, and industrial interaction level, and then put forward the corresponding research hypothesis.

2.1. The direct effect of the digital economy on the transformation of industrial structure

The impact of the digital economy on the transformation of industrial structure is visible as it promotes the servitization of industrial structure, the upgradation of industrial structure, the upgradation of service industry structure, and the level of industrial interaction. The digital economy reduces transaction cost and transform the servitization of industrial structures. The digital economy penetrates through digital technology and reduces the information barriers between enterprises and industries. Further, it promotes industrial efficiency and create synergy while using modern science and technology [ 19 ]. It innovates the production process of traditional industries through innovative management options and realizes the servitization of industrial structure [ 20 ]. Further, digital economy is profoundly changing all interrelated value-added links within the product lifecycle of the manufacturing industry and promotes transformation and upgradation of the manufacturing enterprises [ 21 ]. It helps in immediate gathering and disseminating important information that may help in efficient decision-making through different digital technologies such as big data and the internet of things and have overcome several issues of the labors in the manufacturing industry [ 22 ]. Digital economy also promote the transformation and upgradation of traditional industrial enterprises [ 23 ]. Moreover, the digital economy supports the rapid development of new forms of knowledge-intensive services, which helps to upgrade the structure of the service industry. The development of the digital economy has brought convenience to data integration, resource flow, and value sharing. The wide application of digital technology in the service industry has greatly promoted the rapid development of new forms of knowledge-intensive services such as integrated offices, online medical care, online education, and cross-border services. The continuous advancement in the digital technology is perhaps fulfilling the modern requirements which are important in upgradation of service industry structure and for the improvement in the labor productivity [ 24 ]. Finally, the digital economy promotes organizational change and helps in gathering important information in lesser time. The digital economy can promote interaction among different industries using the available information on the internet and through digital inclusive finance. The digital technology continues to change the production and organizational methods in various industries. Further, this will reduce the traditional barriers and help industries to integrate leading to sustainable development [ 25 ]. Based on the above discussion, we develop the following hypothesis.

Hypothesis 1: The digital economy has a direct role in promoting the transformation of industrial structures.

2.2. The mediating effect of innovation factor allocation in digital economy promoting industrial structure transformation

Innovation is the key to the transformation of industrial structures. From the perspective of human factor, the digital economy can indirectly promote the transformation of the industrial structure by improving the innovation in elements such as humans, knowledge, technology, and systems. The construction of human organizations may become the source of innovation research [ 26 ]. At the same time, the labor force engaged in R&D activities has high education and strong skills [ 27 ], which can provide intellectual support for the transformation of industrial structure. The implementation of the internet and modern communication technology, the integration of data elements and labor force can promote the allocation efficiency of human innovation elements. Thus, innovation in the human factor may help them to perform creative activities which results in transformation of industrial structure.

From the perspective of innovation in the knowledge elements, the digital economy can use modern digital technologies to swiftly screen out information that is conducive to innovation, improve the capacity of information storage and use it innovative ways to maximize value and drive industries to higher level maximize value [ 28 , 29 ]. From the perspective of technological innovation elements, the development of the digital economy has accelerated the speed of information transmission. The digital economy may be helpful in build an information-sharing platform, integrate internal and external resources of enterprises which will create opportunities for collaboration and result into transparent environment. This efficiency in the technological innovation may improve the environment of enterprise and upgrade the industrial structure. From the perspective of system innovation elements, with the development and expansion of the digital economy, the country has gradually attached importance to institutional innovation in digital platforms, data security, and artificial intelligence. The improvement in the institutional innovation can motivate the innovative behavior among employees that will smoothly transform the industrial culture and bring technological innovation in the industry [ 30 ]. Based on the above discussion, we develop the following hypothesis:

Hypothesis 2 : The digital economy can indirectly promote the transformation of the industrial structure by improving the level of innovation factor allocation.

3. Models, variables and data

3.1. model setting, 3.1.1. benchmark model construction..

3.1.2. Mediating effect model.

3.2. Variable measure and description

3.2.1. explanatory variables: industrial structure transformation..

The transformation of industrial structure refers to the improvement of production efficiency and the transfer of production factors from low-efficiency industries to high-efficiency industries. It is usually measured by the upgradation and the rationalization of industrial structure. On one hand, the digital economy shifts the factors of production from low-efficiency industries to high-efficiency industries, which promotes the improvement of production efficiency. On the other hand, it makes the development trend of mutual integration and blurred boundaries between industries more effectively. At the same time, the industrial policy that intend to enhance service industry proportion may misallocate resources between industries which results in excessive servitization. It is impossible to accurately analyze the transformation of the industrial structure by using one proxy i.e. upgradation and rationalization of the industrial structure. Therefore, this paper measures it from the four dimensions to accurately measure it i.e. industrial structure servitization, industrial structure upgradation, service industry structure upgradation, and industrial interaction level, as shown in Table 1 .

• PPT PowerPoint slide
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https://doi.org/10.1371/journal.pone.0300788.t001

• Industrial structure servitization (Insev) In this paper, the servitization of industrial structure is used to describe the transformation of industrial structure at the macro level. It represents the changes in the proportion of the three industries at the macro level. It is measured by the ratio of the added value of the tertiary industry to the secondary industry, and combined with the other three indicators to comprehensively evaluate the transformation of industrial structure.
• Industrial structure upgradation (Manh): The increase in the manufacturing value chain or the transformation and upgradation from traditional to advanced manufacturing industry will be reflected through the increase in the value chain. Therefore, this study uses the total regional industrial profits and taxes to measure the advanced industrial structure. To a certain extent, this index reflects the value added in the manufacturing industry. It is believed that the total profit and tax of the high-tech industry is usually higher as compared to others. If the total amount of industrial profits and taxes in a region is higher, it shows that the industrial level in the region is also higher.
• Service industry structure upgradation (Sevh): The upgradation of service industry structure shows the rapid development of emerging industries and producer services compared to traditional industries. Producer services can not only effectively overcome the Baumol ’s disease because of its high productivity, but also support the development of advanced manufacturing industry. This paper uses the ratio of employment in producer services to employment in the tertiary industry to measure the structure of the service industry [ 32 ]. According to the classification criteria of the National Bureau of Statistics (2005), producer services mainly cover transportation, warehousing and postal services, financial services, leasing and business services, scientific research, technical services and geological exploration, information transmission, computer services and software industries.
• Industrial interaction level (Indi): In the modern era, industrial interaction and integration is an effective development model that improves productivity and competitiveness. Industrial interactive integration refers to the process of removing the barriers in the industry for industrial growth. This cross-industry interaction enhances technology innovation which enhances industrial agglomeration and industrial interactive integration. In the era of service economy and digital economy, service products will be put into the economic production activities of various industrial sectors as intermediate products on a large scale. Therefore, the level of industrial interaction is one of the important characteristics of industrial structure transformation. In this study, Herfindahl index (HHI) is used to represent, Q i represents the output value of the i industry, Q represents the regional GDP which is presented in the following model:

3.2.2. Core explanatory variables: Digital economy development level.

This study measures the digital economy at the prefecture-level city level. The data has been collected based on its availability [ 33 ]. Kapur and Kesavan [ 34 ]stated that, when the data source produces a low-entropy value, the event carries more “information”. The entropy method is an objective and comprehensive weighting method, which is based on the dispersion degree of the evaluation index data to measure the index weight, so we use the entropy method to calculate the digital economy considering the level of development of internet and digital inclusive finance. Further, the level of Internet development is divided into four three-level indicators: first, the output level of internet-related industries measured by the total amount of telecommunications business; second, the internet-related industry practitioners with the number of computer services and software industry practitioners to characterize; third, the internet penetration rate expressed by the number of Internet broadband access users in 100 people; the fourth is the mobile phone penetration rate expressed as the number of mobile phone users per 100 people. The development level of digital inclusive finance is characterized by the digital inclusive finance index compiled by the Digital Finance Research Center of Peking University and Ant Financial Services Group. The principal component analysis method is used to standardize the relevant data and reduce the dimension, so as to obtain the development level of the digital economy at the city level.

3.2.3. Mediating variable: The level of innovation factor allocation.

We constructed a comprehensive index for the allocation of innovation elements comprising four dimensions i.e. human, knowledge, technological and institutional innovation. We measured human innovation by the full-time personnel for R&D while the number of colleges and universities were used to measure the human organizations. Further, for the knowledge innovation several aspects are considered such as knowledge retention, technological innovation, quality of technological innovation. The internal R&D expenditure was used to measure the knowledge retention and the quantity of invention patents were used to measure the quality of technological innovation. Similarly, the sum of the quantity of utility model patents and design patents is used to measure the quantity of technological innovation. Moreover, we measured the institutional innovation factor by the total collection of books in the public libraries and government’s expenditures on science and education. As per the objective weighting method, the entropy TOPSIS is used to calculate the level of innovation factor allocation (Inf). The system of measurement indicators is shown in Table 2 .

https://doi.org/10.1371/journal.pone.0300788.t002

3.2.4. Control variables.

To study the effect and mechanism of the digital economy on the transformation of industrial structure more comprehensively, this paper refers to the existing literature [ 11 , 35 – 39 ] and used several control variables such as economic development degree, infrastructure level, financial development level, government intervention and population density. Economic development degree (Pgdp) refers to the degree of economic development which is an important driving force to promote the upgradation of China’s industrial structure. Infrastructure level (Bins) is important for the economic development and is the basis for the transformation of industrial structure. Financial development level (Fin) which is also required for the industrial development and this problem can be solved by the funds available in the capital markets. We used the proportion of loan balance of financial institutions to the GDP for measuring the level of financial development. Government intervention (Gov) also impact the industrial structure and government plays an important role of the regulator. Lastly, Population density (Lnpop) is used as a control variable which is an important factor that affects the transformation of industrial structure. It is measured by the ratio of regional resident population to urban land area.

3.3. Data sources and descriptive statistics

This paper used a balanced panel dataset comprising 41 cities in the Yangtze River Delta for the period 2011 to 2020. The data has been extracted from "Jiangsu Statistical Yearbook ", "Zhejiang Statistical Yearbook", "Anhui Statistical Yearbook ", "China City Statistical Yearbook ", each city Statistical Yearbook, and the EPS database. Some missing data was supplemented by the linear interpolation method. Table 3 presents the descriptive statistics of all the variables used in this study.

https://doi.org/10.1371/journal.pone.0300788.t003

Table 3 suggests that the standard deviation of industrial structure servitization, service industry structure upgradation, and industrial interaction level is small which implies that the data fluctuation is not large. Further, the minimum and maximum values of industrial structure upgradation are significantly different, indicating that the development gap of industrial structure among cities in the Yangtze River Delta region is large. Moreover, the descriptive statistics suggests that the mean value of digital economy is small but the standard deviation is large. This finding is consistent with [ 12 ]. Similarly, the allocation level of innovation elements also has a similar mean and standard deviation. The descriptive statistics of control variables suggest significant differences in economic development, infrastructure level, financial development level, government size, and population density among different cities.

4. Empirical results and analysis

4.1. benchmark regression analysis.

We perform several diagnostic checks to ensure that the dataset meets the basic assumptions of regression. First, we perform a 1% tail reduction on the panel data in order to remove outliers. Second, we use Hausman test to check whether fixed or random effect model is appropriate, and the results support the use of the fixed effect model. In the actual regression, the time trend of industrial structure servitization and service industry structure upgradation is not obvious, so the one-way fixed effect model without time effect is chosen for the final regression of the two dimensions.

Table 4 reports the benchmark regression results of industrial structure transformation driven by the digital economy. The results of columns 1, 3, 5 and 7 show that the development of the digital economy has significantly promoted the servitization of industrial structure, the upgradation of industrial structure, the upgradation of service industry structure and the level of industrial interaction without considering the control variables. Further columns 2, 4, 6, and 8 report results after inclusion of control variables. The results are consistent which suggest that considering the differences in the degree of economic development and infrastructure construction in different cities, the development of a digital economy can significantly promote the transformation of industrial structure. It is also found that the promotion effect of the digital economy on industrial structure servitization and industrial structure upgradation is much greater than that on service industrial structure upgradation and industrial interaction level. Overall, the results suggest that the digital economy may enable transformation of industrial structure, which not only promote the servitization of industrial structure at the macro level but also effectively promote the integration of service industry and agriculture which optimize the industrial internal structure, promote the development of high-tech industry, and produce productive service industries. The digital economy may serve as a strong driving force which promote the evolution of industrial structure and industrial internal structure to the middle and high end. Therefore, the development of the digital economy in the Yangtze River Delta region enables the servitization of advanced industrial structure instead of "real-to-virtual " transformation of the economy. Hence, we find support for H1.

https://doi.org/10.1371/journal.pone.0300788.t004

Further, the results suggest that the degree of economic development is conducive to improving the level of industrial structure upgradation and industrial interaction level, which is consistent with scholars [ 3 , 40 ]. However, the impact of the industrial structure upgradation and the upgradation of the service industry structure is significantly negative, which suggest that China suffers from insufficient supply of high-quality products and the dependence on foreign products. The positive coefficient of infrastructure construction for the servitization of industrial structure indicates that infrastructure construction can improve the cost of factor flow which promotes the digital economy, and transform the industrial structure to servitization. The level of financial development also promotes the upgradation of the service industry structure and new products are developed using internet and finance that has significantly improved the industry. However, the demand of finance from industrial upgradation does not match the supply from financial institutions which may be a hindrance towards industrial structure upgradation. The population density promotes the service of industrial structure and the advancement of industrial structure, which indicates that the development of a digital economy can attract a large number of high-tech talents which helps in transforming traditional industry to tertiary industry. However, the increase in population will shift the focus of labor to low-end service industries which may become the hindrance in the development of the service industry.

4.2. Mediation effect test

This study analyzes the transmission path of digital economy development to industrial structure transformation. Table 5 reports the regression results of the intermediary effect model. Column 1 and 4 present the results that test the impact of the digital economy on the innovation factors allocation without controlling the time effect and with controlling the time effect, respectively. The significant coefficients indicate that the development of digital economy can significantly improve the innovation factors allocation level. As the economy started transition into digitalization, the transaction cost of innovation factors is reduced which will promote the flow of factors such as talents and knowledge which efficiently allocate innovation factors.

https://doi.org/10.1371/journal.pone.0300788.t005

The columns 2, 3, 5, and 6 present the regression results of the benchmark regression plus the mediating variables. It is found that in columns 2 and 6, the coefficients of the development level of the digital economy and the allocation of innovation factors are significantly positive, and the absolute value of the coefficient of the development level of the digital economy is reduced compared with the benchmark regression, indicating that the digital economy plays a significant mediating role in driving the servitization of industrial structure and the level of industrial interaction. Further, the innovation factors allocation does not have any significant impact on the upgradation of the service industry structure and the industrial structure in column 3 and 5. However, after the Sobel’s test, the hypothesis that there is no mediating effect is significantly rejected which implies that the digital economy indirectly affects the service structure upgradation and the industrial structure upgradation by promoting the innovation factors allocation. The development of digital economy stimulates the demand for innovative factors, and expands the supply scale of innovative factors through the informatization and digitization of enabling factors, which lays a factor foundation for industrial transformation. At the same time, the innovation of participation mode accelerates product innovation, business integration and high-end upgrading. Hence, we find support for H2.

4.3. Endogeneity and robustness test

4.3.1. treatment of endogenous problems..

In the above models, there are two possible endogenous problems: First, there may be a two-way causal relationship between the digital economy and industrial structure transformation as the increase in technological demand for industrial structure transformation may in turn affect the development of the digital economy. Second, there may be several variables which are omitted that can make results bias although the impact of control variables such as economic development level and financial development level is considered. To overcome these possible endogenous problems, we have used an instrumental variable approach to estimate the model. By constructing the interaction term between the number of fixed telephones per 100 people in 1984 and the number of urban internet users in the previous year as the instrumental variable of the digital economy development level. We used the two-stage least squares method for analysis and the results are presented in Table 6 . The first-stage regression results show that there is a significant positive correlation between the instrumental variables and the digital economy. The rationality test results for instrumental variables show that the p-value corresponding to the Kleibergen-Paaprk LM statistic is less than 0.01, which significantly rejects the null hypothesis that "insufficient identification of instrumental variables" at the 1% level. Further, the Kleibergen-Paapr-Wald F test value is 37.398 which is greater than the critical value of 16.38 at the 10% level of the Stock Yogo test passing the weak tool test which indicates that the instrumental variables selected in this paper are reasonable. Moreover, the second stage regression results show that the development level of the digital economy still promotes the servitization of industrial structure, the advancement of industrial structure, the advancement of service industry structure, and the level of industrial interaction. Both are significant at the 1% level, which is consistent with the main regression results.

https://doi.org/10.1371/journal.pone.0300788.t006

4.3.2. Stability test.

As discussed earlier, we have measured the explanatory variables i.e. industrial structure transformation from four dimensions. These four dimensions are complementary, and the regression results between them can explain the promotion effect of the digital economy on industrial structure transformation to a certain extent. In addition, we use the alternate variable measurement, excluding municipalities and provincial capitals to further validate the robustness of the results.

(1) Replacement variable measure method

In order to eliminate the interference of the variable measurement method with the estimation results, this paper uses the entropy method to measure the digital economic development index and re-estimate the model and the results after replacement are presented in Table 7 . The coefficient sign and significance of the digital economy development level are consistent with the main results which implies that the results are robust to several measurements of digital economy.

https://doi.org/10.1371/journal.pone.0300788.t007

(2) Delete provincial capitals and municipalities

The sample data in this paper includes 41 cities of the Yangtze River Delta region.

Since, the level of each city in terms of economy, finance and policy is different from other therefore, the regression results are also different. In this section, we exclude four cities from our sample and re-estimated our models. The results are presented in Table 8 which suggest that the results are consistent with our main results which imply that the digital economy has a significant positive effect on the transformation of industrial structure.

https://doi.org/10.1371/journal.pone.0300788.t008

5. Conclusions and recommendations

This study intends to investigate the effect of the digital economy on industrial structure transformation from the perspective of innovation factor allocation using panel dataset of 41 cities in the Yangtze River Delta region for the period from 2011 to 2020. We have considered digital economy as the basis for industrial structure transformation and measured the industrial structure transformation comprehensively using its four dimensions i.e. industrial structure servitization, industrial structure upgradation, service industry structure upgradation and industrial interaction level. We have employed panel regression technique for ascertaining the relationship between the variables. The results suggest that digital economy has a significant impact on industrial structure transformation. It does not only promote the servitization but plays a crucial role in industrial structure upgradation, service industry structure upgradation and enhance industrial interaction. Further, we find that innovation factor allocation mediates the relationship between digital economy and industrial structure transformation. Digital economy can accelerate the flow and combination optimization of various innovative resources through digital, intelligent and networked organization, improve the efficiency of resource allocation and the coordinated development of industrial structure, and help to build a modern industrial system with coordinated allocation of factors, intra-industry development and inter-industry deep integration. The findings are robust to different measurements and several estimation techniques.

The results have several implications. First, the government should promote digital economy in all regions that will transform into high-quality development which will results in sustainable economic development. All regions should make a strategy to implement digital economy using artificial intelligence and blockchain which will transform the industrial structure. Second, all regions should promote innovation and incentivize firms that innovate at all levels. Government should also allocate special funds that help firms in adopting technologies that brings innovation. All regions may collaborate with each other to enhance the innovation as is it will help in industrial transformation. Third, digital economy policies may be developed according to the regional conditions. All regions should devise own strategies to enhance digital economy in order to enhance its impact on the region. Metropolitan cities may strengthen their relationship with small cities and promote innovation and digital economy which will enhance collaboration and industrial transformation. It is also suggested that the policy obstacles may be removed which restrict cities to collaborate with each other. Multi-stakeholders have an interactive effect on the choice of governance strategies, which is affected by the cost-benefit relationship of various stakeholders [ 41 ]. Local governments should assess the information technology infrastructure and make information technology investment plans accordingly to promote digital economy which will help in overall sustainable economic development and growth.

Based on the panel data from 41 cities in the Yangtze River Delta, this study takes industrial structure transformation as the explanatory variable and digital economy as the main explanatory variable and draws the key conclusion that digital economy can significantly promote industrial structure transformation. However, there are still some limitations. First, Limited to the limitations of the index data, the measurement of industrial structure upgrading in this paper is only measured from the macro inter industry and the meso industry, and the micro factors are not included in the index measurement. In the case of available data, more detailed research can be further carried out based on the level of micro enterprises. Second, limited to the limitations of index data, only representative and data-accessible indicators are selected for research in the construction of digital economy index system. With the rapid development of digital technology, the measurement index system of digital economy should keep up with the pace of development. In the future research, it is necessary to build a more perfect and more realistic digital economic evaluation index system.

Supporting information

https://doi.org/10.1371/journal.pone.0300788.s001

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• 34. Kapur J. N. and Kesavan H. K., ‘Entropy Optimization Principles and Their Applications’, in Entropy and Energy Dissipation in Water Resources , vol. 9, Singh V. P. and Fiorentino M., Eds., in Water Science and Technology Library, vol. 9., Dordrecht: Springer Netherlands, 1992, pp. 3–20. https://doi.org/10.1007/978-94-011-2430-0_1

A popular YouTuber's negative video of Humane's AI Pin raises questions about critical reviews in the age of innovation

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Hello there! If you're struggling to decide the foods worth buying organic, best-selling author Michael Pollan has some suggestions for the ones worth splurging on to avoid harmful chemicals .  

In today's big story, we're looking at a critical tech review that caused a bit of a stir on social media .

What's on deck:

Markets: Goldman Sachs quiets the haters with a monster earnings report .

Tech: Leaked docs show one of Prime Video's biggest issues, forcing customers to abandon shows .

Business: The best bet in business these days? Targeting young men who like to gamble .

But first, the review is in!

If this was forwarded to you, sign up here.

The big story

Up for review.

"The Worst Product I've Ever Reviewed… For Now"

Marques Brownlee, the YouTuber better known as MKBHD, didn't mince words with the title of his review of Humane's AI Pin .

In a 25-minute video , Brownlee details all the issues he encountered using the AI device. (Spoiler alert: There were a lot.)

Brownlee's review aligns with other criticisms of the device . But not all of those came from someone with as much sway. His YouTube channel has more than 18 million subscribers.

One user on X pointed that out , calling the review "almost unethical" for "potentially killing someone else's nascent project" in a post reposted over 2,000 times. 

Most of the internet disagreed, and a Humane exec even thanked Brownlee on X for the "fair and valid critiques." 

But it highlights the power of Brownlee's reviews. Earlier this year, a negative video of Fisker's Ocean SUV by Brownlee also made waves on social media . 

Critical reviews in the age of innovation raise some interesting questions.

To be clear, there was nothing wrong with Brownlee's review. Humane's AI Pin costs $700. Watering down his review to ease the blow would be a disservice to the millions of fans relying on his perspective before making such a significant purchase.

Too often, companies view potential customers as an extension of their research and development. They are happy to sell a product that is still a work in progress on the promise they'll fix it on the fly. ("Updates are coming!")

But in a world of instant gratification, it can be hard to appreciate that innovation takes time. 

Even Apple can run into this conundrum. Take the Apple Vision Pro. Reviewers are impressed with the technology behind the much-anticipated gadget — but are still struggling to figure out what they can do with it . Maybe, over time, that will get sorted out. It's also worth remembering how cool tech can be, as Business Insider's Peter Kafka wrote following a bunch of trips in Waymo's software-powered taxis in San Francisco . Sure, robotaxis have their issues, Peter said, but they also elicit that "golly-gee-can-you-believe-it" sense.

As for Humane, America loves a comeback story. Just look at "Cyberpunk 2077." The highly anticipated video game had a disastrous launch in 2020 , but redeemed itself three years later, ultimately winning a major award .

Still, Humane shouldn't get a pass for releasing a product that didn't seem ready for primetime, according to the reviews. 

And its issue could be bigger than glitchy tech. Humane's broader thesis about reducing screen time might not be as applicable. As BI's Katie Notopolous put it: " I love staring at my iPhone ."

3 things in markets

1. Goldman finally strikes gold. After a rough stretch, the vaunted investment bank crushed earnings expectations , sending its stock soaring. A big tailwind, according to CEO David Solomon, is AI spawning " enormous opportunities " for the bank. 

2. Buy the dip, Wedbush says. Last week's drop among tech stocks shouldn't scare away investors , according to Wedbush. A strong earnings report, buoyed by the ongoing AI craze, should keep them soaring, strategists said. But JPMorgan doesn't see it that way, saying prices are already stretched .   

3. China's economy beat analysts' expectations. The country's GDP grew 5.3% in the first quarter of 2024, according to data published by the National Bureau of Statistics on Tuesday. It's a welcome return to form for the world's second-largest economy, although below-par new home and retail sales remain a cause for concern .

3 things in tech

1. Amazon Prime Video viewers are giving up on its shows. Leaked documents show viewers are fed up with the streamer's error-ridden catalog system , which often has incomplete titles and missing episodes. In 2021, 60% of all content-related complaints were about Prime Video's catalog.

2. Eric Newcomer is bringing his Cerebral Valley AI Summit to New York. The conference, originally held in San Francisco, is famous for producing one of the largest generative AI acquisitions ever. Now, it's coming to New York in June .

3. OpenAI is plotting an expansion to NYC. Two people familiar with the plans told BI that the ChatGPT developer is looking to open a New York office next year. That would be the company's fifth office, alongside its current headquarters in San Francisco, a just-opened site in Tokyo, and spots in London and Dublin.

3 things in business

1. America's young men are spending their money like never before. From sports betting to meme coins, young men are more willing than ever to blow money in the hopes of making a fortune .

2. Investors are getting into women's sports. With women like Caitlin Clark dominating March Madness headlines, investors see a big opportunity. BI compiled a list of 13 investors and fund managers pouring money into the next big thing in sports.

3. Bad news for Live Nation. The Wall Street Journal reports that the Justice Department could hit the concert giant with an antitrust lawsuit as soon as next month. Live Nation, which owns Ticketmaster, has long faced criticism over its high fees.

In other news

Blackstone hires Walmart AI whiz to supercharge its portfolio companies .

Taylor Swift, Rihanna, Blackpink's Lisa: Celebrities spotted at Coachella 2024 . 

NYC's rat czar says stop feeding the pigeons if you want the vermin gone .

A major Tesla executive left after 18 years at the company amid mass layoffs .

Some Tesla factory workers realized they were laid off when security scanned their badges and sent them back on shuttles, sources say .

New York is in, San Francisco is very much out for tech workers relocating .

AI could split workers into 2: The ones whose jobs get better and the ones who lose them completely .

Oh look at that! Now Google is using AI to answer search queries .

A longtime banker gives a rare inside look at how he is thinking about his next career move, from compensation to WFH .

Clarence Thomas didn't show up for work today .

What's happening today

Today's earnings: United Airlines, Bank of America, Morgan Stanley, and others are reporting . 

It's Free Cone Day at participating Ben & Jerry's stores. 

The Insider Today team: Dan DeFrancesco , deputy editor and anchor, in New York. Jordan Parker Erb , editor, in New York. Hallam Bullock , senior editor, in London. George Glover , reporter, in London.

Watch: Nearly 50,000 tech workers have been laid off — but there's a hack to avoid layoffs

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