Exposure to Action Cameras Could Bode Well for Investors

GuruFocus.com

- By Adam Lawrence

It really is no secret that action cameras are out there, but unlike the cameras on your phone or even the mainstream camcorders you would buy at a big-box retailers like Best Buy, these haven't really been mainstream, yet. Though the industry has been growing, it hasn't been until recently that action cameras have taken more of the main stage. And in the coming years, it is anticipated that the market will continue to grow.


The action camera market size is expected to increase at a CAGR of over 22% from 2016 to 2023. Personal action camera market share equated to roughly 75% of the total revenue in 2015. Growing popularity among several different age groups in addition to advanced product features offered by vendors is likely to provide added growth potential to the action camera market over the next seven years. A big contributing factor to this has been the dominance of GoPro (GPRO) and the limited (until recently) selection that consumers have had.

Price can be a big driver and with GoPro's priced upward of $500 depending on any additional accessories, the average consumer could easily be priced out of this market. But obviously, the bigger technology companies may have been using this time of GoPro's dominance to make it the guinea pig and truly test the market. Now we're starting to see more popular names in the space begin introducing their own brand of action cameras.

In fact, Nikon (TSE:7731) just introduced its own line of action and 360 degree cameras. One is a more GoPro-like 4K action camera called the KeyMission 170, and the other is a life-logging camera called the KeyMission 80. Nikon will call its 360 camera the KeyMission 360, which the company announced at CES. The KeyMission 360 actually came out with "Best Action Camera" designation at the recent Photokina show.

Rumored to be released in "late September," Sony (SNE) is also vying for a seat at the action camera table with its launch of the FDR-X300R. The company's flagship action camera product features much of the functionality that its competition hosts but as an extra value add, the FDR-X300R boasts a "live view" remote and features the same technology that its leading camcorders hold as well. Sony introduced its new action camera, the FDR-X300R, at IFA 2016 in Berlin earlier this month.

The downside? This product will not be cheap for consumers. Entry level users that don't get the waterproof housing or the live view remote could be set to spend somewhere in the ballpark of $400. Also, unlike other traditional action cameras that can be mounted directly onto the front of a helmet, the Sony version looks more like a smaller, traditional camcorder and mounts to the side of a helmet

Even GPS company, Garmin (GRMN) jumped into the market earlier this summer with its introduction of the Virb Ultra 30. This is another higher priced "entry level" camera that boasts a price of $499 on the company's website. Higher grades of stabilization features, as well as a unique voice command function, help set this product apart from others. According to early reports, "You just shout 'okay Garmin,' the lights on the camera will blink, and then you can tell it to do things like start or stop recording, or take a photo. It even works through the camera's waterproof case, though you have to yell a bit louder."

Unfortunately, the limited live streaming features of the camera leave much to be desired when it comes to sharing life's moments in real time. According to Garmin, you'll either have to use an iPhone or iPad for the data connection (or be hooked onto the same Wi-Fi), you can only stream to YouTube at launch, and the stream is capped at 720p.

The facts remain that GoPro has initially set the tone for this arena and its latest move could continue to build awareness around a once niche market. Late last week, the company announced that it will be bringing a drone quad-copter, called Karma, to market in October with a $799 price tag. Though many consumers are familiar with the drone space, GoPro's Karma has been well received by investors. In fact, since making the announcement the company has seen share prices increase by as much as 16% from its Friday, Sept. 16 closing price heading into the weekend the company announced it would be debuting a "new product".

A 20 minutes' flight time, 35mph top speed, and all of the bells and whistles to handle a GoPro action camera "passenger" are included in this new product. On top of that, a user can remove the front part of the drone to have a handheld unit, called the Karma Grip feature, and promises "Hollywood-quality stabilization."

This product doesn't just signify a new product for GoPro, it also shows investors that it is far from a "one trick pony" that many have begun to think over the years. In 2014, the stock traded at nearly $100 per share but tumbled shortly after. This has been the first clear example that GoPro is looking to become more of a tech company than a camera company, at least for now.

But this hasn't deterred other companies from throwing a hat into the action camera space while GoPro figures out that diversification is a real thing. Recently HP Inc. (HPQ) and Life Clips Inc. (LCLP) entered into a licensing agreement for Life Clips to be allowed the use of the HP branding on its line of action and 360 degree cameras. HP has approved for sale and distribution in the United States, Canada, Australia, New Zealand, Israel, 26 countries in Europe, five countries in Africa and 38 countries in Latin America.

The deal doesn't necessarily net HP a huge score, but it could be a foray to at least test the viability and consumer response of what could end up becoming an eventual HP Action/360-degree camera.

Other companies attempting an entry into this market include Panasonic (TSE:6752), with its less than desired bullet camera, dubbed Panasonic HX-A1M. It's on the less expensive end of the spectrum at $199.99, but again, its price reflects its quality as it doesn't have the same image quality and stability control as other more developed products.

The once "king of film," Kodak (KODK) has its version of a 4K camera. Kodak's Pixpro 4KVR360 is targeting more of the 360-degree VR action camera space. It's able to wirelessly upload files to outlets like YouTube and Facebook via its "Smart Device App" and has capabilities to control & view the camera remotely. Though no pricing has been revealed yet, Kodak's new exposure to the action camera space may finally set the company in the digital space.

A study released earlier this month suggests that shipments for wearable cameras will grow from 7.4 million last year to 24 million by 2021. Analysis firm, Tractica, is anticipating that the market will be worth about $3.4 billion by the end of that period.

The facts remain, what GoPro originally forged has now begun to develop into and quickly become a potential industry of scale. The use of third party applications, the implementation of WiFi capabilities, the inclusion of 360 degree options, and the new push toward virtual reality could all be strong reasons to be paying attention to companies that have exposure to the action camera space.

Disclosure: The author owns no stock in any of the companies mentioned within this article & has received no compensation of any kind to write / publish this article, but he is affiliated with MIDAM Ventures LLC, a company which has an existing awareness agreement with Life Clips Inc.

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