GoPro's TV Plans Are 'Smart,' But Will It Raise Revenue?

GoPro Inc GPRO is expanding its TV plans with new apps for various devices, but investors might want to temper their reactions.

"It's smart on their part to create a hook for their hardware where [users] now have a chance to be on the GoPro [channel] instead of YouTube," Asif Khan, CFO of Virtue LLC and CEO of Shacknews.com. "It's a curated thing for themselves to promote. It's not a bad idea. But is it going to generate any revenue? Probably not."

Khan referred to the GoPro Channel app, which has already been downloaded by more than one million individuals on Xbox 360 and Xbox One, as a "distraction from the fact that they make a product that doesn't have a big moat around it."

"Sony could come in and kill them," Khan warned. "A lot of companies could come in and just squash them, 'cause there's a lot of great camera technology out there and GoPro doesn't invent it. They just decided to mount it on your head, chest, bike, whatever."

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Reinforcing The Brand

Marc Berman, editor in chief of TV Media Insights, told Benzinga that the GoPro Channel is a way for the company to reinforce the brand with consumers. He also had doubts about GoPro's ability to profit from this venture, but seemed to think that had more to do with the overall challenges and expenses of online television.

"The financial model right now is very questionable," said Berman.

But Where's The Revenue?

Khan said that GoPro is a brand that resonates with a lot of individuals, but that doesn't change the fact that the stock is "very overvalued."

"[They're rumored to] have their own content network," said Khan. "That can happen. I guess I go back to my original point: how is that going to drive revenue for them?"

Khan compared the GoPro Channel concept to Red Bull, which has its own channel on Apple TV. He said that Red Bull does it for self-promotion, not profit.

"I think that's what GoPro is doing," he added. "It's a tough, tough market. Online content, with the ad-supported model, is not doing so well. When I see a hardware company doing this, it means they're done or remotely done with whatever they could evolve their hardware to be."

Even without the GoPro app, Khan said there are "plenty" of apps that consumers can use to watch GoPro videos. He thinks GoPro is doing this simply to appease shareholders.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.