Even GoPro Has Hit a Ceiling. How Is the Rest of the Camera Business Doing Outside Smartphones?

When it comes to taking photos, most people think first of a smartphone, not a camera.

The camera world's last star has been having a hard time lately.

At the end of October, action-camera brand GoPro reported its third-quarter sales figures. Revenue was up 43% from a year earlier, but that still fell short of analysts' expectations. GoPro's shares fell 18% on the news, and its market value has shrunk by nearly half.

Before that, its flagship product, the US$400 Hero 4 released only this July, sold so poorly that GoPro was forced to cut its price by US$100.

It looks as if using sports as the selling point to open a new market for cameras has hit a ceiling too.

Action cameras are far from the first camera business to hit one. Kodak, which invented the first digital camera, went bankrupt in 2013, and sales at Canon and Nikon, the two giants of professional cameras, have been dismal for years.

Go to Flickr, the largest photo-sharing community for serious photographers, and the five most popular cameras right now are, in order: iPhone 6, iPhone 5s, Galaxy S5, iPhone 5 and iPhone 6 Plus. Every one of them is a smartphone.

The five most popular cameras on Flickr are all phones

When it comes to taking photos, most people think first of a smartphone, not a camera.

Still, other companies have not given up. Over the past few years there have been many experiments in the camera business outside phones, and GoPro, which has just hit a wall, is only one of them. Light-field cameras, smart glasses, watches that take pictures... even consumer drones are, at heart, just photography equipment.

So how are the camera companies outside phones doing now?

The compact camera has already said goodbye

Spend a few hundred to a thousand yuan on a compact camera to carry in your pocket? That sounds very 2007.

As early as 2008, the company that sold the most digital imaging devices each year was already a phone maker: Nokia. After 2010 the title of "world's largest camera company" passed to Apple or Samsung, and from then on Canon and Nikon were out of the running.

Compact digital camera shipments, 2009-2014 (millions of units)

In 2014 only 69 million compact cameras were sold worldwide, just 5.3% of global smartphone sales. And the smartphone, carried 24 hours a day and always online, made the compact camera seem even more dated. Phones may not match compact cameras on raw pixel count, but with software correction and image stabilization, it has become routine for a phone to take better pictures than a compact camera.

Image quality is only part of it. The real killer is the huge number of photo-sharing services on phones. The iPhone 4 caught up with the D90 DSLR in the number of photos on Flickr back in 2009-2010, and Snapchat, the disappearing-message app, now sees 700 million photos shared every day.

To save the digital camera, almost every camera company has added a way to connect to Wi-Fi or upload photos through a phone. Some companies, such as Eye-Fi, even built Wi-Fi into the memory card. But when you are out shooting and your camera has yet to connect to Wi-Fi, the photo your friend took on a phone has already been retouched and posted to WeChat Moments, waiting for likes.

Professional cameras are struggling too, including the mirrorless cameras once hailed as the industry's savior

Phones have long been the most common cameras, yet whenever a tactless photographer sets an iPhone beside a DSLR for comparison, the snide comments arrive by the dozen.

Today's phones weigh less than a single DSLR or mirrorless lens, and on pure image quality a phone camera is still an "optical rookie". But as the gap narrows, amateurs who once traveled with long and short lenses slung around their necks really do have less reason to buy a professional camera.

Global digital camera shipments, 2013 to 2015

According to a report by the Camera & Imaging Products Association of Japan, DSLR shipments fell 19.2% year on year in 2014. Conservative camera makers are still stuck in their old ruts: Canon keeps tinkering with sensors, Nikon with lenses, Olympus with algorithms. However much they improve the technology, it cannot offset a rapidly shrinking market.

Mirrorless cameras, once expected to bring growth back to professional cameras, have also seen sales dip slightly. After several years of development the technology has matured, but there has been little innovation.

GoPro, the first to find a different path in cameras, was at least a hit once

While professional cameras grew ever more boring and phone cameras kept getting better, GoPro, a niche action camera, found its own way to stand apart.

It began as a toy that Nicholas Woodman, an engineer who lost his job in the 2000 dot-com bust, built for himself: a waterproof camera for shooting short surfing videos.

GoPro's first camera, the Hero, launched in 2006, was crude: a matchbox-sized camera that could record only 10 seconds of video, had no viewfinder, and still cost US$200. At the time GoPro was popular only with a small circle of extreme-sports fans, and its revenue for 2006 was just US$800,000.

GoPro only really took off after 2010. It opened a YouTube channel and posted extreme-sports videos on a regular schedule. The videos were heavily edited, but the adrenaline they delivered made them spread remarkably well, and revenue rose year after year. By the time GoPro listed on Nasdaq in 2014, its annual shipments had reached 6.9 million units, giving it 94% of the action-camera market. Four years earlier, the figure was 200,000.

Recently, though, things have changed. GoPro's revenue has missed analysts' expectations for two quarters in a row. And not long ago Nick Woodman admitted that sales of the new square camera, the Hero 4 Session, had fallen short of his expectations because it was priced too high.

Pricing the Hero4 Session was a mistake. GoPro dropped its usual brick shape and made the new camera a cube. On performance, specs and price it was no match for the company's own high-end line, yet it cost the same US$400 as the high-end camera. It did not sell, GoPro had to cut the price itself, and doubts about the real size of the market for GoPro cameras followed.

And the future GoPro talks up most these days is not cameras at all. It hopes to become a content platform that makes money from high-quality video shot on its own cameras, though so far there is nothing to show for it.

Action camera sales trend, 2010-2015

But GoPro matters more because it opened up a new market. In 2014 GoPro shipped 6.9 million cameras, up from 200,000 four years earlier. More alarming still for GoPro, other brands' action cameras have started pouring into the market. Besides startups like the GoPro of old, established players such as Sony, Kodak and even Polaroid have launched small action cameras.

From variety shows to famous mountains and rivers, it may all have been shot by drone

GoPro caught on because of its unusual point of view, and so did drones. Drones can survey terrain, spray pesticide and even deliver packages, but data suggest that 41% of drones are used for aerial photography.

A drone's "God's-eye view" offers a distinctive, steady perspective. More important, shooting with a drone costs far less than with a traditional camera crane or helicopter.

QDaily has learned that a drone for a film shoot rents for roughly US$4,500 to US$8,000 a day, while a helicopter crew costs US$15,000 to US$20,000 a day. Add the gain in efficiency, and hiring a drone team can save a film production a substantial sum.

That leaves out costs that cannot be measured in money, such as regulation and pilot training. The US government is preparing legislation to make drone owners register, and some Chinese cities restrict where drones can fly, but drones still face far fewer restrictions than helicopters.

So drones have taken off in photography. The skateboarding and slopestyle events at the 2014 Sochi Winter Olympics were broadcast live by drone, and the hugely popular Game of Thrones has used drones for filming. You will surely remember the drone chased by unruly kids on the variety show Where Are We Going, Dad?

Goldman Sachs analysts say drones are already a US$1.4 billion market that will grow to US$5 billion within two years. DJI makes the most money of anyone, with a 42% share of registered drones in the US. Founded in 2006, DJI grew its business 80-fold in its first three years, and by the end of 2014 its annual revenue had reached US$500 million.

More companies have their eyes on this fat market. Sony recently set up a drone joint venture with a partner, contributing its (only) technical strength: image sensors. Qualcomm also launched its "Snapdragon Flight platform" this year, hoping to become a chip supplier to drone makers.

Other novel attempts have all failed

Beyond drones and action cameras, plenty of odd cameras are working hard to reinvent the unexciting traditional camera.

Lytro light-field camera

Shoot first and focus later sounds very cool, and Lytro really did build such a camera. It uses "light-field technology": when you take a picture, the camera records all the optical information within its focal range, so you can choose the focal point afterward. When Lytro unveiled the technology in 2011, it was lauded by the press and photography enthusiasts alike.

But it was too expensive: the second-generation model sold for US$1,599. More important, focusing after the fact did not create much new demand. This February the company laid off staff and turned to virtual reality.

Lifelogging is another photography concept. It is aimed at people who like to record and quantify themselves: you pin a mini camera to your clothes and it records your life around the clock.

Memto camera

The Memto, which began crowdfunding in 2012, is one such lifelogging product. It is a camera the size of an iPod Shuffle, with 8GB of flash memory and a built-in battery that lasts two days of shooting. Like its rivals, the Memto has no on-off switch: clip it to your clothes and it takes two photos a minute; take it off and it stops.

Like Google Glass, lifelogging cameras have yet to show people any real value, and they face controversy over leaking their owners' privacy and prying into other people's. They remain a niche market to this day.

As for other odd cameras, such as the pipe-shaped HTC Re and the Cube mini camera, there is little to say. If they were going to catch on, you would already see them on every street.

Polaroid Cube action camera

From art to tool: the definition of photography has changed

Consumer cameras outside phones may have shrunk to a niche, but taking pictures has become more common than ever.

For one thing, the camera phone has become almost part of your body. More than 50 million pictures are shared on Instagram every day, and Snapchat adds 700 million a day.

For another, demand for 1.3 billion smartphones a year has kept imaging components improving and getting cheaper. Today the things recording everything around you are not just cameras and phones that someone has to operate. They can be an always-on dashcam, a home camera, a surveillance camera in an office building, or a body camera on a police officer's chest.

Even looking at photos has gone from a job done entirely by people to one in which computers take part. When a Google Nest Cam that sells for under 1,000 yuan can use a distant server to automatically outline the people it "sees," you know the definition of photography has changed.

The barrier to photography keeps falling. It is turning from a refined art into a pleasure everyone shares, and into something households and public life depend on.

The camera has changed with it: from a niche, high-end machine into an everyday device for mass entertainment, such as the phone, and even into a household tool and a piece of public infrastructure on the street.

The result is a flood of images. As you rush to snap a beautiful scene you have stumbled upon, countless cameras are pointed at you too: someone else's phone, perhaps, or a hidden surveillance camera.

Amid all this constant shooting and being shot, will you still care whether the thing in your hand is a digital camera?