Euroconsult released September 3rd its latest findings on the satellite-based Earth observation sector. According to its new report "Satellite-Based Earth Observation, Market Prospects to 2018" there will be over $1 billion in annual data sales in 2009 — a figure expected to nearly quadruple by 2018 — indicating the commercial Earth observation sector is establishing itself as a legitimate source of revenue growth for the global economy. Approximately 260 Earth observation and meteorology satellites will be launched in the next ten years, generating $27.4 billion in manufacturing revenues compared to only 128 satellites and $20.4 billion in revenues the previous decade.
"The satellite-based Earth observation sector is undergoing a transformation; commercial data sales are projected to grow on average by 16% per year, reaching $3.9 billion by 2018," said Pacôme Revillon, CEO of Euroconsult. "This reflects the development of a true commercial business, an increasing number of government programs, and growth in investment from established government programs. Growth in commercial data sales will create revenue opportunities for manufacturers, commercial operators, service providers, and government agencies alike."
According to the report, governments currently remain the biggest investors in the sector in 2008. Ninety three Earth observation (non-meteorology) satellites will be launched from established government agencies up from 66 in the previous decade. Leading space agencies such as NASA, the European Space Agency (ESA), and the Japanese space agency JAXA (Japan Aerospace Exploration Agency), have identified environment-based Earth observation missions as a priority and have outlined ambitious programs for the coming decade.
Both private and public actors fueling industry expansion
"Despite the dominant role of established government programs," says Adam Keith, Senior Analyst at Euroconsult, "much of the industry growth in the next ten years will come from emerging government Earth observation programs and commercial actors. New government Earth observation programs are expected to launch 65 satellites by 2018, compared to only 15 the previous decade, generating $3.7 billion in manufacturing revenues."
By 2018, 34 countries are expected to have launched Earth observation capacity up from only eight countries in 1997. Many emerging programs use Earth observation to address important local needs such as resource monitoring, mapping and disaster relief and as a relatively low-cost first step into a government space program. While these countries generally lack satellite manufacturing capability, established manufacturers are stepping up to provide technology transfer and training. This provides an opportunity to grow a local manufacturing industry and for established manufacturers to build regional partnerships. As these programs develop, emerging agencies will also likely play a greater role in the global collection and coordination of environment data and seek opportunities to commercialize their data.
Mr. Keith continued, "Commercial satellite operators will launch 38 satellites in the next decade, up from only 15 the previous decade. While this is still small, it is a clear indication they are beginning to position themselves and respond to growing demand for data from both government and private sector users."
Data demand provides an engine for growth and transforms the business
Today, government demand accounts for over 80% of commercial Earth observation data and service revenues. Government demand for data has grown sharply due to security needs; demand for data for resource management, agriculture, and maritime applications, to name a few examples, is growing more gradually as adoption is more progressive. Initiatives such as the European Union’s Global Monitoring for Environment & Security (GMES) will provide further impetus for services usage, as the program is designed to develop operational Earth observation services for use by public entities.
U.S.-based commercial operators DigitalGlobe and GeoEye have carved out leading positions by providing timely delivery of accurate, high-resolution data sets in particular to the US National Geospatial-Intelligence Agency through the NextView purchasing contract(s). Together with European-based SPOT Image, a subsidiary of Astrium Services, these commercial operators currently account for 63% of total commercial data sales. Commercial Earth-observation satellite operators will need to ensure future growth to fund next generation satellites and build constellations. Their ability to reach those goals by tapping into growing data demand will be determined by a number of factors.
Reducing dependence on home-country government customers and developing a more diversified client base is, to varying degrees, a must for most commercial operators. The challenge is to develop both sales to "foreign" governments who lack their own specific high-resolution satellite capacity and to private sector customers. Both require operators to establish extensive regional networks through dedicated subsidiaries and local partners.
Increased competition for data sales is expected from new entrants to the market, including both other private companies and governments seeking a return on their investment by commercializing data. In response, operators will expand and develop their service offerings by providing complete geo-information solutions. This includes offering aerial data-based services and first level value-added products such as image mosaics, GIS-ready images to end-users and thematic maps. In doing so, operators will encroach on the realm of the heavily-fragmented services sector.
Private sector users have in the past been reluctant to adopt Earth observation products and services, with the exception of the oil and gas industry. Educating end-users and providing a compelling cost-benefit analysis to enterprises has also been challenging. But the industry has received a considerable boost from the mass market appeal of "virtual-globes" such as Google Earth. The key now is translating that into sustainable sales of data and services. The emerging "consumer" service market is already seeing fast development with leading operators and service providers partnering with mobile-device and GIS companies to supply consumer-driven location-based-services utilizing Earth observation data.
Report Profile
Satellite-Based Earth Observation, Prospects to 2018 is the only comprehensive market survey providing industry forecasts, assessment of business opportunities and analysis of the entire value chain for this growing market segment of the satellite industry. Now in its second edition, this exclusive report contains 180 pages of expert analysis, including 35 full-page color graphs, and exhaustive benchmarks of governments and commercial players. The report includes forecasts for commercial imagery and satellites to be launched (commercial, civilian government) as well as comprehensive assessment and analysis of commercial operators & distributors (financing mechanisms, capacity); government programs (focus & strategy, the move towards commercialization, emerging initiatives); drivers and risks facing the industry and a complete analysis of the value chain.
For more information go to www.euroconsult-ec.com
