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Earth Observation Market Prospects Shaped by Large Government Contracts





November 30, 2010


According to NSR’s Global Satellite-Based Earth Observation, 2nd Edition study released today, the EO market growth, size and shape are more than ever affected by government contracts, in particular from military users.  They are the largest consumers of high-resolution satellite imagery, as demonstrated by the recent EnhancedView contracts from the National Geospatial-Intelligence Agency (NGA) that will generate a majority of the EO data market revenues over the next ten years.


“The EO market continues to see growth associated with larger civil government and military segment orders for defense and intelligence, surveillance and security as well as environmental and climate change” stated Claude Rousseau, Senior Analyst for NSR and author of the report.  “Notwithstanding these two main segments, commercial and enterprise users have increased their adoption rate of EO data products and services, albeit at a slower pace.” 


NSR forecasts global Earth Observation (EO) market revenues from data, value-added services and satellite manufacturing will grow to $7.7 billion by the end of 2019 at a CAGR of 3.5% over the next ten years. At the same time, the number of operational satellites will grow from 180 satellites in-orbit in 2009 to almost 240 operational satellites by the end of 2019. NSR also projects 77% of all new satellites in the coming ten years will be owned or operated by a government or military entity, confirming the dominance of public institutions on the supply side. 


Many new commercial EO satellites and constellations are expected to be launched in the next 3 years with sub-meter resolution, and military users will have a big say in this growth.  But as more commercial high resolution satellites continue to be launched, regulations imposed on pixel size due to national security issues will create an opportunity for new players to challenge established ones. Reliance by government and military organizations on commercial satellites has nonetheless rendered the prospect of the EO market sustainable and less prone to the ups and downs of traditional commercially-oriented markets.


With a reduction in data costs in contracts for larger volumes of imagery, the sector is seeing more government and military agencies dedicating staff to use EO, which will slow EO value added services (VAS) growth.  The definite trend towards higher resolution is also having a negative effect on low and medium resolution imagery providers who try to fend-off EO data distributed by governmental organizations at a very low price.