Why is Low Resolution EO Data Still Attractive?

With Airbus Defence and Space announcing it will add DMCii satellite imagery to its portfolio, and add up to 10 million km² of data per day, one has to wonder where the incentive is to offer more low resolution imagery.  The question is central since this market will face the frontal assault of free data from various government programs in the coming years.  

As NSR indicated in its recently released Satellite-Based Earth Observation, 6^th Edition report, the low-resolution EO data market will no longer be viable in the not-too-distant future as very-high and high-resolution imagery types take hold.  So is the ADS move to broaden its portfolio useless?

Not really, as there are still a large number of customers that require the high-revisit and large swath products that this type of data provides before customers no longer want to pay for low resolution imagery.  Even at 22 m resolution, applications such as vegetation monitoring, agriculture, change detection and forestry (to name a few) are key targets for low resolution data.  

And as with the recently announced teaming agreement between Deimos, Dauria Aerospace, EIAST and BSEIT, who together will offer EO satellite capacity ranging from 75 cm to 20 m from 9 spacecraft, the move makes sense as ADS can offer a one-stop-shop for a variety of users for diverse applications with both SAR and optical satellite data starting with sub-meter resolution data. Furthermore, NSR estimates the agreement gives ADS more than 70% market share in the low resolution data market, thus deep reach in a fairly large and diverse market.

But with the advent of high-resolution imagery, coupled with the blitz to free low resolution data via the Sentinel program, will mean that to avoid being left out in the cold, the operators’ strategy has to be focused on attracting current and new users of low res data with good quality and additional services.  This will allow them to get familiar with their products and then help the migration to medium- and higher resolution datasets that users are still ready to pay for.  

The other side of the business that operators have certainly looked at is that low resolution data imagery is plentiful in the Public Authorities market, a vertical that is expected to grow to more than $1.4 B in 2023 with more than half of revenues coming from information products (IP).  Getting specialized skills for these is the undercurrent of IP and expertise has a price, needs strong knowledge of local conditions to extract valuable information and is on an upward slope.  The growth in this part of the market will be even more pronounced with higher resolution data sets.

Bottom Line

As more free low resolution EO data becomes available, the market will continue to see negative side-effects even for medium resolution data prices.  To slow down the decrease in revenues, low resolution data is still attractive as it helps shift users to higher resolution data, where customers will continue to pay for imagery and higher margin information products.