NSR Report Projects Satellite Earth Observation Market to Reach $4.5 Billion in Next Decade

24 August 2015

NSR’s, Satellite-Based Earth Observation (EO), 7^th Edition  report, released today, forecasts that data, value-added services and Information Products markets from Earth Observation (EO) will reach $4.5 billion by 2024, from $2.3 billion in 2014.  A thriving Information Products segment will drive the EO market as the industry transitions to an era of very-high resolution imagery and increased adoption of ‘big data’ analytics products in the face of decreasing data prices for medium and high resolution imagery. The market saw a sizable increase of $200 million in 2014 due to an economic recovery leading to greater expenditure by governments, and a thriving Information Products segment.

“From traditional operators to the recent cash-rich EO start-ups, there is definite excitement and apprehension as to what the EO market will look like in the coming years,” said Claude Rousseau, Research Director at NSR and co-author of the report. “The industry is at a point in its development cycle where vast, new, untapped markets could open up. But, this assumes that quality of data and its ease of use and integration in Information Products will continually improve to meet requirements of an increasing large and more sophisticated end-user market,” stated Rousseau.

The supply of sub-meter resolution imagery is likely to explode as multiple small satellite constellations are launched. This trend will require distribution models to be more efficient and secure and put pressure on pricing of medium- and high-resolution data but at the same time, opportunities will grow with very-high resolution (below 50 cm) data for both optical and SAR imagery.

"Commercial satellite EO markets are rapidly transforming, with competing technologies and innovative business models, into data-driven and end-application oriented markets. Though the government is expected to continue as the premium customer for commercial EO satellite operators, large untapped markets like agriculture are gaining interest over Oil & Gas and Location-based services, which have slowed in the past year," stated Prateep Basu, Analyst at NSR and report co-author.

However, margins are shaken up at the satellite operator level, which means the long-awaited shortening of the EO value-chain is well on its way, with vertically-integrated players able to touch almost all parts of the downstream industry.  The market dynamics in commercial satellite EO point to more consolidation in the near future, as operators try to leverage each other’s strengths to better compete for government and commercial market share.