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EO Investment & Data/Services Demand
Expected to be Driven by Emerging
Markets
OCTOBER 9, 2014
According to Euroconsult's newly
published report,
Satellite-Based Earth
Observation: Market Prospects to
2023, 353 Earth observation (EO)
satellites are expected to be
launched over the next decade
compared to 162 over 2004-2013.
This will result in $36 billion
in manufacturing revenues over
the period, an 85% increase over
the previous decade.
Organizations from 41 countries
are expected to launch EO
satellite capacity by 2023,
compared to 33 over the previous
decade. Government supply
continues to grow strongly as
more countries expand their
portfolios of EO satellites to
meet various policy needs. In
addition, newcomers are
launching EO satellite capacity
to develop a local industrial
base, create the building blocks
for a space program, obtain
greater autonomy in data
acquisition, and/or meet local
demand for data and services. As
a result, investment in EO and
meteorology programs reached a
high in 2013 at $8.7 billion, a
13% increase over 2012. This
represents the 8th year of
continued investment growth,
with EO remaining a primary
concern for government space
expenditures.
Commercial supply is also
expected to go through a
significant expansion, both from
private sector initiatives (the
expansion of fleets, and new
entrants) and government
commercialization of proprietary
systems. New entrants such as
Skybox Imaging have launched
their first satellites, and
others, particularly in the
domain of commercial meteorology
and environment monitoring
solutions, could follow suit in
the next decade. "With this
expansion in commercial supply,
differentiating positions of the
operators will come to the fore,
with trade-offs in ground
resolution, revisit, geolocation
accuracy, and data prices," said
Adam Keith, Director of Space &
Earth Observation at Euroconsult
and editor of the report.
"Nevertheless, competition is
increasing and with new entrants
possibly pricing data and
solutions very competitively,
there is the potential for
disruption in the market."
COMMERCIAL
DATA MARKET GROWTH STAGNATION
DISGUISES OPPORTUNITIES
Supply
of EO solutions continues to
expand and diversify despite an
overall slowing of commercial
data demand; this slowing is a
result of reduced U.S.
government defense spending on
commercial data compared to
previous years. The commercial
data market totaled $1.5 billion
in 2013; this represents
stagnant (0%) growth from 2012
as the impact of reduced U.S.
government spending takes
effect.
The level of the U.S. defense
outlay however disguises growth
elsewhere in the market, in
particular in sales to non-U.S.
defense users. The commercial
data market to non-U.S. defense
organizations totaled $560
million in 2013 and has grown at
a 14% CAGR over the last five
years. In order to meet this
demand, commercial operators are
successfully providing
direct-access satellite
contracts to defense users.
Emerging enterprise markets are
also expected to further
develop, particularly
location-based services and
support to engineering and
infrastructure projects.
In 2023 the market for
commercial EO data is expected
to reach $3.6 billion (8% CAGR
over 2014-2023). Regionally, the
Asian markets, Latin America and
Africa are expected to have
strong growth profiles with
expected growth at over 10% CAGR
to 2023. Natural resources
management, engineering &
infrastructure, and again
defense are expected to be the
main application areas
supporting growth.
MANUFACTURING EXPORT
OPPORTUNITIES TO INCREASE, POSES
DILEMMA TO THE INDUSTRY
Satellites launched from
emerging programs will account
for a growing part of the
manufacturing market. Between
2004 and 2013, $1.9 billion of
the total EO manufacturing
revenues were derived from these
programs; this is expected to
increase to $4.4 billion between
2014 and 2023. Such programs,
which may lack proprietary
manufacturing solutions, are
expected to be a key driver for
the upstream industry looking to
export solutions.
The majority of export
activities to date have focused
on lower-cost technology
transfer missions to help
develop a national industry
and/or space program.
Partnerships have been a
successful mechanism to build up
emerging manufacturers'
expertise. However, further
countries have chosen to procure
high-cost EO systems to meet
more immediate national
requirements, particularly for
defense. For countries
lacking a national manufacturing
infrastructure, more direct
procurement is required from
existing "high-end" solutions.
In this case, capacity building
is dropped in favor of obtaining
a high-performing satellite
delivered in a shorter
timeframe. The dilemma for the
established manufacturers
capable of designing "high-end"
systems is whether they expand
into the development of
lower-cost solutions, or remain
with high-end provision, despite
the more limited number of
export opportunities.
There is however already strong
competition to address these
opportunities as most major
prime manufacturers look to
expand their business. In
addition, by 2023, 26 countries
are expected to have full
manufacturing capabilities
(acting as a prime and/or
integrator); this will add
further competition in the
longer term for the developing
EO satellite export market.
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