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Earth Observation Satellite Systems Market 2021

14th Edition

Trends in the Segment

  • New operators entering with diverse constellation projects: Start-up financing is diversifying beyond optical constellations with SAR, HSI, GHG and GNSS-RO/R systems. Payload diversification supports the idea of EO domain maturation.
  • Government programs: In 2021, the total government (civil and non-classified defense programs) investment into EO and meteo programs totaled $11.9 billion (excluding ELINT/RF). This represented $9.3 billion (excluding ELINT/RF) for the civilian part and the 14th year of continuous investment growth.
  • The Data market remains structurally highly consolidated with the top two players (Airbus and Maxar) making the bulk of 53% of revenues. It is mainly driven by legacy customers with defense sector as a key anchor customer.
  • The Service market is by nature fragmented but is consolidating, with the top two player making ~30% of revenues. It is driven by legacy and emerging applications.
  • Going down to higher resolutions: New commercial capabilities are fueling more optical data supply in about the 30cm range and sharper. On the SAR scene, Capella reached 25cm in range and azimuth, and Umbra plans to reach 15cm with a new FCC license. This interest is further seen in hyperspectral (HSI) constellations.
  • SPAC, a new source of funding: The SPAC boom has reshaped the EO sector with the main constellation operators such as Planet, BlackSky, Satellogic and Spire going public by means of this new financial vehicle to rapidly develop their capabilities.

Towards Rationalization & Diversification

Euroconsult has identified more than 50 companies that have announced intentions to develop such constellations representing nearly 1,700 smallsats (lighter than 500kg), with a large majority under 50kg. Among approximately 50 companies, roughly 20% have claimed to deploy constellations of 50+ satellites, the majority having fewer than 30 satellites.

Not all the listed companies will reach the deployment phase, as many of them will face funding issues. The number of commercial operators is expected to decrease by keeping those with a diversified offering (new sensors) and new proven concepts or business models or considered as strategic for their regional market.

In addition, a preliminary plan can be revised down, as mid-inclination orbits and technology improvements (better satellite design lifetime and revisit performance) can reduce the number of satellites required. On the other hand, some operators performed a strategic pivot and concentrated their efforts on other parameters to meet defense requirements.

Moving toward B2B

A key promise behind new services is to open the EO market to more end users across various sectors. The idea of more customers paying for lower-cost solutions that are more responsive to their needs targets opening the B2B market, given that most current solutions are B2G. This would open service providers to wider audiences, which are often quicker to adapt to new processes, and will scale up procurement if cost benefit can be demonstrated. 

 

Building new services with new supply

New constellations such as Planet, BlackSky and Satellogic may offer different services, but they all target one common theme: the ability to build new services and better meet market needs based on high-frequency change detection analytics. As satellites are based on low-cost designs, the data to fund these new service areas will also be much cheaper than the VHR data that are currently available. Smallsat solutions are invariably less stable, simpler platforms that compromise accuracy. However, the lower-cost approach of reducing the CAPEX means operators can price data competitively, potentially disrupting the market. Advances on the IT side are allowing for postprocessing improvements in image accuracy. This brings greater emphasis to the ground segment, with lower-cost space segment solutions. 

 

Up to 550 commercial satellites in orbit in 2030

Today, data are being sold commercially from over 275 satellites. This is set to expand to around 550 by 2028. This estimate is based on current satellite launch schedules and the planned operational lifespans of the individual satellites. It also assumes that new operators reach the funding levels required to support the missions developed. The number, however, could rise even further with new companies emerging later in the decade and countries, particularly China, commercializing data from their EO programs. Based on current planning, by 2025–2028 constellations are expected to head to more of a replenishment cycle, maintaining the required number of satellites in orbit. The need to replenish also implies that demand is keeping up with supply. There is some risk here, given that the new service areas and applications aimed to be built also remain nascent. If demand is slower to follow, further consolidation and/or pulling back of constellation development may occur. The increasing supply will mean that operators will need to more thoroughly differentiate themselves in the marketplace regarding their respective systems’ capabilities.

 

The figures presented

Two aspects of EO downstream sales are presented in this report: the market for commercial data and the market for VAS. Following the introduction in the link here, commercial data sales consider up to Level 2a processed data. There is some processing from raw data, but it is nonvertical-market specific. The VAS market considers data that are transformed through further processing to provide applicability into specific vertical markets. It includes corrections from Level 2b and beyond, including analytics and information delivery.

The figures revised in this version

The discrepancy with the previous edition is due to a finer definition of the addressable market through what was really outsourced and therefore commercially accessible for the environmental market. We have revised down the LBS and finance markets as well. Several interviews confirmed a progressive adoption of the end-user community. In fintech, this can be explained by the fact that new applications require AI tools to be trained on a sufficient archive imagery library. Furthermore, satellite supply faced some delay on its initial development schedule (WV-Legion postponed to 2022, BlackSky, etc.) thus postponing service developments based on (very-)very high resolution (VVHR) a little. That has some consequences on the forecast by 2030, slowing down market progression. Some of our model inputs have been slightly refined benefiting from newly public information releases; i.e., Satellogic, Planet and BlackSky revenues published through their respective investor presentations (for SPAC purposes). Maxar sold MDA, so we got a finer estimate of the market by asset (optical vs. SAR) and the impact of WV-4 losses on the VVHR market and the rebound on the VHR market. Also, we have revised down the MDA commercial data revenues from government prefunded Radarsat-2 data. Because RCM is now operational but not considered commercial, this is hampering the commercial SAR data revenues.

Key markets differ for data and services

The key markets for VAS do not mirror those for commercial data sales. Defense, while representing 69% of the commercial data market, only represents 29% of the VAS market. Conversely, environment-monitoring users, for instance, procure limited commercial data (2%) but are developing solutions using scientific and coarse-resolution data, and represent 12% of the VAS market. In this case, downstream EO could be considered not to represent a fully developed value chain. The reasoning for this is relatively straightforward: defense end users purchase data with many value-added analytics performed in house. On the other hand, lower-cost/free, coarser-resolution and/or low-geolocation-accuracy data can be leveraged to build greater value VAS such as for the environment sector. Many infrastructure applications for mapping can also get by using Landsat and Sentinel data. It can also be reasoned from this that making coarser-resolution government data free does support the development of VAS solutions. The benefits to a government include the socioeconomic gains of developing an EO industry.

Total EO (data-service) market to top $7.4 billion in 2030

The most promising markets are those using VHR imagery and requiring very high revisit – as these are priced higher. Security applications including defense and maritime surveillance will keep growing at a rapid pace; indeed, a growing supply is going to meet customers’ needs. New services based on change detection analytics brought by satellite constellations acquiring data on specific points/areas at a high frequency will benefit nascent markets such as finance markets (business intelligence, insurance, etc.) or applications based on location (LBS). Some other markets are considered existing or underdeveloped but served by other solutions (in situ data collection/smart sensors and aerial imagery) – such as infrastructure site monitoring, pipeline monitoring, precision agriculture (natural resources) or parametric insurance (disaster management).

  • The Earth Observation Satellite Systems provides a global assessment of the EO space systems market. It covers supply and demand for EO satellites launched and to be built and launched and focuses on the manufacturing and launch markets and their evolution over the next 10 years in comparison to the previous decade, regarding the commercial and government (civil and unclassified defense) satellites.

  • The report considers all factors that will drive/inhibit growth in demand for EO manufacturing and launch, including the following:
    • Satellite system applications and missions.
    • Satellite operators and users; the ecosystem evolution.
    • Government and private-sector investment to support development.
    • Technology changes affecting both platforms and payloads.
    • Implications for manufacturing and launch businesses.

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