The Earth Observation sector has seen accelerating growth over recent years. In 2020, the commercial market for EO data stood at $1.6 billion—a figure expected to top $2.5 billion by 2030, with the Value-Added Services (VAS) market adding another $5 billion on top of this by 2030, with 7% CAGR through the decade, driven by emerging applications such as LBS and insurance.
Earth Observation Data and VAS market by sector in 2020
Following the release of the latest edition of their “Earth Observation: Data & Services Market” report, in this article, Euroconsult draws on its extensive database and in-house expertise to explore the latest developments in the sector, and to highlight the industry’s recent market trends.
Still a Defense & Security matter
Earth Observation technologies have been used for a range of military and defense applications for decades, including in scenarios related to land or maritime border control and those that require up-to-date information on infrastructure, logistics and military facilities.
As estimated by Euroconsult, the defense market remains by far the most significant—making up around 45% of the total data market, worth $1.8 billion, in 2020. US defense is the largest consumer of commercial imagery, although sales to non-US defense markets are anticipated to be the most significant upcoming growth driver for revenues—growing at a 10-year CAGR of 5%, compared to 3% for the US.
The defense sector is beginning to show a trend of purchasing commercial data as the new Earth Observation Commercial Layer program presented by the NRO in October. Previously, the submeter resolution data were obtained from various orbital military assets but their growing interest is now also concerning the highest resolution which is set to become one of the main markets in coming years.
Beyond the traditional multispectral VNIR market led by companies such as Airbus and Maxar, the defense is more and more attracted by other types of data like hyperspectral (Orbital Sidekick, HyspecIQ, etc.) and SAR (Capella, Iceye, Umbra, Predasar, etc.). Most operators in U.S. are supported by the DoD through R&D contracts to develop innovative systems bringing a higher revisit to the defense assets. As usual, these new trends, firstly driven by defense needs should progressively impact other markets which will benefit from these new capacities.
For example, more affordable satellites and constellations have created opportunities for advanced specialized sensors that meet the requirements of a growing user base. The use of new, specialized sensors will also unlock the potential of open-source data from programs such as Copernicus and the latest generation of Landsat. The combination of the new technologies, the open data, and a higher revisit rate will open up new markets around land use, for example vegetation water stress detection, water saturation and wildfire detection.
New data types now supporting sustainable development goals
Beyond the defense market, the agricultural sector is a good example of an industry that will really benefit from the new types of data available. For example, the recent growth of hyperspectral imaging in the market, collecting data from across a much wider range of wavelengths in the electromagnetic spectrum, rather than being restricted to visible light wavelengths, presents a wealth of new opportunities. Analyzing data of this kind allows for the detection of tiny changes in plant physiology, in turn offering information about proteins and potential diseases in crops.
Satellite operators like Hydrosat or ConstelIR are also starting to leverage high-precision thermal infrared data, which measures Earth’s surface temperature to gain insights into crop health and water needs. Access to data of this type will contribute to far more sustainable irrigation, as well as more effective yield monitoring, which has financial benefits not only in agriculture, but in the wider food industry.
According to Euroconsult Market Intelligence report “Earth Observation Data & Services Market”, 12% of the EO market is related to natural resources monitoring in 2020 thus providing valuable information on the condition, value, and quantity of natural resource assets—leading to more environmental, as well as economic, global sustainability.
Considering a large part of the population depends on marine resources and fishing industry, particularly in emerging regions, satellite imagery plays a leading role in this sector. In addition to support sustainable fishing, with satellites monitoring ocean salinity, surface temperature, and chlorophyll content, satellite imagery, and particularly SAR data and services, are also interesting to fight against illegal, unregulated and undeclared (IUU) fishing over large remote areas, thus reducing means at sea and related deployment costs.
A lower cost-data and higher revisit enabling global and reactive new services
While the growth of value-added services is mainly driven by open-source imagery and constellation supply, operators and VAS providers aim to address new valuable markets like finance and insurance which are expected to leverage of this massive global monitoring to feed bigdata models and improve forecasts and risks assessments. Euroconsult estimates that the VAS market in finance stood at $0.4 billion in 2020 with a 40% CAGR through the decade, driven by emerging applications like competitive intelligence, the support to environmental, social and corporate governance, and the control of import/export.
Indeed, satellite imagery falls under the umbrella of alternative data, which represents non-traditional forms of data that are greatly coveted by financial services companies eager to gain a competitive informational edge over their peers. Whether it’s counting cars in a retailer’s parking lot as a measure of sales activity, tracking ships across the seas, monitoring crops or scanning the activity at oil rigs, refineries and ports, satellite imagery is proving incredibly useful as a way to measure levels of industrial activity that may not necessarily be possible to determine at ground level.
However, these sources are also more and more used by international organizations and companies to have a comprehensive overview of the impacts of local, regional, or global phenomena like economic crisis, political instability, or food security issues, in a global supply chain. Indeed, satellite imagery is used to feed models of risks assessment, used by companies but also their insurance to prevent potential impacts on revenues and margin or by national and international organizations to prevent impacts on the economy but also on social phenomena like illegal immigration, terrorism, and other hybrid threats.
Towards a new era for Earth Observation sector after covid crisis?
Due to a long period of global lockdown, industries, financial services, and international organizations fell back on remote sensing information like satellite imagery to continue their activity. Indeed, there have been concrete and operational projects that used EO data to improve support industries and governments to collect information all over the world.
For instance, a recent project by UK company Astrosat combined data products from satellites with UK-based surveys and census data, in order to identify “hidden vulnerable” communities, and better connect them with volunteers who could provide help and support. This is just one example of how EO data can make a valuable difference even in a social capacity.
Even after the unprecedented covid crisis occurred in 2020 and in the first period of 2021, the Chinese company “Webank’ developed the China Economic Recovery Index (CERI), based on geolocation information provided by Baidu constellation but also on satellite imagery to track China’s economic recovery from the outbreak. The company measured manufacturing activity via building the Satellite Manufacturing Index (SMI) using mining massive satellite imagery data to evaluate the impact of the Coronavirus over several key sectors of the national economy.it is expected to generate bottlenecks for the timely analysis of increased dataflows. However, the lower cost of this data, and the entire process of launching satellites and constellations, can be leveraged to build greater value services that will inevitably lead to more interest in the field.
Concluding thoughts
Despite 2020 bringing the first slow-down in fundraising for the market, as a result of the COVID-19 crisis, the next decade will undoubtedly represent a very exciting time for the sector and associated industries. Indeed, this global phenomenon showed the added value of remote sensing information, in particular Earth Observation data & services, across many applications. Beyond all the technological constraints, the biggest challenge for the earth observation industry remains to prove what satellite imagery can bring to end-users in their daily life and work by understanding their needs and making their readiness easier thanks to turnkey solutions.
Furthermore, as described in Euroconsult’s “Earth Observation Data & Services” Market Intelligence report, a recent boom in special-purpose acquisition companies (SPACs) has reshaped the Earth Observation sector, with the leading operators going public by means of this new financial opportunity. The billions raised through SPACs are expected to trigger multiple mergers and acquisitions in the next few months and to accelerate the deployment of operational constellations, expected to unlock new applications and markets.
Euroconsult is looking forward to the prospects that this growing market will bring to all industries across many sectors and to the wealth of benefits that these innovations in Earth Observation will bring to our day-to-day lives here on Earth.
