Nearly 200 new satellites expected to be launched through 2017, almost double the number launched over the previous ten years. Growth will be fuelled primarily by the promising private sector and dynamic emerging space programs. “The satellite-based Earth observation sector is in a period of transformation.” remarked Adam Keith, Senior Analyst at Euroconsult, “Previously, established government programs were the dominant actors in the industry. Now we see many new projects coming from the private sector and emerging government space programs. This diversification of the industry is creating growth and opportunity, but also challenges market players” he continued. “As new actors and business models emerge we are also seeing a re-shaping of the value chain,” he concluded.
According to Euroconsult’s new report “Satellite-Based Earth Observation, Market Prospects to 2017” this departure from near-total dependence on established government programs is leading to a reshaping of the value chain as actors define new strategies and growth of the commercial data market.
Departure from dependence on established government programs
According to the Euroconsult report, the world manufacturing market for EO satellites will grow from $14.8 billion to $16.9 billion, a 14% increase. Established government programs (such as NASA, ESA, CNES, ISRO etc.) that have historically dominated the Earth observation sector will remain the leading actors in terms of number of satellites to be launched, with 54 satellites expected in the 2007-2016 time period, relatively flat compared to the last decade when 53 satellites were launched. However, their share of total satellites to be launched will drop from a whopping 77%1 (1997-2006) to 36% in the next ten years (2007-2016).
Emerging government programs
Emerging government space programs will give a major boost to the Earth observation sector in the coming years. According to Euroconsult, 52 EO satellites will be launched by emerging government space programs in the coming ten years, a five fold increase compared to the last decade. This represents a 34% share of EO satellites to be launched over the period, rivalling traditional government space programs. A number of countries2 have recently established national space agencies or dedicated entities to manage their program, or are planning to do so. These emerging actors are developing small EO platforms to rapidly acquire space technology, primarily to meet specific local and regional needs such as disaster management, natural resource monitoring and infrastructure planning.
The emergence of these new space programs is one factor pushing the industry toward smaller, lighter, and less expensive satellites, and certain established manufacturers have already enjoyed some success in selling smaller generic satellites. Emerging countries also commonly look to develop technology-transfer partnerships between larger space primes who pass along know-how for developing satellite capabilities, such as has been observed between EADS Astrium and Algeria. This kind of partnership will continue to foster and support growth in emerging space programs.
Increasing private sector activity indicates greater market maturity?
According to the Euroconsult report, from 2007 to 2016, 29 Earth observation satellites will be ordered by private satellite operators, representing 19% of EO satellites launched during the period. This compares to a 7% share during the previous decade (5 satellites) clearly illustrating the rise in prominence of these non-governmental actors.
However, relatively strong direct or indirect government backing has been a key success factor in the business model of these private ventures.
DigitalGlobe and GeoEye, both US companies, initially benefited from the US Department of Defense contracts which enabled them to get an early start and establish leadership positions as data providers. Both companies have gone on to fund their growth through more traditional private sector financing methods: GeoEye is quoted on the NASDAQ. DigitalGlobe is supported by a series of private investors including an investment bank and companies inside and outside the sector.
A third private EO satellite operator, ImageSat, is a Netherlands Antilles company owned 46% by Israel Aircraft Industries Ltd. (IAI), a quasi-governmental entity, 14% by a subsidiary of Elbit Systems and the remainder by minority shareholders.
In Europe, Public Private Partnership (PPP) has become an attractive model to develop commercial ventures with both RapidEye and TerraSAR-X funded by a mix of government funding and private financing.
Growth anticipated in the data market
According to Euroconsult, the development of the private sector should give encourage the data sales market. From a base of $735 million in revenues in 2007, data sales are expected to grow by approximately 15% per year in the next ten years, reaching about $3 billion in 2017.
The improving capabilities of satellite systems to deliver better tailored and more suitable data products to public and private customers is contributing to data sales growth such as in the high resolution domain for defense and security applications. Simultaneously, consumer-oriented programs such as GoogleEarth and Microsoft Virtual Earth are raising awareness of Earth observation capabilities which will over time create demand for services and drive innovation. They are also providing a new model for data distribution via Internet.
Major changes in the EO value-chain
Previously the EO value-chain was clearly defined from manufacturing down to the value added segment. Currently it is being reshaped as established market players’ strategies include a role in the growing data sales market. Newcomers to the sector are also having an impact as they too are looking at this growing opportunity. Finally, manufacturers and other market players are looking to tap into a variety of other new opportunities, giving rise to integrated companies with access throughout the value chain. Euroconsult expects further integration and consolidation in the sector in light of these new entrants and market growth.
Satellite-Based Earth Observation, Prospects to 2017 is an exclusive market survey of this growing segment of the satellite industry. This exclusive report contains 140 pages of expert analysis, including 30 full-page color graphs, and exhaustive benchmarks of governments and commercial players. The report includes forecasts for commercial imagery and satellites to be launched (commercial, civilian government & military) as well as comprehensive assessment and analysis of commercial operators & distributors (financing mechanisms, capacity); government programs (focus & strategy, look towards commercialization, emerging initiatives); drivers and risk facing the industry and a complete analysis of the value chain.
 All percentages in release are calculated using non-meteorology satellites only : 69 satellites (1997-2006); 151 satellites (2007-2016)
Algeria, Chile, Iran, Nigeria, Turkey, South Africa, etc.
About Euroconsult. Euroconsult is the leading international research and analyst firm specialized in satellite applications, communications, and digital broadcasting. Euroconsult develops comprehensive research reports and forecasts; provides strategic consulting and analysis; and produces world summits. With 25 years of experience and more than 350 satellite-related consulting assignments, Euroconsult is a worldwide reference. Euroconsult has over 560 clients in 50 countries, including leaders throughout the satellite value chain: satellite operators and service providers; satellite manufacturers and launch service providers; equipment providers and integrators; governments; media and broadcasting companies; and banks and investors.
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