World Satellite Business Week | Reseller Says Ukraine Crisis Only Partly Explains DigitalGlobe’s Drop in Russian Business

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PARIS — Russian satellite imagery distributor Sovzond on Sept. 12 said the precipitous drop in satellite imagery provider DigitalGlobe’s business in Russia this year was due to a combination of factors — mostly business-related, but some political.

The comparison with 2013 is also a problem because several large Earth observation projects in Russia generated an exceptionally large revenue stream that year that was not going to be repeated in 2014 no matter what the political situation.

Addressing the World Satellite Business Week conference, Sovsond Deputy Director-General Michael Bolsunovsky said his company may eke out a 5 percent revenue increase in 2014 thanks to value-added services. Revenue from satellite imagery, he said, will be down 15 percent. The company had grown used to double-digit revenue increases in recent years.

Longmont, Colorado-based DigitalGlobe in July reported that its revenue from Russia, which has been one of the fastest-growing national markets for the company, dropped 83 percent, to $1 million from $5.8 million, in the three months ending June 30.

DigitalGlobe officials said they were uncertain of the reason for the drop, but they suspected that U.S.-Russian tensions over Ukraine may have played a role. DigitalGlobe imagery has been used regularly by the U.S. government and by NATO to back up claims of Russian incursions into Ukraine.

Bolsunovsky said that is part of the explanation, as is a sagging Russian economy and the distorted comparison with 2013.

“The year 2014 is not simple,” Bolsunovsky said. Another factor, he said, is that Russian government agencies are increasingly being urged to use Russian satellite data, which until recently was not viewed as useful for commercial sales. But the launch of the Resource-P satellite, with a 1-meter-resolution imagery, and another spacecraft with 2-meter ground resolution has now put Russian satellites in a better light for Russian distributors, Bolsunovsky said.