From 2009 to 2018, emerging space programs are expected to launch 65 satellites, a fourfold increase over the previous 10 years. This increase in satellites is in direct relation to the number of countries developing Earth observation programs — up from eight in 1997 to an anticipated 34 by 2018.
The emergence of these countries as satellite operators is primarily the result of their desire to develop autonomous space capabilities and industry know-how. With Earth observation satellites much cheaper to manufacture and launch compared with other systems, such as satcom, they are often an entry point for countries seeking to develop a national space program.
Some of these emerging programs will go on to distribute their data commercially in an effort to realize a return on their satellite investment. This approach is not new; the U.S. Landsat program and the French Spot series have been commercializing data for more than 20 years. Other countries followed suit over the last 10 years, including India, South Korea, Brazil and Taiwan. But with the commercial data market valued at $916 million in 2008 and expected to reach $3.9 billion by 2018, there is even more significant incentive for programs to look toward commercialization as their systems develop.
The commercial data market is dominated by the three private operators — DigitalGlobe, GeoEye and Spot Image — that combined have 63 percent market share. Each company has grown strongly over the last five years, focusing on the provision of high-resolution data. Their largest customer group is government defense and security agencies, with 62 percent of data sales coming from this sector. To ensure that possible government budget changes will not drastically affect their bottom lines and to grow market share, these operators need to diversify their client bases in the coming years, possibly putting them on a collision course with emerging programs in their data distribution efforts.
Typically, data from emerging programs are marketed as a low-cost alternative to data from private commercial operators. For example, pricing for the Indian Space Research Organisation’s 80-centimeter ground resolution Cartosat-2 satellite data marketed by Antrix equates to $8.60 per square kilometer; data from the Sino-Brazilian CBERS-2B mission (2.7-meter ground resolution) are available for $0.14 per square kilometer. By contrast, a similar Level 1 processed image product from DigitalGlobe’s WorldView-1 satellite equates to $24 per square kilometer.
Government defense and security customers require high-ground-resolution, high-accuracy data, delivered in a timely fashion. For this, commercial operators have a distinct advantage. Commercial operators’ satellites boast image accuracy in the range of 4 meters to 8 meters of deviation, much more accurate than the 100-plus meters of the high-resolution, low-cost solutions. Timeliness of data delivery is also crucial, with the more flexible commercial satellites’ cameras capable of a repeat pass in one day to three days or even programmable for multiple images of the same area in a single pass, making them much more responsive than the low-cost solutions. Where a combination of high ground resolution, accuracy and timeliness is required, lower-cost data will have a difficult time competing.
In more cost-sensitive application areas that do not require data with such high resolution and accuracy, low-cost and free data solutions are becoming increasingly capable of meeting the needs of certain users — especially those using the data for moderate-scale land-cover mapping, agriculture and cartography applications, for example.
With such solutions on the market, commercial operators may have difficulties with their more price-sensitive clients. But as DigitalGlobe and GeoEye are currently so dependent on a single client — the U.S. government (which represents 75 percent and 39 percent of revenues, respectively, with GeoEye’s percentage to further increase with GeoEye-1 operational) — developing additional sources of revenue is increasingly important. Given the number of competing low-cost solutions available, the first logical area of expansion seemingly is export markets to international governments for similar defense and security purposes. Sales to private enterprise have proved difficult in the past, but are expected to be driven by the oil and gas markets and emerging consumer-driven applications focusing on location-based services — again, application areas requiring higher accuracy and/or increased timeliness.
Where low-cost or free data solutions will benefit is in the Earth observation services market. To date, this area has not grown as fast as the rest of the overall Earth observation market, as operational services have struggled to emerge and service providers have had real difficulty demonstrating the cost-benefit of the Earth observation solution. High data prices have been partially responsible, with data costing as much as 50 percent of the total cost of a project. With an increasing volume of low-cost data available from numerous sources, service providers have the platform to develop value-added services at lower cost, thus overcoming the business case obstacle.
As an example, Landsat data were made available globally free of charge in 2008. Within the first six months, over 500,000 images from the satellite and satellite archive were distributed; compare this with the next best whole year distribution of 25,000 images (2001). When one considers the cost of a Landsat data series at $600 per scene ($3.3 per square kilometer) prior to the policy change, one realizes the significant impact of cost on Earth observation data usage, particularly in research and development projects. Through the Global Monitoring for Environment and Security (GMES) project, the
Sentinel missions will similarly look to supply free operational data to government and industry with the plan to build operational services through public bodies.
As with Landsat data, however, no data in the first planned series of GMES Sentinel missions will be of high ground resolution. With this data available, it seems unlikely that there will be commercial viability for data of moderate (more than 10 meters) resolution.
Low-cost solutions from emerging space programs and free solutions from policy-driven initiatives will not have an impact on commercial operators at this stage. But increasingly capable offerings from emerging programs and hi-res solutions from established governments will start to compete with the commercial operators. To a degree, this is already happening — for example, through dual-use missions such as the Italian Cosmo-SkyMed and the future French Pleiades mission commercialized by e-GEOS and Spot Image, respectively. At this time, data pricing from these two systems is similar (or likely to be similar) to their commercial counterparts with comparable offerings. Since there is no pressure to fund follow-up systems, there is a chance that prices will drop to increase their competitiveness in the marketplace.
This puts the commercial operators in a potentially precarious position; government customers are critical, but overdependence on one client is never healthy, and potential scaling back of military options may impact their needs. As they seek new clients, they will run into competition from low-cost and free data solutions for price-sensitive private-sector customers. While other government customers (outside the U.S.) are viable options, commercial operators cannot afford to disregard the lucrative private-sector customers who will likely generate an increasing portion of data sales in the coming years.
To tap into this business, commercial operators will need to increasingly position themselves as providers of total geo-information solutions. This includes multiple data offerings, from proprietary satellites and distribution of third-party data to aerial data solutions and value-adding. The primary objective for operators is to offer a prospective client a range of geospatial services. This is also likely to drive further consolidation in the market as the larger companies look to best position themselves to offer complete solutions.
Adam Keith is a senior analyst responsible for Earth observation projects at Euroconsult North America .