Insight and data diversification driving ambitions in Earth observation
The coming surge of satellite imagery is prompting a shift to the collection of imagery from multiple sources and to data insight-oriented service models, amid the rise of non-imagery datasets and largescale plans.
The Earth observation (EO) sector is primed for an explosion, as the number of birds for civil/commercial applications and smallsats through 2027 is forecast to expand by extraordinary levels of magnitude. Given the expansion of supply, prices are expected to fall faster than the current single digits. Launch costs are also dropping, as big names such as Arianespace and SpaceX gain a foothold in the smallsat launch segment.
The shift of data to analytic services from imagery is increasing, as EO players devise new business strategies to expand the revenue, customer count and simplicity of data collection, including remote sensing data company SkyWatch.
The Canada-based company’s concept calls for aggregating EO data from many “industry-leading” sources into a single platform called EarthCache. It touts benefits that include a cut in data integration costs, simplified data searches and a stream of actionable intelligence. Sinai Ventures and Space Angels led SkyWatch’s C$4m (US$3.04m) seed round in February 2018.
Others are taking a similar tack while attempting to leverage other technology, including AI-focused US startup Hypergiant and high-tech solutions provider Dynetics, also based in the US. They formed a partnership to gather satellite data from multiple sources, aiming for governmental and commercial customers that use Amazon Web Services (AWS). The idea is to leverage AWS’ cloud services for mission and payload on-demand services.
Location-based services and financial services are likely to be the first industries to benefit from faster access to this low-cost data in a market previously dominated by government customers, Euroconsult said.
A fast-growing opportunity in EO does not involve imagery at all, Northern Sky Research said in a recent analysis. New technology, rising environmental concerns and a diversifying industry are encouraging the development of non-imagery datasets for climate change monitoring, with radio occultation, microwave and greenhouse gas emissions some of the most promising emerging datasets.
Non-imagery EO data is expected to grow at a whopping 46.5% CAGR to US$1.2bn between 2019-28, the analytics provider said. Some 250 satellites are proposed in that timeframe, with some already deployed by Spire, GHGSat and Orbital Micro Systems that will drive these revenues.
The two largest smallsat operators, Planet and Spire, are each offering data analytics. The former boasts nearly 400 satellites in orbit, with the latter having some 111 birds in space.
Serving 11 end markets, Planet Analytics leverages machine learning to transform global, daily satellite imagery into information feeds that detect and classify objects, identify geographic features and monitor change over time. And Spire is focusing on analysing its data for customers interested in weather systems, resource management and other applications.
Market pull for analytics is coming from the business intelligence and insurance sectors, as well as from infrastructure site monitoring and precision agriculture. For these types of services, subscriptions and recurring sales to multiple users are expected to keep pricing affordable. New services will also benefit from cloud computing and artificial intelligence, technologies that will enable even higher data consumption and faster analysis.
Thousands of EO satellites?
Grand ambitions sum up the outlook for EO, as more than 2,000 satellites by 2027 could be launched to serve the segment, according to Euroconsult. Not even 200 birds were launched over the 2008-17 segment, including 162 satellites with mass greater than 50kg for civil/commercial Earth observation and 31 for GEO/LEO meteorology.
Regardless of the number of satellites that are actually put in orbit, the increased competition is good for satellite operators and their customers, as price drops are expected to fall faster than the current rate of 3-5% a year.
Nearly 1,500 smallsats – those less than 500kg in mass – will have been launched from 2018-27 to serve EO applications, the vast majority being less than 50kg, the researcher said in a report. More than 20 companies intend to develop low-cost smallsat constellations for EO, including satellites designed to collect optical, radar and hyperspectral imaging. Constellations increase the frequency of data collection for better global coverage and faster detection of change – the wheelhouse of EO satellites.
On top of this, some 650 satellites for civil/commercial EO are also forecast as governments and commercial enterprises launch capacity. Dan Jablonsky, CEO of space giant Maxar Technologies (NYSE:MAXR), underlined on the company’s Q3 2019 earnings call in early November that it expects to deploy “new constellation assets” in its imagery segment. He was likely referring to the US$600m Worldview Legion network with the deployment of the Legion 1 and Legion 2 birds expected in 2021.
The EO sector overall is forecast to have experienced 8.2% annual growth to about US$7.5bn between 2018-28, Northern Sky Research noted recently.
Maxar’s mixed bag
It is a mixed bag in imagery for Maxar Technologies in terms of developments as the company plans a billion-dollar bond offering.
On the upbeat side, the company said in late-August that it has been awarded a four-year contract with the US government for on-demand access to satellite imagery. It is worth US$44m for the base year and includes three option years at the same value that would extend through August 2023. The market for imaging and analytics companies is still mostly limited to government customers and high-paying users like those in the oil and gas industry, though end uses are expanding. The contract was likely a factor in the company’s early November announcement of a private offering of senior secured notes worth US$1.25bn due in 2023.
On the downside, however, Maxar Technologies in January announced the loss of the WorldView-4 satellite, and it is understood that the company settled for two-thirds of what it had been seeking from some insurers.
It is also up and down for Maxar Technology’s imagery segment as it saw gains in adjusted EBITDA and revenue in its early November Q3 2019 earnings announcement, but it has had sluggish results year-to-date.
In Q3 2019, imagery generated an almost 9% increase in adjusted EBITDA to US$140m, compared with the same period a year ago. Year-to-date, however, the segment is down 3%. to US$384m, also compared with the year-ago period.
As for revenue, Maxar Technologies in Q3 2019 had a 5% increase to US$220m, compared with the same period a year ago. Year-to-date, revenue declined 2% to US$621m, compared with the year-ago period.
