Next Big Thing

Making Money In Satellite Data Processing Industry

Sep 21, 2018

Gathering information about our planet using remote-sensing technologies has rapidly evolved in recent years. Earth observation has become more technologically sophisticated and helped to monitor and predict the adverse effects of human activity on Earth. However, being useful and promising to improve the economic and social well-being is not enough to make it cost-effective. So, is it possible to build a sustainable business model for satellite imagery?

Earth observation data: market overview

According to Geospatial World, earth observation accounts for 14% of the whole space industry market (along with 20% for satellite launches and 13% for satellite internet). Authors also quote Gil Denisa’s research where the main demands for EO data in 2015 were defense, infrastructure, and natural resources. Also, the dominant market for EO-based value-added services was environment monitoring.

Via Satellite magazine authors say that during the four years between 2012 and 2016, more than 300 remote sensing satellites, at a cost of $8.79 billion, were delivered by both commercial companies and government-financed programs. In the next four years since 2017, more than 900 satellites, priced at $16.52 billion, are expected to be delivered. Overall, they are small satellites which are cheaper than the large ones. That is why the number of satellites will triple while the price will only double.

An NSR report shows that satellite Big Data analytics will have an almost $3 billion earnings opportunity by the year 2027, with 46% from Earth observation applications. Over the next ten years, while the North America region will have the vast majority of revenue opportunities, other areas may also grow at a swift rate, because more and more countries are opening up to the digital paradigm.

The contributors of Ingenium magazine write that satellite imagery may compete with widespread sensors that may acquire the same or similar data faster and at a lower cost. For instance, if in the near future smartphones with sensors capable of measuring the air pollution become available, it will make some types of satellites redundant. The most difficult applications will be to compete with services that provide high-definition images.

Smaller, but more efficient

What should we know about how the satellite market is changing over the past few years? According to the European Space Agency, lighter and less complex Earth-observing satellites being produced. Companies tend to create constellations of smaller and cheaper satellites. The aim is to provide better coverage and revisit times which are the primary conditions for near real-time Earth surface monitoring.

The amount of Earth observation data continually increases and is becoming more accessible to a broader audience. On the one hand, satellite imagery prices are supposed to decrease over the coming years. On the other hand, Earth-observing data providers may not only sell raw data, but also analyze it and create intelligent information (for example, they can estimate the revenue of a shopping mall by the number of cars in the parking lot).

One more advantage of the small satellite business model is that they can bring together updates in less time. This means that the increased number of smallsats will accelerate the development and implementation of new technologies than the larger satellites.

Looking for EO data customers

In determining the reason the demand for satellite imagery has increased, we should consider what purposes satellites are used for. Nowadays, analytics emphasize the three main areas: a global navigation satellite system that provides geolocation and time information (GPS), communication, and earth observation. The crucial area of interest for the space industry is a rapidly growing need for internet access, even for remote areas. This is a case where having a large number of comparatively inexpensive satellites may be useful.

Some satellite industry players say that entrepreneurs who want to bring Earth observation data to the mass audience sector have to overcome some contractual, commercial and technical issues. In other words, to simplify the data procurement contract, revise the traditional distribution model, and open up the software and hardware for processing these images.

Another angle of view is how remote-sensing businesses will work with the government. The big challenge is specifying how widely the government-purchased data can be shared. As for the U.S. government, it often used to make satellite data easy to access, but it doesn’t account for selling EO imagery to multiple clients.

Jim Bridenstine, NASA administrator, compared the satellite remote-sensing industry to the market of cheeseburgers, explaining that even if cheeseburgers are in the public good and they are essential for life, nobody is going to produce them for free.

Technically, cheeseburger as a material good can’t be sold to multiple customers. The Open Space concept followers point out that with widely spread satellite databases, society will benefit mainly because the same information may be used by multiple researches and operations.

Let’s consider if Earth observation imagery became available for a mass audience. The mass market means that products are accessible for people not only with lots of money or a particular interest. The most striking example of the mass market for satellite imagery is Google Maps, which was released in 2006 and remains one of the most used mobile applications.

Besides Google Maps, Google has many ways to generate benefits from Earth observation data. For example, Google Earth Engine, which puts to use EO data from NASA, ESA and other organizations, provides a Cloud Storage with lots of public satellite data. It is ten to one that such databases, algorithms, and generated services will be used in more highly developed Google applications, e.g. for the self-drive car.

How EOS found its business model

Earth Observing System (EOS) is a company that was established by Max Polyakov in 2015 as a part of the space business ecosystem. EOS analyzes and processes a large amount of geospatial data obtained from satellites and drones.

According to Vladimir Vasilyev, EOS Chief Technology Officer, the project came from the idea to create an informative product from satellite data to solve various business issues – for example, to predict crop yields.

Vladimir Vasilyev says that EOS’s most popular instrument is Land Viewer, which allows users (not only businesses) to freely view and download large amounts of satellite imagery. However, it is just a small part of the whole service: “We saw the potential in rapid access to data. The technology allows to quickly extract  the necessary information from large data sets and provide it to the user in a convenient way.”

EOS invests in servers that make the calculations. “We set a certain limit to the free requests. After exceeding it, downloading information via our service becomes paid.”

Vladimir Vasilyev reveals that EOS’s main clients are from agribusiness, insurance, and government organizations. He concludes that key to success in the satellite data business is to find a unique combination of solutions.

 

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