More EO Data Types...But for Who?
In the business of satellite-based remote sensing, the market for optical imagery is relatively well established, with a robust ecosystem of data/service providers and customer channels. While optical imaging leads in terms of market size, commercial Synthetic Aperture Radar (SAR) imagery is not far behind, having come into its own in recent years. The ethos of commercialization that is characteristic of the new space movement has made significant inroads in these segments.
More recently, this has trickled into the development of modern satellite sensors and associated data products. Operators are taking advantage of increased launch frequency and satellite miniaturization to target niche use cases, including climate monitoring, weather services and defense/intelligence applications. This has led to an emergent “non-imagery” class of data from sensors such as hyperspectral, radio occultation (RO), passive microwave (MW), thermal infrared (TIR) and radio frequency (RF) detection, to name a few.
NSR’s Satellite-Based Earth Observation 13th Edition report shows this non-imagery market opportunity will generate $4.6 billion in cumulative revenue during the 2020-2030 period, reaching upwards of $1.5 billion by 2030. In contrast, optical and SAR imaging markets are more than an order of magnitude larger. While Non-Imagery makes up a fairly small portion of the total EO opportunity, it is the fastest growing segment, with a CAGR of nearly 48% during the coming decade.
In what is perhaps typical of commercial EO, supply continues to overreach despite lack of clarity on the expected demand.
Where is the Demand?
Currently, this market is driven mostly by early contracts and preliminary, niche demand for data from vertical specific applications.
Environment, Social and Governance (ESG) regulatory requirements is the big one and is expected to drive the opportunity for satellite-based climate monitoring solutions in the coming years. A significant amount of funding is being funneled into this segment for data and analytics solutions: TIR EO operators such as Albedo Space, Hydrosat and ConstellR raised seed and pre-seed rounds earlier this year. There is rising confidence in satellite playing a key role in the road towards effective climate adaptation policies.
GHGSat and Bluefield Technologies, for instance, are focused on carbon emissions monitoring in support of climate action and investments. In Europe, Kayrros launched a program that uses non-imagery satellite data to monitor methane emissions of major gas producers. Earlier this year, Spain-based Satlantis received $14M in a funding round led by Enagás, the country’s main gas producer, which will use satellite infrared sensors to achieve its goals of ‘zero-emissions’ by 2040.
The intent is now to zero-in on specific plants and facilities that are increasingly pointed out as major contributors of pollutants and who wish to have a scalable solution to account for their carbon footprint and how climate change affects their business. Given satellites’ increasing revisit rate and multi-sensors capabilities, it appears like an ideal answer to the problem. But it’s not a slam dunk in terms of market volumes, as the adoption rate of ESG remains low due to poor data available and the different standards to be applied to reporting.
ISR and Security
However, much of the initial revenues for non-imagery markets are expected to come from government and military clients. RF monitoring for ISR applications, especially in the maritime domain is a key driver, as evidenced by HawkEye 360’s RF mapping contract with the NGA.
There is a strong push for commercialization here, with organizations such as the U.S. Air Force and NOAA turning to commercial operators for data. Many of the operators considered in this segment have already received public funding or were awarded government contracts. As such, Gov/Mil clients are expected to remain the main customer throughout the forecast.
Financial and Weather Services
Once these constellations and services evolve, it is expected that the Non-Imagery opportunity will diversify to other applications. Enterprise sector targets, ranging from Energy and Natural Resource companies to Weather and Financial Services are key for this market to scale, presenting a blue ocean market of untapped customers. Parametric insurance and reinsurance products from AXA Climate, for instance, already leverage MW data from Vandersat. Many of the upcoming datasets expected in this segment fit naturally with weather forecasting and atmospheric sounding applications and will further boost the opportunity in these verticals.
Downstream Shift
In time, the value is expected to shift from data to insights, as reflected in the long-term growth of the Information Products and downstream Big Data Analytics segments. Already, Non-Imagery datasets are being combined with SAR and optical for new use cases. There is a larger shift towards high volume subscriptions and analytics services already underway in the EO industry, and Non-Imagery providers will need to consider the value of their offering through this lens.
The Bottom Line
The Non-Imagery segment is susceptible to the same challenges that hinder most emerging space markets: an excess of funding riding on the coattails of hype, and a lack of clear and strong demand signals. The market has already seen several commercial constellation announcements with little direction on actual customer needs.
Non-Imagery data and service providers are in a prime position to understand such problems, with access to case studies from the Optical and SAR markets, amongst others. Adopting the right strategies upon addressing questions related to data resolution, revisit, quality, and price will be important if this market is to grow as expected.
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