To set the scene ahead of ESA's Earth Observation Commercialisation Forum next week, here is some need-to-know background information on the evolution and state of play of the Earth observation industry.
1) Relatively small but ramping up According to Euroconsult, the entire global space economy was worth a remarkable US$464 billion in 2022, and while the Earth observation portion is only around 4% of that figure, the sector is undergoing significant growth.
Looking at the trend over time, the space economy as a whole has seen annual growth of 7% since 2017, and this is broadly expected to continue up to 2031. A presentation at the Summit on Earth Observation Business (SEOB) in September predicted a similar trajectory for the Earth observation data and service market, increasing from US$4.6 billion last year to US$8 billion by 2032.
2) The innovation and adoption horizon TerrawatchSpace has carried out a Gartner Hype Cycle analysis on the commercial Earth observation sector, with a look at both the technological and application perspectives. Technologies such as SAR, Hyperspectral, Edge Computing in Space and Thermal Infrared have created significant buzz in recent years, but remain in the early phases of development.
In terms of application sectors, some of the significant areas on the rise are thought to be carbon monitoring, parametric insurance, climate risk reporting and pipeline monitoring, although adoption remains at an initial stage.
3) Going backwards to move forward Earth observation is increasingly being seen as a strategic asset for organisations, giving rise to a process of backward vertical integration - going a step back in the value chain to acquire or partner with a satellite provider.
Energy companies Williams and ONEOK, several Indian banks and consultancy Accenture have all invested in satellite operators, while insurance giants Aon and agriculture market leader Bayer have established partnerships with ICEYE and Planet respectively.
4) The European Earth observation canvas The European Earth observation industry is dominated by SMEs (Small and Medium-sized Enterprises) which are mainly active in solely downstream activities.
The rest of the world has a larger proportion of capital-intensive businesses, showing a more favourable mix of industrial maturity, together with a higher concentration of start-ups and LSIs (Large System Integrators) and larger average company sizes. This may be related to higher and more stable domestic demand and easier access to private investments.
A number of strategic directions may be taken to give better support to European commercial Earth observation. The creation and nurturing of start-ups could be increased, including mechanisms for both start-ups and SMEs to scale up. Businesses should draw on the unique technical excellence across the continent to offer more diverse end-to-end products and services.
Thirdly, access to funding from both public institutions and private investors could be made easier, with support tailored to the needs of not only start-ups but also more mature companies.
5) The cash injection inflection As reported by Euroconsult at SEOB, private investment in commercial space grew from US$1.4 billion worldwide in 2017 to a peak of US$14.9 billion in 2021, only to fall back to US$6.3 billion last year.
In Earth observation, Terrawatch Space recorded a 37% share in Europe of the global total from private investors in 2022, with over 25 funding rounds taking place. However, last year was exceptional, as the European share of capital injection in Earth observation commerce was around 20% on average in the 2017 to 2021 period.
6) Breaking down barriers Experts envisage several hurdles that need to be overcome for the European Earth observation market to continue to flourish. There is still demand which is not being met by current suppliers, and this is coupled with a need for market creation to take advantage of opportunities for diversified data and innovative services.
The lack of awareness of the value of Earth observation among many non-space companies is limiting its adoption, and where there is awareness, price is perceived as a barrier for some business cases.
The quality, availability and reliability of Earth observation products need to improve in order to increase customer take-up and retention, and finally there is still significant market uncertainty due to a lack of characterisation of business cases.
ESA Earth Observation Commercialisation Forum The first-ever ESA Earth Observation Commercialisation Forum will provide a treasure chest of information and discussions on all these topics and many more. With keynote addresses and deep analysis from institutions, industry experts and investors, the two-day gathering commences on 30 October and is the must-see event for all aspects of Earth observation New Space.
Proceedings live on ESA WebTV Two
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