What is wrong with the Earth Observation Industry?

What is wrong with the Earth Observation Industry?

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Earth Observation Industry - Why didn't DigitalGlobe ever cross $1billion in revenue and got sold over? What's wrong with small satellite companies?

It is official that MDA will acquire DigitalGlobe. A big news for Earth Observation Industry! I am surprised by this move, but not quite a bit.

I go back to the 5 minutes discussion; I had with a key individual from the earth observation industry at Geospatial World Forum 2017 exactly a month back. The discussion was revolving around DigitalGlobe vs. small satellite companies and earth observation industry trends.

Here is the point I have put forward – it is quite obvious that we have already reached a point with the EO industry that the amount of data collected is way beyond than the need. Please pause a minute before you bring in your views on the scope for growth, the lack of data accessibility, the opportunities in the analytics space, etc. That is all about possibilities.

However, what’s fundamentally happening is that the small satellite companies have flocked the market – the doves have arrived, the satellite is now little a camera on the space station. Then what was the need for Urthecast to acquire Deimos, who in turn formed a small sat consortium? How successful is the model of Planet Labs – why it had to acquire RapidEye?

I am putting my presumptions here – but this is my wild guess! The small satellite market is a failed business model in the short term at least! It is hype! Moreover, it is here to hit established players. Just like Uber – an excellent player with an innovative business model, to shake up the existing setup, but making huge losses in the process.

Another challenge I think the EO industry is facing is the availability of Open Data. US in the form of EOSDIS, from Europe, as Copernicus and India inform on Bhuvan are there in the major markets providing free data. This challenge is going to go big, as open data becomes a major enabler for government programs.

DigitalGlobe is (was) an active player from my perspective, I didn’t see growth – but it was a sustaining business – is what I said to that gentleman. It was fact was struggling to cross the $1 billion in revenue (702.4 million USD in 2015) is even what I said. All these years it was sustaining! A company with an established network of sales staff, resellers and partners with premium products was just sustaining!

There are no other active commercial players of this stature and size left in the market, except MDA. I have not seen an active participation of MDA, and I do not in the short term forsee. Now DigitalGolbe is history, and MDA a backbencher, it would be interesting to see how the business dynamics in this space change.

So, the next time you get excited about 80 odd satellites launched by someone! Just question, when and how will they make money?

The views presented in this blog are the views of the author and do not reflect the views of Geospatial Media.