Presented bySima Fishman, Managing DirectorEuroconsult USA

21st September 2016Advisory Committee on Commercial Remote Sensing (ACCRES) meeting

EARTH OBSERVATION: STATE OF PLAY AND FUTURE PROSPECTS

SNAPSHOT OF THE INDUSTRY

• 163 satellites (>50kg) launched for civil/commercial Earth observation and 31 for GEO/LEO meteorology over 2006-2015, from 35 countries

• To expand to over 400 satellites for civil Earth observation & over 50 for meteorology from 2016-2025 as further governments and commercial enterprises launch capacity

• In addition, up to 2,000 satellites <50kg , built in constellation will add to the overall supply: first constellations taking shape, some funding still required

• Majority of satellites launched from government space agencies; civil government investment topped $10 billion for the first time in 2015

• Commercial data market totaled $1.7 billion in 2015: • 5%, 5-year CAGR - defense remains the main growth driver

• Value-added services market reached $3.2 billion in 2015• 11%, 5-year CAGR environment monitoring and infrastructure projects lead.

SATELLITES LAUNCHED BY CLIENT TYPOLOGY*

2006-2015 2016-2025M

AR

KET

VA

LUE

SAT.

LA

UN

CH

ES

163satellites

OtherLeading

Gvmt(40%)

Dual-use(21%)

Developing Govt.(17%)

Commercial Const. (9%)

Commercial (other) (6%)

$18.4billion

OtherLeading

Gvmt(39%)

Dual-use(25%)

Developing (8%)

Commercialconst. (4%)

Commercial (other)(13%)

400+satellites

OtherLeading

Gvmt(24%)

Dual-use(9%)Developing

(19%)

CommercialConstellation

(40%)

Commercial (other) (5%)

$35.5 billion

OtherLeading

Gvmt(38%)

Dual-use(13%)

Developing (15%)

CommercialConst. (21%)

Commercial (other) (6%)

USG (7%) USG (3%)

USG (11%) USG (7%)

*civil and commercial only

SATELLITES BY CLIENT TYPOLOGY: COMMERCIAL

24 satellites

US (other) (17%)

RoW Constellation(54%)

RoW(Other) (21%)

$3.1billion

2006-2015 2016-2025

180+satellites

$~10 billion

MA

RK

ET V

ALU

ESA

T. L

AU

NC

HES

USConstellation. (8%)

US Comm. (other) (7%)

RoWConst. (16%)

RoW (Other) (5%)

US Constellation (72%)

US Constellation (3%)

US (other)(46%)

RoW Const. (22%)

RoW (Other) (29%)

US Constellation (55%)

US (other) (14%)

RoW Const. (22%)

RW (Other) (9%)

GOVERNMENT EO PROGRAMS

< $10 million

$10 - $50 million

$50 - $100 million

$100 - $200 million

$200 - $500 million

$500 - $1000 million

>$1000 million

• Other 50 countries investing, reaching $10 billion in civil investment

• First destination for emerging programs

EO COMMERCIAL DATA SALES

BY CUSTOMER

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

BY DATA

U.S. DEFENSE

NON-U.S. DEFENSE

NON DEFENSE

VHR OPTICAL (≤1M)

OPTICAL

SAR$

mill

ion

• Commercial data market reached $1.7 billion in 2015

• Defense markets dominate, topping $1 billion. Reflected in the procurement of VHR data

• Defense/maritime remains first destination for SA

• Non-US defense remains most significant growth driver (11% 5-year CAGR)

• Enterprise markets gaining traction – mainly going to support VAS development

• More moderate resolution datasets starting to slow (in revenue generation) – price pressure, greater availability of lower cost solutions

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

LATAM

EUROPE

MIDDLE EASTRUSSIA & CIS

AFRICA

REST OF ASIA

SE ASIA & OCE.

$m

illio

n

FORECAST COMMERCIAL DATA SALES

BY REGION

BY SECTOR

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

DEFENSE

CIVIL & ENTERPRISE MARKETS

• Commercial data market to reach $3 billion in 2025 (6% CAGR)

• Lower figure on previous years:• Slowing regional markets

(LATAM, Russia)• Oil and gas impact• Greater price pressure >

higher usage, but at a lower data cost

• Regionally, Asian markets in double-digit growth, expected to become second area for data sales

• LBS markets fast developing – but expected to be greater emphasis on lower-cost data inputs to build VAS

NORTH AMERICA

VALUE ADDED SERVICES MARKET

4%

DATA:

$1.7 Bn.

61%

10%

9%

7%

2%

5%

2%

SERVICES:

$3.2 Bn. Defense (15%)

Energy

(9%)

Natural

Resources

(13%)

Infrastructure

(33%)

Disaster

Management (4%)

Environment

Monitoring (21%)

Maritime (2%)

LBS (3%)

• Total VAS + Data market = $4.9Bn (of which $3.2 VAS)

• Key markets those which leverage lower-cost/free data sets

• Defense sector data sales do not translate in VAS > much work done in-house

• Current market forecast to reach $5.3 by 2025 (5% CAGR)

• However, potential for additional service areas to open up focused on high revisit location-based application

• Uptake can be significant –though entry in to new markets a challenge

Operational Satellites Based on Future Launches

SIGNIFICANT COMMERCIAL SUPPLY EXPANSION

0

50

100

150

200

2006 2008 2010 2012 2014 2016F 2018F 2020F 2022F 2024F

#sat

ellit

es

OPTICAL & SAR SATELLITE UNITS AS PART OF A

CONSTELLATION

SAR

OPTICAL

Operational satellites (>50kg) based on anticipated lifespans

* Commercial refers to commercially operated and commercial data availability from government satellites with data <2.5m optical or <5m SAR

Launched and in Operation

ADDING EVEN MORE INTO THE MIX

To Be Launched (2016-2025)10

12

150+

~40

Planet 160+

Spire

1000+

4

2

18

UrtheCast

~100BlackSky

16

260

50 kg

Corvus 2 8

Satellogic

Hera Systems

PlanetIQ

51KG+ Terra Bella 25

OmniEarth

50+Iceye

Geo-Optics 24

Planetary Resources

Launched*

<10 kg(75%)

10-50 kg(18%)

50-250 kg(5%)

251-500 kg(2%)

2016-20252,130 UNITS

EO SMALLSATS TO BE

LAUNCHED BY MASS

• Numerous companies putting forward constellation solutions• Sector attracted >$500 million in investment other last few

years, though slowed in last 18 months• First full operations for several actors expected in next 2-3 years• Further funding required to support more ventures

* As of April 2016

PRICING STRATEGIES

0

10

20

30

40

0 1 2 3 4 5

Resolution (m)

Pri

ce: $

/km

2

High-accuracy and high-resolution from DigitalGlobe,

Airbus

High-accuracy and high-resolution multispectral;

including WorldView-3 SWIR bands

High-moderate resolution data, less stringent on geolocation accuracy

Announced Hera Pricing

OPTICAL COMMERCIAL DATA PRICING• Current prices for EO data range

from free to over $100/km2: Ranges due to GSD, spectral res., geolocation accuracy

• … 1m optical data can be acquired for $5/km2 if there’s compromise on accuracy.

• With competition prices are expected to fall at a faster rate than current: 3-5%/year

• New lower-cost solutions expected to challenge on price, albeit if challenged by platform stability

• Bringing the geolocation accuracy into the 10–20 m CE90 range would make the data suitable for most applications.

*Newly acquired level 1 data, data prices from the last 12 months

KEY TAKE-AWAYS

• EO supply expected to expand rapidly in the coming 5-years; this will add competition and challenge on price, but growing commercial capabilities (in hyperspectral, GPS-RO, meteo…)

• Possible for supply to start outstripping demand… unless new markets are opened up?

• Investment into the sector slowing in the last year; a wait and see approach for emerging constellations? Further companies still requiring further funding

ON SUPPLY

ON DEMAND

• VAS more commonly using lower-cost datasets, argument for allowing certain data types to go for free (as supported by Copernicus, Landsat)

• Two differing markets? Or two tiers of data? One for high-end data to support defense, lower-cost, high revisit data building services?

• Defense expected to remain first market for commercial data; infrastructure, environment and emerging LBS for value-added services