A Sky Full of Eyes S8-Min

A sky full of eyes – Exploring the commercial
opportunity in Earth observation
Media series
November 2018
Media Series
Executive briefing
November 2018

600+ Earth observation satellites are constantly keeping an eye on us from space – is there a
commercial opportunity in Earth watching, and how can companies play in this space?
Key insight
High Earth orbit 600+ Earth observation satellites
(HEO) are orbiting our planet, collecting
>35,786 km data and images, as well as
Communication monitoring and tracking changes
Earth observation satellites
satellites In eight executive briefing series,
Arthur D. Little shares key insight
into the commercial opportunity
in Earth observation and how
Medium Earth orbit companies can play and win in
(MEO) this space. We look into:
2,000–35,786 km Weather
satellites  What is Earth observation, and
what are its key applications?
 What is driving the interest in
Navigation International Earth observation, and is there
satellites a commercial opportunity?
Space Station
 Where is the sector headed?
 How to ride the Earth
Low Earth orbit Communication
observation wave and win?
(LEO) satellites
160–2,000 km Next edition:
Earth observation applications
Your contacts:
Jaap Kalkman, Partner Adnan Merhaba, Principal Matteo Ainardi, Principal
Arthur D. Little Kalkman.Jaap@adlittle.com Merhaba.Adnan@adlittle.com Ainardi.Matteo@adlittle.com 2
Executive briefing
November 2018

Analytical solutions based on Earth imagery are used across a wide range of industries, promising
high impact and disruptive changes
Earth observation SELECTED EXAMPLES Key insight
Insurance
applications  Companies are building
Monitoring assets, assessing
risk and detecting changes analytical services based on
Earth observation imagery,
Agriculture to streamline insurance Commercial with different applications
processes across industries
Monitoring crop health, Assessing market dynamics,
estimating yield, optimizing increasing visibility over  Defense and government
production and costs supply chains, analyzing applications are still a key
economic activity, etc. source of demand; however,
use cases in other industries
(insurance, commercial, etc.)
are gaining traction
 Early adopters tend to be from
Disaster risk reduction Defense technology-exposed industries
 Customers are increasingly
Predicting and monitoring National security and demanding solution-based
of disasters to support Infrastructure defense monitoring (e.g., services (e.g., intelligence,
rescue & relief operations Monitoring deployed assets, tracking maritime and supporting decision-making)
planning new installations, airfield activity) rather than pure image-based
predicting infrastructure products
failure
Next edition:
Market value & key drivers
Your contacts:
Executive briefing
November 2018

Cheaper access to space and advances in data analytics will continue driving the double-digit growth
of the Earth observation sector
Global Earth observation data and services revenue Key insight
2013–2025, USD billion
 The Earth observation sector
is expected to continue its
5.4 double-digit growth, driven by:
– Availability of cheaper
SmallSat technologies and
+12% decreasing costs of
launching and operating
satellites, which are
making commercial
3.1 solutions more viable
– Advances in data analytics
+10% and artificial intelligence
2.2 that make Earth
2.0
1.8 observation solutions
1.5 1.6
more accessible and
enable the emergence of
new applications across
industries
2013 2014 2015 2016 2017 2020f 2025f Next edition:

Investment dynamics
Source: Arthur D. Little based on Euroconsult
Your contacts:
Executive briefing
November 2018

Investor interest in Earth observation start-ups has significantly increased, driven by the expansion
of potential use cases and range of clients
Start-up investment dynamics in Earth observation Key insight
2013–2017
 Investor interest in Earth
250 25 observation has significantly
increased over the past 5
years:
Number of new start-ups

200 20 – Over USD 220 million was
invested and over 50 new
start-ups were set up
USD million
150 15 – 2017 was a boom year,

with a ~9x increase in
invested capital compared
100 10 to the average of the
previous 4 years
 Investor interest is driven by
50 5 expansion of use cases/
applications and potential
customers (e.g., going beyond
government-backed demand)
0 0
 New start-up companies are
2013 2014 2015 2016 2017 focusing on data analytics
New Earth observation start-ups Investments in Earth observation start-ups Next edition:
M&A trends
Source: Arthur D. Little based on Norther Sky Research
Your contacts:
Executive briefing
November 2018

Existing players are furthering their stake in the sector and extending capabilities from pure
satellite operation and image sales to analytics services based on Earth imagery
SELECTED EXAMPLES
M&A dynamics in the Earth observation sector Key insight
Manufacturing Operations Services  The Earth observation sector
2017
is evolving, with key players
EagleView Tech. OmniEarth extending their capabilities:
– Recent vertical integration
Planet deals allow for building a
2015 2017 full set of upstream and
Blackbridge Terra Bella downstream capabilities
(Spaceflight Industries,
2017 OpenWhere, etc.)
DigitalGlobe
– Horizontal mergers (e.g.,
MacDonald, Dettwiler and Associates (MDA) 2016 2016 Planet, Terra Bella &
2012 Blackbridge) allow for
Space Systems/Loral Radiant Group Timbr.io scale and tapping into
adjacent segments
Elsag Datamat VEGA Earth-i
 Value generation is moving
2011 2011 2016
from pure image sales towards
Telespazio ability to sell analytical
Thales Alenia Space solutions on top of Earth
2017
2017 imagery
2016
Spaceflight Industries OpenWhere
Next edition:
Legend: Acquisition target Acquirer Acquisition Joint venture Other agreements
Key business models
Your contacts:
Executive briefing
November 2018

Successful Earth observation businesses typically adopt one of 2 main business models – captive,
government-backed demand or industry-focused model
Government-backed model Industry-focused model Key insight

 Business models in Earth
 Providers serving demand mainly  Providers focusing on the commercial observation focus on
from defense and intelligence sector, offering niche industry government- or commercially
government entities or other vertical solutions and targeting backed demand, with distinct
Overview government authorities, etc. specific sectors differences in buying and usage
patterns for each
– Governments typically
 Lower-resolution, high-revisit images release long-term
 High-resolution images to support
to support quick commercial insight contracts and are
defense & intelligence applications interested in image
 Focus on data sales due to national  Focus on actionable analytics to
acquisition, while taking
security considerations and reluctance solve business problems and support data analytics in-house for
Typical to outsource analytics decision-making confidentiality reasons
requirements  Long purchasing cycles  Industry-specific applications – Commercial actors are
focused on analytical
solutions and willing to
purchase them, given
intrinsic value for their
businesses is unlocked
( ) ( )
Players Next edition:
Market positioning
Your contacts:
Executive briefing
November 2018

To capture the commercial opportunity in Earth observation, prospective players have three main
options – choosing the right positioning depends on market specificities and internal aspects
Satellite operator VAS player Integrated player Key insight

 The decision on type of
Operating an Earth Sourcing data from Earth Integrating Earth market positioning needs to
observation satellite observation satellite operators observation satellite take into account internal and
constellation, offering data to and offering VAS analytics operations with VAS service external factors:
resellers or final customers solutions offerings – From an external
perspective – market
demand, range of use
 Opportunity to  Increased customer  Control over data supply, cases and technology
developments are key
differentiate through a interest in analytics quality and cost of image
– From an internal
unique data set/ images solutions acquisition perspective – capabilities,
 Capex-light model  Opportunity to financial commitment and
 Availability of open access differentiate through a risk tolerance need to be
data sets (Sentinel, Landsat) unique data set/ images taken into account
 Uncertainty exists regarding
 Capital intensive  No control over image  Most capex intensive, the sustainability of pure data
 Increasing number of Earth supply and quality with uncertain returns play/satellite operations due to
observation constellations  Issues with data quality,  Availability of open- a shift towards open data and
 Availability of open- synchronization and access data and increasing data commoditization
access data and increasing platform interoperability data commoditization Next edition:
data commoditization Key success factors
Your contacts:
Executive briefing
November 2018

To be successful in Earth observation, players need to combine a solution-based mind-set, advanced
technical capabilities and strong market push
Earth observations play – key success factors Key insight

Raise market awareness  Combining technical
capabilities and commercial
Raising awareness of Earth observation applications, as well as finding new use cases
acumen is key to winning in
targeted at solving industry-specific problems, will be key in developing the market the Earth observation market
– Key technical skills include
Adopt a solution-based, rather than a product-based mind-set imagery analytics, data
Focus on developing solutions together with clients, ensuring strong understanding of processing & data
end-user needs and requirements rather than pushing a standard product set management based on
advanced technologies
(e.g., machine learning/
Leverage what you know artificial intelligence)
Leverage knowledge of a specific vertical and understanding of local economic specificities – Commercial capabilities
to identify potential pockets of opportunities and design tailored client solutions revolve around deep
vertical knowledge, ability
Build up technical capabilities to proactively develop
Build capabilities for imagery analytics, data processing & management, utilizing demand and explore new
machine learning/artificial intelligence, and establish an easy-to navigate, user-friendly use cases, and adopting a
interface solution-based mind-set
Distill insight leveraging a range of data sources

Feel free to contact us for
Distill insight combining satellite Earth observation data with other data sources, which
further insight
will create a unique data pool and analytical depth
Your contacts:
Jaap Kalkman
Arthur D. Little has been at the forefront of innovation since 1886. We Managing Partner
are an acknowledged thought leader in linking strategy, innovation and M: +971 55 559 4332
E: Kalkman.Jaap@adlittle.com
transformation in technology-intensive and converging industries. We
navigate our clients through changing business ecosystems to uncover Adnan Merhaba
new growth opportunities. We enable our clients to build innovation Principal
capabilities and transform their organizations. M: +971 55 559 4325
E: Merhaba.Adnan@adlittle.com
Our consultants have strong practical industry experience combined
with excellent knowledge of key trends and dynamics. ADL is present in Matteo Ainardi
the most important business centers around the world. We are proud Principal
M: +33 1 55 74 28 31
to serve most of the Fortune 1000 companies, in addition to other E: Ainardi.Matteo@adlittle.com
leading firms and public sector organizations.
Arthur D. Little Middle East FZ-LLC
For further information please visit www.adlittle.com or Office 606, 6th Floor
www.adl.com. Arjaan Tower, Dubai Media City,
Dubai, UAE
Copyright © Arthur D. Little Luxembourg S.A. 2018.
All rights reserved. Arthur D. Little France,
7 Place d'Iéna, 75116
Paris, France
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A sky full of eyes – Exploring the commercial

opportunity in Earth observation

A sky full of eyes – Exploring the commercial

A sky full of eyes – Exploring the commercial

A sky full of eyes – Exploring the commercial

2013 2014 2015 2016 2017 2020f 2025f Next edition:

A sky full of eyes – Exploring the commercial

Number of new start-ups

150 15 – 2017 was a boom year,

A sky full of eyes – Exploring the commercial

A sky full of eyes – Exploring the commercial

Government-backed model Industry-focused model Key insight

A sky full of eyes – Exploring the commercial

Satellite operator VAS player Integrated player Key insight

A sky full of eyes – Exploring the commercial

Earth observations play – key success factors Key insight

Distill insight leveraging a range of data sources

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