Geographic Frontiers


On Orbit

Can Satellite Imagery Survive on Commercial Markets?

Historically, commercial satellite imagery companies have survived by being subsidized by government or by having the government serve as their largest customer. Can recent entrants into the industry such as Planet Labs and Google’s Skybox buck this trend? Because of government funding support over the years, satellite imagery is viewed as a social good meaning many think it should be low cost or even free—particularly in response to environmental and humanitarian issues or for disaster response. The rise of inexpensive drone imagery will also cut into the market. By the way, satellite companies advertising the availability of daily coverage have another problem—on average, a particular spot on the earth is cloud-covered about 60% of the time. When it comes to obtaining reliable, conventional satellite imagery coverage, weather is technology’s biggest nemesis. All is not lost. There are a few options that offer a glimmer of hope.

Is the commercial market for satellite imagery on the verge of taking off? Google, along with some venture capitalist firms, seem to think so.
On March 16th, Orbital Insight, a company planning to rapidly and efficiently analyze streams of commercial imagery for business intelligence, raised $8.7 million in Series A financing.
On February 25th, DigitalGlobe announced that it had received approval to make 30cm (1 foot) imagery from its WorldView-3 satellite available to non-government—think commercial—users.
In January of this year, Planet Labs raised $70 million in Series C equity financing plus took on $25 million in debt to continue its plan to put over 100 small imaging satellites into orbit providing 3 to 5 meter imagery of the planet daily.
Back in August 2014, Google purchased Skybox Imaging for $500 million. With a planned fleet of 24 satellites launched by 2018, Skybox claims it can provide thrice daily coverage of anyplace in the planet at slightly less than 1 meter resolution.

If the past is any indication, these companies will have a tough row to hoe.

Commercial satellite imagery is not new. One-meter satellite imagery has been available for 15 years and imagery at grosser resolutions for over twice that long. At one point, there were three U.S. companies building high resolution (one meter or better) imaging satellites. Now, through acquisitions, only one—DigitalGlobe—survives. The high-resolution satellite imagery industry in the United States did not take off until the government adequately subsidized it. As late as 2010, DigitalGlobe received close to 80% of its revenue from government customers. The merger of three companies into one occurred for two reasons. The government could not afford to purchase the commercial satellite imagery needed to keep three companies in business. The other reason: the commercial market never materialized to the degree anticipated.

Planet Labs and Skybox are relying on three things to buck this trend: lower cost satellites resulting in a lower costs per image, cheaper cloud storage and computer processing to make imagery more accessible, and a public expectation that up-to-date geographic data is essential—a view fed by applications such as Google Maps.

This is a double-edged sword for these companies.

With imagery and map data available largely for free via such applications as Google Earth and Google Maps, individuals have come to view this imagery and much of the information derived from it as an inexpensive—if not free—commodity. Amazon is providing NASA Landsat imagery free of charge via its cloud. Google likely sees their acquisition of Skybox as a bargain since they now own a source of data for making their imagery and maps more up-to-date and accurate generating more revenue from businesses that will want to advertise their locations using Google. Consumers don’t see the cost of the imagery used to develop the maps in their smart phone apps.

As authentically concerned corporate citizens, the satellite companies will provide their imagery for free to allow the public to assess environmental and humanitarian concerns and to assist in disaster response. DigitalGlobe has done this in the past. Planet Labs and Skybox give every indication they will follow suit. This adds to the perception that satellite imagery will be inexpensive to the point of being free when it is really needed.

There is one more “minor” problem: CLOUDS. Clouds cover over 60% of the earth’s surface on any given day. We can be a bit more generous and put it at 50% over land. Planet Labs may offer daily coverage of the earth, but on a good day you’ll only see 50% of the actual land surface. The rest of the time, clouds. In some areas, the odds of clear sky are better. In other areas, worse. If you’re planning to count cars in Wal-Mart parking lots to see how sales are going, you’ll miss a considerable number of stores in the Seattle area due to cloud cover. Monitoring construction in Shanghai presents a challenge. The median cloud cover is above 70% from January through September. All of a sudden, relying on a company’s reported sales data or public relations releases is perhaps just as reliable and timely. After all, access to traditional “Big Data” means you can locate this information when you need it.

Drones will be a serious competitor to satellite imagery. It is true that only satellites can provide worldwide access—weather permitting. On the other hand, companies will see inexpensive drones as providing them guaranteed access to image their local interests on their own schedule. Plus—unless the weather is very bad—drones can fly under the clouds. Farmers, construction companies, mining and oil companies will see drones as a means of getting the data they need when they need it at a resolution better than a satellite can offer. Drones will also offer a wider variety of sensor options—thermal infrared, hyperspectral, LIDAR—not available from satellites.

Where does this leave us? Essentially where we are today. To remain viable, commercial satellite imagery will need government support either through direct subsidies or as a significant customer. Commercial customers believe they can get the data they need from other sources—to include drones as they become increasingly available. In those instances where its social value has been shown—for maps, environmental analysis, humanitarian support, or disaster response—the expectation is satellite imagery will be available for free.

The world does change. There are a few options that offer a glimmer of hope.

One option is to use the imagery to enhance other revenue streams. This appears to be the path Google continues to follow. They already do this with Google Earth and Google Maps. Its acquisition of Skybox simply gives them their own source of data. This likely was Google’s principal motivation for acquiring Skybox in the first place.

Another option is to sell context or analysis of the data. The idea is there is money to be made not in providing the imagery data, but in providing what the data means. Orbital Insight seeks to do this more efficiently by leveraging algorithms and automated processing and relying less on the old-fashioned approach of having an individual visually analyze relevant imagery. Having observed how much money defense and intelligence agencies have given to their contractors over the years to accomplish this, I hope commercial pressure will lead Orbital Insight to innovate and succeed where government funded efforts have largely failed.

A third potential option hinges on how well a company can make imagery available over the cloud from not just one source, but a large number of sources. Like Amazon is to books, this service would be to satellite and aerial imagery. Not being tied to a specific system or constellation increases the odds of a customer finding imagery of the right location taken at the right time. Adding in commercial radar imagery increases the days of coverage since the radar imagery is largely unaffected by cloud cover. With increasingly inexpensive processing power and cloud storage capacity, a company could develop a viable business, particularly if they encourage others to post imagery data collected by their own unmanned aircraft systems. The owners of the drone imagery have used their data for a specific purpose. Now they are willing to make a small amount of additional revenue by selling it to or licensing it through a cloud-based data-provider. With a viable interface, a subscriber can now access a wide variety of data—satellite and drone imagery—from one source in the cloud. Overhead imagery is presented as the commodity it is, almost to the point of what Karl Marx had to say about wheat, “From the taste of
wheat, it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist."

Perhaps Amazon will want its drones to collect imagery as they deliver packages. They could sell the imagery over the cloud.