NSR Sees Pay-Off for Operators in Challenging EO VAS Market

[Satellite TODAY Insider 03-11-11] Imagery satellite operators could find themselves fighting in an increasingly competitive environment on their own turf for data services if they fail to enter the Earth observation (EO) value-added services market, according to an NSR report issued March 9.
    The report warns operators without value-added offerings that larger players which have already adapted to an increasing demand in the market, and that long-term delays in creating an offering could leave neglecting players competing for a secondary role.
    "A prime example of this trend is Google with its ‘classic’ Google Earth and the Google-Earth Engine, which gathers a large amount of EO data into a unique kit. The EO data market is increasingly oriented towards higher resolution data with better revisit times," NSR said in the report. "Furthermore, South Korea’s Kompsat-3, India’s Cartosat-3, Israel’s ImagesSat International with Eros-3 and France’s Astrium Geo-Information Services with Pleiades are flooding these data markets and creating lower margins for commercial operators in the high-resolution market. Thus, with likely commoditization of their prime source of revenues, will current high-res data distributors be forced to look elsewhere down the value-chain for new opportunities?"
    While the EO VAS market traditionally features higher flexibility with faster turnaround times for data applications, it is a highly fragmented market with more than 125 companies in Europe alone. The three largest EO satellite operators are already on the value-added services stage but accounted for just 15 percent of total revenues in 2009. Several legal limitations that prevent commercial sale of the highest resolution data available also restrain leading distributors from fully using their competitive advantage to differentiate themselves, according to NSR
    "The VAS activities of GeoEye, DigitalGlobe and Astrium Geo-Information Services are targeting work from government and military customers, the largest segments with not only data but [value-added services] as well," NSR said. "As an example, the 2009 U.S. National Geospatial-Intelligence Agency Enhanced View contract allocated to DigitalGlobe and GeoEye contained approximately $1.4 billion in [value-added services] over 10 years, including provisions to create even higher resolution products through lower-altitude satellite orbits. So far, it has been a bumpy road. In 2010, DigitalGlobe reported a drop of 22 percent in [value-added services] revenues, while in 2009 these were up 13 percent, showing the difficulty of gaining stability in this sector."

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