NEWTOWN, Conn. - Once the domain of universities, small satellites are playing an increasingly important role in the commercial market. In the past few years, new companies have introduced business models that utilize large fleets of small satellites to conduct Earth observation. Traditional satellite companies, like DigitalGlobe can spend upwards of $450 million on each satellite. On the other hand, small remote sensing satellites can be built and launched for under $1 million.
Still, there are a number of challenges that the commercial remote sensing small satellite, or SmallSat, market currently faces. While SmallSats are relatively cheap, a large network can still cost hundreds of millions of dollars to develop, build, and launch. In addition, small satellites have shorter lifespans the larger ones, meaning they need to be replaced more often. Small satellite operators will need to make capital expenditures every year. Even though the loss of a few satellites is not devastating, a failure of a launch vehicle carrying a high number of SmallSats can still hurt a company's plans. Planet Labs experienced this hardship when it lost 34 satellites between two launch failures in 2014 and 2015.
Despite these hardships, the number of companies with plans to deploy networks of small satellites is expanding rapidly. The satellites' low cost allows companies to operate larger fleets of satellites, providing wider global coverage and more frequent revisit rates. It also means that companies can take more risks because the loss of a small satellite is not as financially devastating as the loss of a large expensive satellite.
With such a high number of operators in this market segment, competition in intense. Officials with various companies say that there is room for all the new players in the market. They indicate that the high number of satellite operators is a response to customers of imagery that have been starved for data for years. In addition, many satellite networks will feature unique capabilities. For example, NorStar offers Earth imagery as well as space situational awareness data, while UrtheCast will feature both optical and Synthetic Aperture Radar (SAR) data. Finally, because different satellite networks will operate in slightly different orbits, they will offer different angles for customers to view objects of interest on Earth. Therefore, customers may purchase data from multiple companies to get different points of view.
With that said, there are currently eight companies competing with each other over talent, customers, and financial capital. Even if capabilities or viewing angles are slightly unique, customers will need to select the best option for their budget. They may not be able or willing to spend money on multiple services. In addition, small satellite operators will continue to compete with free imagery from government sources, like LandSat, and extremely high resolution from traditional satellite operators like DigitalGlobe. The companies that have the best technology, access to capital, business model, and talent will succeed, while others will not. At this point, it is difficult to determine which companies will succeed and which will fail. However, companies with first mover advantage, like Planet Labs, certainly have a leg up on the competition.
The overall market for commercial remote sensing SmallSats will remain strong. Even if a few of the companies in this report do not succeed, there is demand for Earth imagery from both commercial and government customers. That demand will continue to grow as companies continue to mine, farm, and conduct other economic activities. Therefore, Forecast International currently expects the market for remote sensing satellites under 100 kg to continue to grow through the early part of next decade. Production levels will then level off at under 200 units per year.
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