Heads or tailwinds

The EO sector has found itself in the Doldrums. How can we blow up a storm to move the market?

Which do you choose?

Earth Observation (EO) has met with a series of market-related body blows in the last six months. These blows, from layoffs to consolidations to engineering difficulties to market contractions, have left the EO industry with a sense of “impending doom.” Under a pall of bad news, it’s sometimes hard to feel positive or optimistic about our community of practice. But I dispute the poor outlook. I think the future is incredibly bright.

Photo by Math on Unsplash

It is easy to say, “Things will get better.” And, of course, I am generally an optimist (most entrepreneurs have to be optimists; if not that, then masochists!) But let's look at the fundamentals: supply and demand.

We have an increasing abundance of imagery flowing from Low Earth Orbit (LEO). This imagery is increasingly capable and frequent. Frequency is an important word here; what we have never had before is the ability to monitor assets robustly. Yes, we could periodically watch things from space. Now, we can regularly (within the vagaries of weather and orbits) monitor a location. This ability was once the exclusive domain of government agencies but is now credibly available to the commercial sector. Ok, I didn’t say it was yet “easy.” However, with certain restrictions and commitments, it’s possible to get a 25 km² area tasked with a high-resolution sensor for $200 USD, which becomes well within the range for those motivated to monitor a remote, threatened or valuable asset. So, for a thousand dollars, that’s five tasked looks, ~$10k for a look a week for a year. For the commercial sector, price and access do matter. For numerous remote, heavy, or industrial applications, $10K a year might be reasonable, and with sales volume, this should get cheaper still. That was simply not possible a decade ago.

The SpatioTemporal Asset Catalog (STAC) has also encouraged EO adoption through a simple, commonly understood schema. Our community seems to have coalesced around STAC as a common way for machines and people to search for data products. This benefits the commercial sector by encouraging greater innovation (allowing the collision of commonly structured data) and reducing customization costs to use data products. The opportunity to use STAC to put EO to work has also increased our industrial capabilities.

One source of geospatial innovation is colliding multiple data products together with geography as the common thread. Open (or at least common) standards make this much more possible. Open standards; open minds.

So, supply exists, and incremental innovation has matured our supply’s capabilities. What, then, about demand? This is certainly a more complex story. Clearly, we can see that the infamous space SPACs have not performed as well as their IPO prospectuses suggested they would. Precipitous stock prices reflect the lack of revenue these companies have been able to generate. Various markets, known to be somewhat unstructured, have still not formed adequately. This does not mean they will not emerge, but their lack of structure is the source of the economic doldrums our sector has been facing for the last two years.

In many ways, the Space SPACs should probably not be public; the market is not ready. But they had become a little large for continued venture funding, and SPACs allowed for some private investment risk to be taken off the table. The profile of an EO company suggests a third way would be valuable. Somewhat hinted at by Dr Brianna Pagan at N51 2024, an alternative funding approach would be beneficial. Now, I don’t believe that all EO data should be a public good. Still, we should acknowledge that several satellite constellations have been launched with climate-related missions that have only met with economic success by pivoting to defence missions. I am not criticizing either mission; both are necessary. I am pointing out that our present market cannot yet sustain private climate-related missions (I hope that GHG-Sat or Methane-SAT may be the first notable exceptions.) With that in mind, perhaps there is a third way involving public and private investment that would allow satellite companies to stay out of the public markets until they are ready.

So, when we think about demand, who are we thinking about? As alluded to above, the primary customers of EO data are still governments. As much as I would love to say that EO has more meaningfully penetrated vertical markets, this is still the exception, not a repeatable model. There is still no dominant design for how vast amounts of imagery or derivative products are to be consumed by non-experts.

That said, there are some broad patterns we can point to. A number of old businesses are still prominent in our markets today. These include, but are not limited to, building and transacting properties, insurance, health care, logistics, and media. In all of these, geospatial and, even more specifically, EO can play a role. The role geospatial plays, though, is in supporting and modernizing an existing workflow. Some might even jump at the chance to label this practice “digital transformation.”

Additionally, on a more personal note, I would point to the number of landscape-related events happening in Western North America presently. My social feeds are jammed with EO images of fires, floods, or landslides. While this geo-doom scrolling is alarming, there is an intrinsic benefit to these landscape stories being told honestly and to scale by orbital sensors. While social feeds tend to err towards hyperbole, it's comforting to have a sense of reality and scale brought by Sentinel, MODIS or Landsat imagery. Why guess when you can know?

I think there is one more hint in that word frequency: time. Understanding and managing time through geography will become the basic activity of EO and geospatial. Change is a factor of time. Projection is a factor of time. Monitoring is a factor of time.

So, while there might not be a “killer consumer app” for EO yet, there is a great opportunity for EO to augment some ancient businesses with additional capability and provide non-judgemental evidence of landscape changes and human activities. This is not to say we shouldn’t celebrate EO successes in government either; we certainly should! As we move towards an inevitable, futuristic planetary monitoring capability, the EO sector at large needs all the tailwinds it can muster.