EO Industry Survey Sept2013 © EARSC

8/14/2019 EO Industry Survey Sept2013 EARSC

1/16

eo SERVICES industry EARSC 1

A Survey into the State andHealth of the European EOServices Industry prepared by EARSC under assignment from ESASeptember 2013

eo SERVICES industry Escriba para introducir texto


2/16


It is with great pleasure that we bring you the results of the EARSC survey of the EO servicesIndustry. This is the third survey conducted but the rst since 2006 and the rst performed byEARSC. We are very grateful to all the companies that have spent their time responding to ourquestions. This brochure is a summary of the survey results and the full report can bedownloaded at www.earsc.org.

The survey covers the state and health of the EO services industry in European and Canadawhich we have dened as any company selling products or services which contain some datacoming from an EO satellite. This includes weather related services although this has not beenexplicitly included within the survey.

The EO services industry comprises data suppliers and value-adding companies; the latter areusing satellite data to provide value-added products possibly incorporating other data alongthe way.

The results show an industry in development. There has been a steady growth in the turnover ofthe sector since the previous survey in 2006 accompanied by a good growth of employment.

The sector has seen a lot of change. The period has seen the launch of a number of newcommercial satellite systems (see section 2) as well as signicant technology change with thedevelopment of Google Earth, the advent of cloud computing and a move towards crowdsourcing. These and other technologies such as Remotely Piloted Aircraft systems are arrivingon the horizon and maybe there are other technologies which will emerge in the next 6 yearperiod.

The rst of the Sentinel satellites is poised for launch in 2014 heralding the arrival of vastamounts of new data. The Copernicus programme promises to deliver new services forEuropean policy makers and the opportunity for the European industry to grow in existing andnew markets. Several new private initiatives, largely in the US, as well as other countrieslaunching new systems also promise or threaten to change the market.

We plan to revisit the industry facts and gures in 2014 / 2015 to assess the impact that thesemacro factors have had on the EO services industry and to map the growth and trends that areshaping it. In the meantime, the results for 2012 follow which we hope you will nd interesting,stimulating and helpful in your ventures.

About the Survey

The survey was conducted between November 2012 and April 2013. A total of 365 companieswere contacted with useful responses coming from 133 of them via an on-line questionnairewhich was focused on nancial and numerical data. The responses represent around 75% ofthe nal estimated revenues and 68% of the employees. Of these companies, 54 acceptedadditionally to hold an in-depth telephone interview providing further information The sampleshave been checked using several measures and found that they are quite representative of thewhole population of companies.

5087 employees 319 companies ! 757m revenues

Contents

1. Forward2. Strategic context3. Industrial landscape4. Employment5. Revenues & growth6. Activities7. Customers8. Thematic areas9. Research & Development10. Data sales11. Internal practices12. Strategic issues13. Copernicus14. The future

The surveycovered allcompanies forwhom satellitederived EO data ispart of theirbusiness. Thesemay be satelliteoperators, EOservice providers,or GI companiesusing derivedproducts wherethe satellite data is

not always visible

Forward
http://www.earsc.org/http://www.earsc.org/


3/16


The 6 years since the last study has seen a lot of change within the EO services sector. Inparticular, the large number of new data sources which have come on-stream indicate anindustry moving from an environment driven by R&D to one that is becoming operational. Asshown in the Table below, in Europe alone 16 satellites have been launched offering imagery of20m resolution and better; with 14 of the satellites offering 6m or better. There is a mix ofoptical sensors and high resolution radar which is also a new feature to emerge in the period.

The trend is rmly towards higher resolution and more data with more projects emerging forboth public and commercial systems. The impact of this on the market is visible in several ofthe charts in this report.

Year Satellite Type Resolution Company Country

2007 Terrasar-X Radar 3m Astrium Geo Germany

2007 Cosmo- 1 and Cosmo-2 Radar 3m E-Geos Italy

2007 Radarsat 2 Radar 1m/3m MDA Canada

2008 Rapideye (5 satellites) Optical 6m Rapideye Germany

2008 UK DMC2 Optical 22m DMCii UK

2008 Cosmo-3 Radar 3m E-Geos Italy

2009 Deimos-1 Optical 22m Deimos Imaging Spain

2010 Tandem-X Radar 3m Astrium Geo Germany

2010 Cosmo-4 Radar 3m E-Geos Italy

2011 Pleiades 1 Optical


4/16


In 2012, our survey indicates that there aresome 319 companies offering EO services inEurope and Canada of which 300 are inEurope. The majority of the companies 67% - are micro-sized meaning that theyhave less than 10 employees; a further 28%are small companies with between 10 and49 employees and only 5% of companies(16 in total) have more than 50 employees.

The number of companies has grown ataround 8% p.a. from 210 in 2007 to 319 in2012, with little change in the medium andlarge-sized categories. This growth in smalland especially micro enterprises conrmsthe dynamic nature of the EO servicessector and at the same time is a strongindicator that it is still in the early stages ofdevelopment. Entry barriers are low;requiring specic skills and knowledge butlow capital investment.

Breakdown of companies by class

In the chart below are shown the number ofcompanies in each country which werecontacted (365 in our database at the time oflaunch of the survey) and the number whichresponded. Based on these gures andallowing for some errors we arrive at thequoted number of 319 EO service companies

in Europe and Canada. This is certainly anunderestimate and our database has nowgrown to well over 400 companies.

Unsurprisingly, the largest number ofcompanies can be found in countries whichhave a history of investment in spaceactivities; France, Germany, UK and Italy. Butthis is changing and the largest number in2012 are to be found in the UK (a trendwhich starts between 2003 and 2006)whereas in 2003 France and Germany were

found to be dominant. Strong growth has

also taken place in Spain, Netherlands,Belgium and Austria. Today, we also nd thatthere are companies spread throughoutEurope with at least one company in almostevery country.

Many of the applications require localknowledge or are driven by local ,governmental needs for information oftenlinked to European directives such as landcover and use (Corine, Inspire) andagriculture. We expect this trend for newcompanies to appear in all EU memberStates to continue, in part driven by theCopernicus programme.

Geographical distribution of companies

Growth in the number of companies

Over 75% of thecompanies areprivately ownedsupporting theview, coupled withthe largeproportion of smallandmicroenterprises,that these arestart-ups in asector that isrelatively new andimmature

Industrial landscape


5/16


Employment in the EO services sector hasgrown steadily at a rate of around 10% perannum since the last survey in 2006. From atotal of 3000 employees at that time we nowsee 5087 in 2012. The chart shows the

evolution of total employment over this periodwith earlier gures taken from the 2006 surveyresult. In compiling this result, a total of 133companies provided actual gures whilst wehave calculated the missing employees fromthe other 186 companies based on thedistribution of companies and average numberemployed in the small and micro classes. Inthis case the actual recorded responsesrepresent 68% of the total shown in the chart.

History of total number of employees

The total number of employees within eachclass of company is shown for 2012. The

small and the medium categories make thestrongest contribution to overall sectoremployment. The 1% of companies (3) whichare large employ some 18% of the totalworkforce and the medium and largecombined (16 companies) employee nearly50% of the workforce. The creation of newmicro enterprises is an important rst step;subsequently creating the conditions wherebythey can grow is even more important.

Distribution of employees amongst the companyclasses

The distribution of employees is also shown asa waterfall plotted as the number ofemployees in each company in order from thehighest to the lowest. The horizontal bands

represent the thresholds between thecompany classes. It shows quite clearly thelong tail of small and micro enterprises.

Ordered distribution of employees in the 133companies reporting

Employees in the EO service companies arehighly qualied with 90% of the workforcebeing university educated and over 50%having a post graduate degree. It is worthnoting that 33% of the workforce is female and

67% male which is a small increase from 2006when the ratio was found to be 30%:70%.

Qualication levels in the EO services workforce

The age prole of the sector is shown incomparison to that of the space manufacturingindustry (gures from Eurospace). It shows arelatively young workforce with a median age ofaround 39 and a peak a few years younger,compared with a median of 44 for themanufacturing sector and a peak around theage of 50.

Comparison of the age prole in EO services with the

Space manufacturing industry (gures Eurospace )

The level ofqualication in thesector is clearlyvery high with 90%of the work-forcebeing universitygraduates orholding higherdegrees

Employment


6/16


Over the period 2006 to 2012, revenues forthe sector have increased at a compoundannual growth rate (CAGR) of 10.7% from anestimated ! 412m in 2006 to ! 757m in 2012.

The chart shows this increase which is

calculated from the actual reported revenues(! 568m) coming from the 133 companiesreporting plus an estimated ! 189m for theadditional 186 companies. The reportedrevenues represent 75% of the totalcalculated gures (compared with 56% froma smaller sample based in 2006).

Total sector revenues (m ! ) over the period 2006 to2012

Thi s does not tel l the whole sto ry asunderlying this is a signicant change. Forcompanies that existed in 2006, the growth inrevenues faltered with the economic crisisthat was at its peak in 2009 - 2010. This isclearly shown as the lower base of each pillarin the chart where their revenues attened in2010 and 2011 before seeing a smallrecovery in 2012. The additional revenueswere provided by companies which werecreated in the period and shown in the lightershade in the chart.

.

Impact of the crisis on sector revenues

The new companies more than made up forthe loss in revenues from the pre-existingcompanies. Digging further into the data, wecan nd that just under 90% of the newrevenues came from satellite operators whichstarted selling data in the period. It is wellrecognised that a crisis will stimulate new

companies with new business model; which iswhat we aee happening here. Of course thetrend will have started before the onset of thecrisis since the commitment to buy satelliteswill have taken well before the crisis emerged.

A list of the new satellites was given earlier.

What about company protability? Only alimited number of companies were willing toprovide this sensitive information and the chartbelow shows the results plotted as adistribution. It should be noted that the fewcompanies with very high protability are verysmall companies where owners are most likelytaking dividends rather than salaries. Using thetotal revenues for this set of companies wecan calculate a mean prot level of 8% for the

sector.

Company protability (%)

Finally, we take a look at the growth rates forcompanies which existed for the full period ofthe survey ie 2007 to 2012. We show these as ascatter chart for for each of the companyclasses.

CAGR (%) for company classes

The chart shows the CAGR as a a single datapoint for each of the companies that existed in2007 and also in 2012 grouped by classication.

Although data is limited, we can see that thelarge and medium companies do seem to bemore stable than the smaller ones. The variationis much less and remains positive. As can beexpected, smaller companies and especially themicro-sized ones will suffer more in a crisis.

Total sectorrevenues areestimated at! 757m in 2012.

The large majority 79% - came fromthe 16 large andmedium

companies

Revenues & growth


7/16


EO service companies in Europe are activeright across the value chain (illustrated) andthe chart below shows the relative size ofeach part of the value chain. The rst threesegments are dealing with satellite data eitherfrom their own (or licensed) satellites, fromthird party missions or as an operator of areceiving station taking data from satellitesunder contract or license. Data sellingactivities represent 40% of the market byvalue.

Split of activities (based on 2012 revenues)

Satellite data is then processed into geo-information, often in combination with otherdata eg. in-situ measurements, throughvalue-adding services. We have chosen torecognise two parts to this downstreamsegment: VA companies dealing directlywith the satellite data and GeographicInformation (GI) services companies which

are dealing with spatial data and usingproducts which have been generated usingsatellite data. Perhaps the clearest examplehere is the use of GoogleEarth but there aremany others and, whilst this segment wasnot a specic target of this survey, it will bean objective to evaluate it more in the future.

The information segment comprises 43%of the market. The remaining 17% is madeof companies which are selling software.

Number of companies in each segment

The number of companies active in eachsegment is shown and out of the 133companies, 8 are satellite operators, 31 arereselling data and 78 are value-adding.Many companies are active in more than

one segment which we shall examine later.We expect that the large majority of theother 186 companies are in the non-dataactivities and we have based our split ofrevenue on this assumption.

EO services value chain

Including theground stations,revenues linked todata sales haveincreased at a cagrof 17% since 2006driven by the launchof 16 new Europeansatellites in the

period

Activities


8/16


9/16


This looks at the market from the perspectiveof the service provider and the thematic areain which the product falls (EARSC Taxonomy).

The result is based on a smaller sample size(! 200m) than that for the market segmentswhich may be because companies do notkeep such information or that they nd itharder to allocate their products to a thematicarea.

Thematic segmentation based on revenues

Products associated with security represent

the biggest market with marine ecosystemssecond and land use / cover change third.Whilst we believe that this is a useful measurewe are not sure that these results reect thereality of the situation. Of the ! 200m ofcompany revenues represented by this result,! 78m (39%) was unca tegor i sed i eresponders said that they could not t theirproducts into one of the categories offered.We suspect that companies are now lookingat their products more in terms of the marketthat they address than for the thematic area it

represents and is perhaps a sign of theindustry maturing. This topic will be reviewedfor future surveys.

Market breakdown by thematic sector

If we step back and look at the widercategories the picture is different with land

products being the largest market withmarine second and security third. Of coursethis does reect that there are many sub-categories for land and marine whilst securityis a single category.

For the number of companies which areaddressing each of the thematic areas,security appears further down the list with 15companies; a reection that it is the largerplayers which are more active in this market.

The rst three are all associated with EUpolicy areas where, as in the market sectorsegmentation these are often associated withlocal needs and hence encourage localcompanies. Again, Copernicus is likely toencourage this trend.

Companies addressing the thematic segments

Finally, we can look at how many companiesare active in more than one segment whichgives a measure of their focus. Thedistribution of results is shown in the chart for

which the weighted mean is around 3.9 andthe median is around 2.9. This measure ofthe industry will be interesting to follow infuture studies but bearing in mind theuncertainty of the underlying segmentationand allocation by companies.

Company focus in thematic domains

Security productsrepresents thelargest thematicarea of interest butland products ingeneral are ofinterest for mostcompanies. Landproducts are oftendriven by EU policyand are oftenassociated withlocal needs and

encourage localcompanies

Thematic areas


10/16


The EO services industry has developedthrough strong innovation and R&Dinvestment for which there are two sourcesof funds; from the companies themselves(reinvested prots or loans / new capital) orexternal grants and development funding.We look at both sources.

For new start-ups and those with hightechnology content the percentage of theirrevenues invested in new product R&D hassometimes reached over 75%. In this surveythe highest we had reported was 60%.

These gures exclude external grants anddevelopment funding which we asked for asa separate gure (see below).

Distribution of company R&D investment

When we calculate this self-investment asan overall percentage of the revenues ofeach of these companies and take anaverage, we nd that the R&D intensity is7% which equates to a total R&Dinvestment of ! 53m across the sector. Thislevel of R&D intensity is higher than theaverage in the aerospace industry but lowerthan the software and computer servicesindustry.

Industrial Sector R&D Intensity

Pharmaceuticals and Boilogy 14.7%

Technology Hardware 14.2%

Sof tware and Computer services 10.6%

Leisure Goods 7.1%

Aerospace adn Defense 6.0%

Electronic & electr ical equipment 4.9%

Automobiles and parts 4.9%

R&D intensity in a number of industrial sectors(source: EU industrial Scorecard 2012)

Looking at the trend of R&D investmentover the 3 surveys it appears that the levelhas fallen consistent with an industrymoving from an R&D environment to onethat is more operational. The number of

companies investing under 10% hasstayed relatively stable whilst the numbersinvesting at the much higher levels hasfallen.

Percentage of companies investing in R&D atdifferent levels

External R&D in the form of grants andcontracts is a key element in the sector.Whilst this was reported at a level of 22% in2004, and 23% in 2006, in 2012 it has fallento around 7%. The different sources ofexternal R&D funding are shown with thelevels coming from the revenues of thosecompanies reporting in response to thisquestion.

Reported sources of external R&D funds

The gures come from 2012 so relate tocontracts that would have been started in2010/2011 and maybe even earlier. In thisperiod, the main source of funding to theindustry was coming from ESA and the EC(Framework Programme). This pictureshould be different in 2013 and for the nextfew years given the fall in the former and therise in the latter.

The total external funding represented in thechart is ! 25.9m coming from companieswith revenues of ! 369m, so 48% of the totalsector revenues. Scaled up, this indicates atotal level of external R&D funding of around! 53.9m or a level of 7%. In total, theindustry is spending around ! 107m perannum on R&D or around 15% of the sectorrevenues.

The research

intensity in thesector is around7% but variouswidely betweencompany classes.External sources ofR&D supportcontributeapproximately thesame amountagain to take thetotal R&D spend tobe around 14% ofthe sectorrevenues

Research & development


11/16


The type of data being sold has beenchanging. We noted earlier the number ofnew satellites launched since 2006 leadingto new data being offered. The chart belowshows the mix of data sales for theEuropean companies (but not just Europeansatellites) in 2012.

Mix of sales in 2012

Optical data overall comprises 80% of themarket with high resolution optical dataretaining the largest share of the market at35%. Given the advent of Sentinel 2 data in2014 or 2015, which will offer LR opticaldata free of charge, we should expect theLR segment to fall around this time but newsatellites being launched should push upthe share of VHR data sales. Sales of radar

data have essentially grown from zero in2006 when only the public ERS-2 andEnvisat SAR data were available.

The chart below shows the customers forthe data being sold with the large majority,nearly 75% being bought by public bodieswhether at European, national or locallevels.

Data sales revenues from different customers

Rather surprisingly, very little (8%) is beingbought by the value adding industry whilst

double this (16%) is being bought bycommercial customers that are not selling EOServices. These are the internal service

departments highlighted in the value chain insection 6 which lends the argument that thispart of the sector could be better understood.

The following chart looks at the mix of data

being used for value added sales based uponwhat percentage of the value adding companys revenues is dependent on which data type.

Percentage of Value-Adding revenue dependent

on the type of data

VHR optical data is the most important satellitedata for driving VA revenue and that opticaldata at all scales is responsible for 51% of VAsales. Radar imagery drives a further 18% witha few odd elements also contributing whilstmap and in-situ data is required for 25% of the

revenues. This illustrates the importance of thedata mix to the value adding services.

Finally, with the strong trend towards freeaccess to public data, how important is thattoday for the EO service companies? The nalchart addresses the importance of free datafor different company classes. As could beexpected, it is more important for the smalland micro enterprises than for the large andmedium ones and a few micro enterpriseshave built their business almost entirely on free

data.

Number of companies with the percentage of

their business depending on the free data

Optical imagerymakes up about80% of the datasales with VHR(


12/16


13/16


14/16


Copernicus is a European programme whichwill have a strong impact on the market. Intheir forward looking views, companiesrated their perspective on Copernicus asvery positive. When asked to rate the

anticipated future impact of Copernicus on ascale of -5 to +5 the weighted responsesaveraged 2.68.

Expected impact of Copernicus

Copernicus will provide geo-informationservices to EU policy makers. Furthermore,it has a second objective which is tostrengthen Earth observation markets inEurope, in particular the downstream sector,with a view to enabling growth and jobcreation. When asked which of the aspectsof Copernicus they thought would benetthem most, nearly 50% cited the access to

Sentinel data and only 17% of companiesforesee beneting directly from the EUfunding of the core services.

Aspect of Copernicus of most interest to industry

Copernicus services are grouped into 6specic categories. Companies wereasked which of these is of most interest fortheir business? The results show land asbeing the strongest interest by some way.

Thi s may reect the wide variety of

products contained within this broadcategory as we have seen in the thematicareas or it may be that this is considered

the area most open to industrialcontribution. Certainly atmosphere is atopic which is dominated by public sectorbodies.

Copernicus services interest to industry

It is encouraging that 11% of the companiesthink that climate change will be a service ofinterest. It is a broad subject with manyinterests at stake and industry could have alot to contribute.

Overall the survey results for Copernicusshow a strong industrial interest in both thedata and the information which is consistentwith the ndings in the strategic issues.

Industry has the objective to contributestrongly to the success of Copernicus andsees it as a strong lever with which tocompete on the world market.

Copernicus market interest - customer type

Industry has theobjective tocontribute stronglyto the success ofCopernicus andsees it as a stronglever with which tocompete on the

world market

Copernicus


15/16


16/16

EARSC is a non-prot-making organisation created in 1989 with the mission to foster the developmentof European Geo-Information Service Industry. Our main objective is to stimulate a sustainable marketfor geo-information services using EO data. Today, EARSC has about 65 members in more than 20

countries, and is a recognized association both in Europe and worldwide.

EARSC represents the European providers of geo-information services creating a network betweenindustry, decision-makers and users. We consider that the market is at a crucial stage of developmentas Earth observation becomes more frequently used by society and adds positive value to our dailylives. Nevertheless, there are many issues, opportunities and threats facing industrial actors and,through a small secretariat, EARSC informs and involves its members though its website andnewsletters, through the provision of web-tools, as well as organizing events.EARSC provides tools for its members to promote themselves and their services. As well as the EARSCweb-site ( www.earsc.org ), we run the OGEO Portal ( www.ogeo-portal.eu ) for communication betweenthe EO services sector and the Oil & Gas industry and a brokerage site ( www.eopages.eu ) forcustomers to nd the services which they require and which companies can provide them with a

solution.

CONTACT : EARSCEuropean Association of Remote Sensing Companies

26, Rue Beranger, 1190, Brussels, BELGIUM VAT number BE 0447243442

[email protected]

www.earsc.org
http://www.earsc.org/http://www.earsc.org/mailto:[email protected]:[email protected]://www.eopages.eu/http://www.eopages.eu/http://www.ogeo-portal.eu/http://www.ogeo-portal.eu/http://www.earsc.org/http://www.earsc.org/

Documents

EO Industry Survey Sept2013 © EARSC