...Earth Observation: Defense and Security, demand for data to support imagery intelligence (IMINT) continues to grow globally to support defense activities and military operations. However, as a result of the relatively high cost to maintain and launch EO defense satellites and the investment required to fund R&D, only 11 countries have developed EO defense capacity dedicated to supporting IMINT.

“Since only a few countries operate proprietary high-resolution satellites, the commercial sector is expected to make up a significant part of future demand for IMINT,” said Adam Keith, Director of Space and Earth Observation at Euroconsult and Editor of the report. “The number of unclassified defense and dual-use satellites launched by these 11 countries totaled 75 over the past decade. This figure is expected to rise to 100 satellites over 2013-2022, with a further three countries launching dedicated capacity. With costs remaining high, and budgets strained, development of dual-use systems is therefore expected to increase, with costs spreading across multiple government departments in order to fulfill the data requirements of numerous public sectors, such as engineering, infrastructure and resources monitoring. Further mechanisms to re-coup system costs and/or to support national industry will include commercialization of government satellites through dedicated data distribution entities, such as those already observed in France and Italy through the sale of data from their dual-use systems.

In 2012, 77 percent ($990 million) of the total $1.5 billion EO commercial data market was attributed to defense customers, realizing a CAGR of 20 percent over the last five years. Of this $990 million, close to 50 percent is attributable to the U.S. government, which, through the National Geospatial-Intelligence Agency (the NGA), represents the first customer of commercial EO data. The increased level of procurement by the NGA drove growth in the overall commercial data market from 2006 to 2010. However, following the award of Enhanced View contracts to U.S. operators and data providers (DigitalGlobe and GeoEye) in 2010, demand stabilized, and indeed, U.S. procurement is expected to drop in 2013, with Enhanced View impacted by austerity measures within the broader U.S. government, prompting the merger of the two companies.

Growth in the commercial data sector is now being driven by wider global sales to defense users, particularly by countries with high IMINT requirements and limited viable proprietary solutions. In order to meet these needs, commercial operators are finding success in providing direct access contracts to end-users, providing secure imagery access to defense clients. With continued high demand, revenues from commercial data sales to defense are expected to grow to $2.2 billion by 2022.

Over the last three years much has evolved in the wider defense environment. Continued global unrest drives requirements for satellite imagery to support defense applications, however this is being met by growing economic pressures in leading economies (particularly in North America and Europe) leading in the case of the U.S. to its support of the commercial sector being revisited. In the second edition of Euroconsult’s research report Earth Observation: Defense and Security, government attitudes towards imagery acquisition and satellite procurement are assessed in order to identify the preferred approaches to meeting defense requirements globally and to identify opportunities and risks for the commercial data industry in these challenging economic times.