***The Marketplace in Space

NOVEMBER 18, 2016

Forecast

Though commercial satellite imagery is now available to every corner of the economy, the industry will largely stay focused on its original customers: government intelligence agencies.

Thanks to a number of novel concepts and technologies, imagery collection satellites will continue to evolve and proliferate at a faster and faster pace.

As companies try to keep up with the ever-expanding volume of imagery available, they will have to find better ways to store, analyze and manage it.

Analysis

DigitalGlobe, one of the largest commercial providers of satellite imagery, launched its WorldView-4 satellite into orbit last week, adding to the growing constellation of satellites circling the Earth. Thanks to these satellites, we have gotten accustomed to having vast amounts of imagery at our fingertips. From online mapping services like Google Maps to browsable databases like Microsoft's TerraServer, the widespread availability of aerial photographs has become the new norm.

But commercial satellite imagery was never intended to serve media outlets or households alone. Instead, the industry was largely built with one set of customers in mind: government intelligence agencies. Even now, the imagery that frequently makes its way to consumers in the private sector is still gathered with an eye toward intelligence requirements. In all likelihood this emphasis will not change much in the coming years, even as states' own collection capabilities continue to improve.

A Better Vantage Point

Intelligence agencies have relied on aerial photographs since aircraft first appeared on the battlefield in World War I. Cameras were routinely mounted to air assets to gather information on enemy positions and to support military operations. The practice continued during World War II, though it became more effective as camera and aircraft technologies progressed. A decade into the Cold War, the United States' iconic U-2 spy planes were closely tracking the movements of the Soviets' nuclear arsenal.

Not long after the U-2's debut, both Washington and Moscow put reconnaissance satellites into space, giving each a better means to collect photographs of the other's most sensitive locations. Aircraft were still used to capture aerial images, as they are today. (Unmanned aerial vehicles, for example, have provided a great deal of imagery intelligence in operations against the Islamic State.) But reconnaissance satellites have several critical collections advantages over air assets and have carved out an important role in the world of intelligence as a result.

Unlike aircraft, satellites are at very low risk of coming under enemy fire. This enables them to continuously collect information on hostile environments while avoiding the risk of triggering a diplomatic crisis, as the May 1960 downing of a U.S. U-2 spy plane over the Soviet Union did. Moreover, satellites do not carry pilots who could be captured in such incidents, and their height in space ensures that they stay well out of range of most ground-based air defense systems. (Because advanced anti-satellite weapons are prohibitively expensive, they are still fairly uncommon.) In addition to their survivability, satellites can photograph much larger surface areas than cameras mounted on aircraft can. Today, given the sheer number of imagery satellites in orbit, it would be virtually impossible for aircraft to collect as wide a photographic sample in the same amount of time as satellites do.

Complete and Detailed Coverage

Since 1960, when the United States took its first photograph from space, nearly a dozen other countries have launched their own reconnaissance satellites. Over time, the capabilities of those satellites have evolved. At first, early models such as the Corona KH-1 took images with an equivalent resolution of 12 meters (39 feet). (In other words, the surface represented by a single pixel measured about 12 meters by 12 meters.) At this resolution, analysts could make out only large infrastructure, such as runways. But after a series of rapid innovations, satellites were able to take pictures at an equivalent resolution of 1.5 meters. By 1967, analysts could detect individual aircraft, ships and buildings from the images satellites produced. Of course, they still paled in comparison to today's photographs, whose 30-centimeter resolution allows analysts to identify specific weapons systems or even locate human silhouettes.

On the left, the first imagery taken by the Corona KH-1 satellite on Aug. 18, 1960. On the right, the Soviet Union's Dolon air field on Aug. 20, 1966.

Modern satellites can deliver images more quickly now, too. The satellites belonging to the United States' initial Corona program carried film cassettes that were then dropped and recovered as they fell toward the Earth. Unsurprisingly, this method led to substantial delays in the photographs' arrival on the desks of analysts and policymakers. It wasn't until 1976, when Washington launched the first KH-11 Kennan spy satellite, equipped with a digital sensor, that images could be immediately transmitted to bases on the ground. Now the United States has 15 of these satellites — which are believed to be able to achieve resolutions as high as 15 centimeters — in orbit. Though much of Washington's satellite program since the KH-11's development remains classified, many believe the newer KH-13 series is operational as well. Regardless, the spread of cutting-edge satellites in space has dramatically increased the ability of the world's great powers to observe one another's actions — a change some have even credited with stabilizing the world by making it more difficult for countries to hide wrongdoing or secretly amass military power.

Today's satellite images can provide real-time information about locations around the world.

In Search of New Markets

Governments have not been the only ones pursuing better satellite abilities, either. In 1993, the first private satellite imagery company — WorldView Inc., which later became DigitalGlobe — burst onto the scene when it secured a U.S. license to sell its photographs. Since then, the market has grown exponentially as other giants such as Airbus and myriad smaller competitors followed in DigitalGlobe's footsteps. Thanks in part to increasing internet access and bandwidth worldwide, the industry has taken off, reaching corporations and publishing companies around the globe.

Nevertheless, the bulk of commercial satellite firms still receive most of their revenue from governments. The burgeoning businesses have given countries that are unable or unwilling to field their own satellites access to imagery they otherwise would not have had. Selling photographs to multiple clients has also made imagery far more affordable for consumers, and prices on most products are still falling. The cost of sending satellites into space is dropping quickly as well, reducing the amount of upfront investment required to develop private satellite fleets.

Plunging costs and rising demand have encouraged the sector to seek out new customers. Nongovernmental organizations have been of particular interest to commercial satellite companies, though beyond a small segment that cover conflict zones, nuclear proliferation and humanitarian crises, they have proved a difficult market to break into. The industry has had more success selling its goods to media outlets, but even then it faces tight restrictions on the sale of photographs that contain information on certain government activities, including the movement of troops.

Some firms have even shifted away from the high-resolution images usually sought by governments, developing microsatellites instead. These satellites have less advanced sensors than their larger counterparts, but they are also much lighter and cheaper to launch in great numbers. Together, groups of these microsatellites can follow the movement of naval vessels, estimate economic activity by counting the number of cars in factory parking lots, or measure the amount of crude oil in particular storage containers. One company, Spaceknow, has even created an automated index that tracks Chinese manufacturing output based on observations of industrial facilities throughout the country. Projects like this can provide value to many consumers beyond the traditional intelligence agency customer. And the more the private sector's capabilities improve, the more products it will have to offer to public and private entities alike.

Too Much of a Good Thing?

This has given rise to an entirely new demand of its own, though: The need for a way of sorting through and storing a never-ending stream of images. The numerous public and private satellites in orbit, equipped with an array of sensors and cameras, can essentially provide an uninterrupted view of the world at any point in time. Sifting through and interpreting this imagery has become a daunting task that human analysts alone cannot manage.

On one hand, this has given rise to automated methods of analyzing digital photographs, including some that rely on machine learning or algorithms that can detect change between a series of images. On the other, however, it has forced governments to rely more heavily on the services of the commercial sector to stay abreast of what is happening in the world. As more private companies send more advanced satellites into space, it will become harder and harder to comb through and make sense of the flood of images at our disposal without a revolutionary way to manage them.