Setting Realistic Growth Prospects for the Drone Market

I believe three of the biggest misconceptions in the drone industry is how fast it will grow, which sectors will grow, and which ones will lag.

No one disagrees that drones—both consumer and professional—represent a new and emerging market. Drone market forecasts abound. We currently track 73 independent companies that provide market forecasts, and each of them projects growth for the drone or unmanned aerial system (UAS) sector that is nothing short of phenomenal. Some of these, however, are questionable, because, at the time they were written, there were no historical sales or reliable market survey data on which to create a proper forecast. We wrote about this problem back in 2015 here. Still, today we still see a big gap between current forecasts and actual purchases, services, and business adoption.

In this article, I’m going to take a look at some of the data collected in our latest report on the drone industry—data we think is important to you and answers the question: “Why don’t we see widespread adoption of drones in my industry just yet?”

Business use defined

As part of our 2017 Drone Market Sector Report, we conducted a survey to identify the business users for drone-based projects and which industries have traction. We define “business users” as those individuals or companies that use or purchase drone-based imaging or sensing services. A total of 623 respondents answered our qualifying survey question that they either do such work themselves or contract out for it.

When we asked respondents about the primary commercial drone-based service they perform or purchase, the results show that:

  • the #1 business use is aerial photography and/or video at 31%,
  • the #2 use is surveying / mapping / GIS with 20%,
  • and the #3 use is construction (design, building inspection, or monitoring) at 6%.

Company size

To gauge the extent of drone use, we asked our business users about their company’s revenue, the number of projects they perform per month, and the number of remote pilots they employ. As with service providers, the numbers are low. For example, 75% of business users perform one to five projects per month.

The revenue figures of business users reveal an interesting trend as well. More than half (53%) are small and medium-size businesses (SMBs)—organizations with less than $10 million in annual revenue. Only 6% could be classified as a large enterprise, i.e., an organization that makes over $1 billion.

As we did with drone-based service providers, we asked these business users how many aviation-authority, licensed small UAS / UAV remote pilots they currently employ. The numbers were smaller than we expected. Almost three-quarters (74%) have five or fewer pilots; 50% have only one.

Certainly these numbers debunk the media hype about drones. There are not hundreds of thousands of drones flying now (certainly not at the same time), nor is it true that Millions More Drones Will Be Flying Above Your Head by 2020 and in this piece we make the case Why the Drone Network of Tomorrow is Farther Away Than You Think.

Limited success stories on integration

Our research finds widespread business adoption is being hampered by a reluctance to share too much information about successes.

Companies are depending on information communicated about drones by others that have been successful. Certainly the interest is there. You can see that from the diversity of industries attending the major U.S. commercial drone expos, such as InterDrone, Commercial UAV Expo, and Drone World Expo (which was just purchased by Commercial UAV Expo). Unfortunately, only a handful of companies (we estimate 75–100) are willing to come forward and present their use cases at these shows. Most of these presentations are not about companywide adoption, but rather about a particular, localized proof of concept.

There are positive messages in which the benefits of drones are explained, but communication about what a successful integration looks like is still very limited. Additionally, we find that companies that are already using drones are reluctant to share too much information, so they can continue to reap the benefits of their early investments. As a result of this reluctance to share information, further integration lags as companies wait on successful user stories that may never appear.

Bottom line

Unfortunately, the media all too often equates the business use of drones with drone delivery, and only reports on the headline-seeking efforts of Amazon, Google, and Facebook. There is so much more that’s actually happening, and it’s getting difficult to generate a comprehensive story on business use. Some of this can be attributed to the fact that many of the major industrial users are starting to focus only on the use cases that matter to them. The most concrete examples of this are the NAB Show, which brings together photography, video, and cinema professionals; the Energy Drone Coalition Summit, which is bringing together the major drone / UAV ecosystem players with the energy industry asset owners and end users; the American Society for Photogrammetry and Remote Sensing (ASPRS), which hosted a pre-conference UAS Technical Symposium this year at the Commercial UAV Expo, and will co-locate with the International LiDAR Mapping Forum in 2018.

That said, we will continue to do research on individual verticals and report growth and adoption issues.

If you have questions about what’s in the report or would like to comment on it after reading it, write me at colin@droneanalyst.com.

 

Image credit: Shutterstock

Show Me the Money—A Look at Where Service Providers Are Making Money in the Drone Industry

Guest post by Zacc Dukowitz, Director of Marketing UAV Coach

In this article we’re going to take a look at some of the data collected in the new report from Skylogic Research on the drone industry—data we think is important to you and answers the question: “Where are drone-based service providers making money?”

The report defines Service Providers as those individuals or companies that offer drone-based imaging or sensing services for outside hire (as opposed to Business Owners, who “use or purchase drone-based imaging or sensing services”).

Let’s dive in.

PRIMARY SERVICE AREAS FOR SERVICE PROVIDERS

Skylogic’s report found that the top three primary service areas for commercial drone work are: Aerial Photography / Videography; Surveying / Mapping / GIS; and Real Estate.

However, as indicated in the pie chart below, the first area (i.e., Aerial Photography / Videography) takes up the lion’s share not just of those three, but of the entire services scene, with 41% of the entire chart, while the following category (Surveying / Mapping / GIS) only receives 13%.

skylogic-survey-services

A note on the data: Respondents were asked to indicate the primary and secondary commercial product or services they offer. They could pick one primary and up to three secondary services. Skylogic intentionally had them choose a primary because previous research revealed that many service providers boast about their ability to service multiple industries, but have no domain expertise in those industries.

But just because the majority of commercial drone operators are working in aerial cinematography doesn’t mean they’re actually making money in that sector.

The report goes on to rank the top 10 drone services making over $100K/year. Surprisingly, it’s Surveying / Mapping / GIS that ranks first in that list. Aerial Photography and/or Video is #2. (Of course, just because you’re not making over $100K/year doesn’t mean you’re not making any money.)

After those first two, the third area listed where people are making over $100K/year is Utilities Infrastructure Inspection or Monitoring—even though this is the seventh item listed in the pie chart above, with only 3% of respondents indicating that they work in that field.

SO WHERE IS THE MONEY?

It seems one conclusion we can draw from these data points is that those commercial drone pilots who find a commercial niche (a place where there aren’t many people operating, but there is a demand for the work) are likely to make the most money.

Taking a simplistic view, a commercial operator could potentially look at those areas of minimal saturation on the pie chart—the ones lower down the list—and then look at those areas where people are making over $100K/year, and see what might be required to get into that sector.

Of course, transitioning into commercial mapping or inspections isn’t as easy as just knowing how to fly a drone. But we can foresee a future where solopreneurs team up with other professionals with specific skill sets—for example, a licensed surveyor—to provide high-end services to large industrial operations.

SERVICES MOST LIKELY TO BE OUTSOURCED

Another chart we want to share from Skylogic’s report shows the commercial areas where business owners are outsourcing services.

If you’re a solopreneur looking to find a skill set that will help you find work, this graphic could be a great jumping off place for finding skill sets you might want to develop.

skylogic-survey-outsourced-services

The bottom line is that there is money to be made as a service provider in the drone industry, but the most popular field (i.e., aerial cinematography) is not the most lucrative, and the areas where you’re most likely to find a solid financial foothold will require additional skill sets beyond knowing how to fly and how to operate a camera.

It will be interesting to see the data in another year or two. Things are developing rapidly, with students beginning to study drones and STEM in high school and the landscape appearing to shift radically to focus more on industrial applications. We may soon see mapping, surveying, and similar commercial use cases rise to the top of the services areas for drone service providers, and we might also see a resulting shift in the market from cheap drones to high-end drones developed for niche applications.

skylogic-report-cover
Don’t have a copy of the report? Purchase a full copy of the report here.

This post first appeared on UAV Coach

Image credit: Shutterstock