{"id":4127,"date":"2020-09-17T02:05:16","date_gmt":"2020-09-17T09:05:16","guid":{"rendered":"https:\/\/droneanalyst.com\/?p=4127"},"modified":"2020-12-22T02:16:23","modified_gmt":"2020-12-22T10:16:23","slug":"where-did-the-us-consumer-drone-market-go","status":"publish","type":"post","link":"https:\/\/droneanalyst.com\/2020\/09\/17\/where-did-the-us-consumer-drone-market-go\/'","title":{"rendered":"Where Did the Consumer Drone Market Go?"},"content":{"rendered":"\n

And How It Might Come Back<\/strong> – A Look At Consumer Drone Market Trends<\/strong><\/h2>\n\n\n\n

As we covered in our recent blog post<\/a> about the new FAA registration data, the American consumer drone market hit a snag in 2019. The market’s stagnation is marked by a paltry 6% growth in registration numbers \u2013 an indicator for consumer aircraft sales.<\/p>\n\n\n\n

Put into the larger context of where stakeholders expected the market to be, we are far off from target. Looking at just the FAA US aerospace forecast from 2017, the industry has quickly dropped to 34% behind the base growth forecast<\/strong> in 2019.<\/p>\n\n\n\n

\"Forecast<\/figure>\n\n\n\n

But where did the market go wrong? What is causing this leveling off? And what should we expect in 2020? We break down the consumer drone market trends<\/strong> in this post and look at some new data that<\/strong> shows the COVID-19 global pandemic might have a positive impact<\/strong>.<\/p>\n\n\n\n

A Look at the Consumer Market As It Expanded \u2013 DJI\u2019s Rise<\/strong><\/h2>\n\n\n\n

The consumer drone industry is mostly defined by the dominance of DJI as previous consumer players have either exited the hardware sector entirely (GoPro, 3D Robotics) or doubled down on the commercial market (Autel, Parrot) where they see potential for more growth and less price-sensitive customers.<\/p>\n\n\n\n

One way to look at this is to see the price war that happened as competitors such as Yuneec, 3D Robotics and GoPro made their first foray into the hobbyist gimballed camera drone market that DJI created.<\/p>\n\n\n\n

\"Competition<\/figure>\n\n\n\n

As new competitors entered the market, DJI remained one step ahead<\/strong>, releasing products at a comparable or superior performance with lower prices. At the same time, DJI better covered the entire market with a variety of new offerings, both lowering and increasing prices simultaneously to attract a wider range of customers.<\/p>\n\n\n\n

While some (including the Pentagon\u2019s chief weapons buyer) have stated<\/a> this early market trend as evidence of \u201cdumping\u201d<\/strong> by DJI that has destroyed the small UAS industrial base in the US and elsewhere, there isn\u2019t enough evidence to make the dumping claim. DJI keeps its pricing consistent globally (taxes and tariffs withholding) and a 2015 investment<\/a> of $75 million from Accel is on-par with investments in Yuneec and 3D Robotics.<\/p>\n\n\n\n

Instead, we do see evidence of DJI\u2019s investment in technology and innovation of its manufacturing with a recent video<\/a> showing how automated their production has become. All together, this suggests that DJI\u2019s early investments in manufacturing capability and vertical integration let it make profits at prices competitors simply could not.<\/p>\n\n\n\n

However, while our common knowledge of monopolies will speculate that DJI should have risen its prices as competitors exited the market \u2013 DJI has opted for a different approach.<\/p>\n\n\n\n

A New Type of “Monopolistic Effect<\/strong>“<\/h2>\n\n\n\n

Instead of raising prices, DJI has steadied its segmented pricing strategy while continually trying to reach new \u201clows\u201d. With the Mavic Mini released at the end of 2019 priced just below $400 at launch.<\/p>\n\n\n\n

\"DJI
With various color options, hand gesture control and more, the DJI Spark was an early attempt to bring drones to new audiences<\/figcaption><\/figure><\/div>\n\n\n\n

This makes sense when considering that the drone market has historically failed to capture the female market and a broader public appeal. Lowering prices and testing out new form factors and control schemes has been DJI\u2019s attempt to grow the market<\/strong>. Seemingly that hasn\u2019t entirely worked, with the Mavic Mini de-emphasizing earlier attempts at different control schemes, and registration data signalling a slowdown.<\/p>\n\n\n\n

So how has DJI been maximizing its profits? While DJI has continued to invest in its product lines and lower prices, it has increased profits by slashing sales and marketing efforts<\/strong>. From 2015 \u2013 2017, DJI was investing in a variety of activities across the globe; a series of drone photography exhibitions<\/a> in major cities, local \u201cnew pilot experiences\u201d reaching 200 cities in 2016 alone<\/a>, a multi-year partnership<\/a> to showcase drones at the FIA Word Rally Championship, a global rental and photography contest<\/a> with National Geographic and live-streamed expeditions with Good Morning America to explore lost caves<\/a> and an erupting volcano<\/a>.<\/p>\n\n\n\n

In comparison, 2018 \u2013 2019 has been dominated by DJI focusing primarily on online efforts and product launches. Cutting the aforementioned programs and dropping out of NAB in 2019. While previous DJI product launches have taken place in Grand Central Station<\/a> and simulcasted from across the globe, DJI has not held a physical, large-scale launch event for a drone product since its Mavic 2 Pro and Zoom products in late 2018<\/strong>.

While it\u2019s hard to estimate the impact these adjustments have had on the market’s growth, I can speak from personal experience how much a hands-on product demo can help to introduce drones to new consumers. Putting your hands on the sticks communicates just how easy it is to fly. If DJI isn’t investing in hands-on experiences, who is?<\/p>\n\n\n\n

Signs of a Consumer Market Surge<\/strong><\/h2>\n\n\n\n

So is there any saving of the consumer market, or is it all downhill from here? Yes, and no. There are some signs that COVID-19 has caused a short-term bump<\/strong> in interest for consumer drones. <\/p>\n\n\n\n

If you look at Google Trends global data around keywords that suggest high purchasing intent such as “best drones” and “buy drone”, we are able to get a proxy for real-time interest in consumer drones.<\/p>\n\n\n\n

\"COVID-19<\/figure>\n\n\n\n

This is a great sign, but when you zoom out, this is only a blip in a longer trend towards disinterest in consumer drones that peaked in 2016 (visualised below). Unless we have a new value proposition for consumer drones, and a new way to communicate it, this won\u2019t change.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

There is hope new offerings from Skydio that are focused on autonomy will open up a new category of consumer drones and potentially a new customer base. Otherwise, COVID-19 will be seen as a key event that didn’t halt the decline of consumer drone sales, just delayed it.<\/p>\n\n\n\n

Dive deeper into the consumer drone market trends of the American drone industry in our latest free<\/strong>\u00a0report<\/a> titled \u201cHistorical Performance of the American UAS Industry\u201d.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

And How It Might Come Back – A Look At Consumer Drone Market Trends As we covered in our recent blog post about the new FAA registration data, the American consumer drone market hit a snag in 2019. The market’s stagnation is marked by a paltry 6% growth in registration numbers \u2013 an indicator for consumer aircraft … Read more<\/a><\/p>\n","protected":false},"author":56,"featured_media":4207,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"yoast_head":"\nWhere Did the Consumer Drone Market Go? - Drone Analyst<\/title>\n<meta name=\"description\" content=\"The consumer drone industry has stagnated. 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