Payload has a really interesting piece on the state of earth observation (EO) and how the industry is shifting its focus towards profitability, government funding, and addressing niche issues, as commercial demand lags expectations.

Key points:

• Current EO market breakdown: ~50% US government, 25% allied governments, 25% commercial
• Major players like Planet, Spire, BlackSky, and Maxar are prioritizing profitability after years of growth
• Early movers have an advantage with significant initial investments creating barriers to entry
• Startups need to differentiate through niche capabilities like hyperspectral imaging, climate monitoring, or edge computing
• AI and data analytics are seen as potential growth drivers for the industry
• SpaceX’s $1.8B NRO contract highlights the government’s dissatisfaction with the state of EO and their desire for cost-effective EO solutions

Of course the macro-economic environment that many of these companies have come to market in hasn’t helped. As far as I’m concerned the focus on profitability and selectivity in new venture funding is a welcome side effect of these new economic realities. The survivors from the current crop will grow stronger and the industry should finally be able to avoid the boom bust cycle that has plagued previous attempts to cement new space as a persistent and critical part of the economy. The commercial markets will grow - just never as quickly as the pitch decks predict.