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1|Copyright ©2016 Skylogic Research, LLC

MARKET SECTOR FORECAST FROM UAV INSIDER:WHICH ARE GROWING AND WHICH AREN’T PANNING OUT

For Commercial UAV Expo

November 2, 2016

Colin Snow


“It’s tough to make predictions, especially about the future.”– attributed to Yogi Berra


Topics Forecasts: diversity, hype, rumor, and wonkInvestor sentiment

Outlook for sectors


Forecasts: diversity, hype, rumor, and wonk

$2B - $127B


Diversity

We are currently tracking 50 different forecasts!

Most reports sell between $2,000 and $6,000


Diversity

Source: PwC Source: Goldman Sachs

Most drone market forecasts overlook the largest commercial

sector: Film/Photo/Video

a TAM is not a forecast


Hype

“Precision agriculture and public safety will make up more than 90% of the market growth for unmanned aerial systems.”

The report confidently states, “…the commercial agriculture market is by far the largest segment, dwarfing all others.”


Rumor Q. What was the impact of FAA’s consumer drone registration on holiday sales?

A. NPD Group says some slippage at first, but in the end sales were up YoY


Wonk

5%

1%

1%

1%

2%

4%

7%

18%

24%

38%

5%

1%

2%

2%

4%

5%

11%

19%

26%

26%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Other (DIY, used, etc.)

Action sports / outdoor retailer

General merchandise big box retailer

Vertical market reseller

General camera / audio / video retailer

Big Box electronics retailer

General hobby store

Amazon or eBay

Directly from manufacturer

Dedicated drone dealer/distributor

Past Future

n = 640

Source: Skylogic Research

Qs. Where did you buy / where will you buy your next drone?

NPD data misses most of this


Wonk “On average, exemptions list two unmanned aircraft types that will be used in operations. The most popular unmanned aircraft maker is DJI, which accounts for two out of three drones listed across all exemptions.”

Center for the Study of the Drone at Bard College: Analysis of U.S. Drone Exemptions 2014-2015

Many – including DJI – believe this affirms their “70% market share” claim.

But this is not unit market share. It is only what is listed on the application as what they “might use” - not what they actually own or even will use.

“Echo Chamber”

Image: DJI


Commercial UAS aircraft (N-number)

1805

197134 127

0

200

400

600

800

1000

1200

1400

1600

1800

2000

DJI 3DRobotics Precisionhawk AscTech

DJI = 46.3% Overall

As of 3/31/2016 - Source: sUAS News

See more here:

http://www.suasnews.com/2016/04/suas-guide-q1-update-2016/http://www.suasnews.com/2016/04/suas-guide-q1-update-2016/


Most popular brands Q. What was the brand of your last drone purchase?

50%

7%4%

3%3%

2%2%

2%2%

4%

20%DJI

3D Robotics

Yuneec

Blade

Parrot

Event 38

Hubsan

FreeFly Systems

Syma

Custom

Others (


1.8 1.27

55

107

450

234

1 22

13

29

74

31

-5

5

15

25

35

45

55

65

75

0

50

100

150

200

250

300

350

400

450

500

2010 2011 2012 2013 2014 2015 Q3 2016

Dollars ($)M Deals

Investor sentiment

Source: CB Insights

Dear John Drone,

I’ve found somebody else.

Signed,VC


Outlook for sectors


U.S. Drone Sales Revenue Forecast (in 000’s) – all price points

$1,526,004

$2,334,786

$2,918,483

152%

113%

87%

0%

20%

40%

60%

80%

100%

120%

140%

160%

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

2016 2017 2018

Projected CAGR Source: Skylogic Research

$2.9B in 2018


Drone purchases – price points

Q. What was the price of your last drone purchase?

17%

13%

34%

18%

9%

7%

2%

1%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Less than $500

$500 - $999

$1,000 - $1,999

$2,000 - $3,999

$4,000 - $7,499

$7,500 - $34,999

$35,000 - $99,999

More than $100,000

n = 650


More than half of all buyers purchase drones costing between $1,000 and $4,000

insight

SEVEN


Drone purchases - usage

Descriptor Price RangeHobby

Use

Commercial or Government

Use

ConsumerLess than $500 73% 27%

$500 - $999 65% 35%

Prosumer $1,000 - $1,999 39% 61%

Professional

$2,000 - $3,999 11% 89%

$4,000 - $7,499 3% 97%

$7,500 - $34,999 0% 100%

$35,000 - $99,999 0% 100%

More than $100,000 0% 100%


“Prosumer” category is narrow. ASP = $1400

insight

FIVE

Most drones (85%) costing more than $2,000 are purchased for professional use.

Key insight

FOUR


User survey Q. What is the primary intended use of your drone purchase?

Film/Photo/Video accounts for 43% of intended commercial use and constitutes the largest commercial market sector

insight

FOUR

37%

16%13%

7%

6%

6%

4%

3%

8%

Commercial photo / video

Survey and mapping

Inspection / monitoring

Precision agriculture

Academic research

Cinematography

First responder

Testing and R & D

Other



Current environment

Uncertain future

Mapping

Photo / Video Structural Inspection

Sports

Real Estate

Cinematography

Search and Rescue

Surveying

First Responders

Precision Agriculture

Package Delivery

Linear Inspection (rail,

oil, power)

Border Patrol

Fish and Game

VLOS BVLOS

Source: Gryphon Sensors and Skylogic Research

Sector challenges

Construction


Sector Scorecard

= Few

= Severa l

= Many


Precis

ion Ag

ricult

ure

Civil I

nfrast

ructu

re

Cons

tructi

on

Energ

y & U

tilitie

s

Film

/ Pho

to / V

ideo

Minin

g & Ag

grega

tes

Publi

c Safe

ty &

1st Re

spon

ders

Surve

ying &

Map

ping

OVERALL SECTOR OUTLOOK

Challenges:Access permissionsBVLOS operationsData capture resolution and accuracyData governance and chain of custodyData processing bottleneckIncumbent technology and playersIntellectual propertyNighttime flightsOcclusions and obstaclesPrivacy rightsWorksite safetySOPsStandards and practicesState and local restrictionsTerrain and object height autonomyWorkflow and legacy software integration*VRT adoption rate

OUTLOOK = drone usage and micro-economic benefit

Sheet1

Sector Outlook

Precision AgricultureCivil InfrastructureConstructionEnergy & UtilitiesFilm / Photo / VideoMining & AggregatesPublic Safety & 1st RespondersSurveying & Mapping

OVERALL SECTOR OUTLOOK

Challenges:

Access permissions= Few

BVLOS operations

Data capture resolution and accuracy= Several

Data governance and chain of custody

Data processing bottleneck= Many

Incumbent technology and players

Intellectual property

Nighttime flights

Occlusions and obstacles

Privacy rights

Worksite safety

SOPs

Standards and practices

State and local restrictions

Terrain and object height autonomy

Workflow and legacy software integration

*VRT adoption rate


Find out more - articles and free research reports

Commercial UAV News

http://www.expouav.com/news/

Skylogic Research

http://droneanalyst.com/research/

http://www.expouav.com/news/http://droneanalyst.com/research/


Questions?


About Skylogic Research, LLC is a research, content, and advisory services firm supporting all participants in the commercial unmanned aircraft systems (UAS) industry.

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• Buyers of UAS technology and services – to help inform their acquisition decisions• Investors – who need to distinguish technical and market viability

This focus, plus research as a foundation and reach into a community of more than 80,000 business executives and innovators through social media and media partnerships, allows Drone Analyst to deliver a high-value, low-risk method for achieving optimal understanding.

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In particular, Skylogic Research has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and Skylogic Research strategy and possible future developments, products, and/or research directions are all subject to change and may be changed by Skylogic Research at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, research notes, or web content.

MARKET SECTOR FORECAST FROM UAV INSIDER:�WHICH ARE GROWING AND WHICH AREN’T PANNING OUTSlide Number 2TopicsForecasts: diversity, hype, rumor, and wonkDiversityDiversityHypeRumorWonkWonkCommercial UAS aircraft (N-number)Most popular brandsInvestor sentimentOutlook for sectorsU.S. Drone Sales Revenue Forecast (in 000’s) – all price pointsDrone purchases – price pointsDrone purchases - usageUser surveySector challengesSector ScorecardFind out more - articles and free research reportsQuestions?About© 2016 Skylogic Research, LLC.�All rights reserved.�

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