Although drones have been in existence for several decades, they have outgrown their military surveillance roots and are now widely used by consumers and professionals. In the last couple of years, the commercial drone industry has grown in staggering rates. With improving technology giving drones more versatility in fulfilling commercial needs, more and more industries are starting to recognize the value that drones can give to their businesses. Service providers have likewise responded to the increasing market demand, with the increase of commercial drone-base services getting further facilitated by the decreasing costs of drone technology.
To better illustrate the size of the drone industry and its potential for more growth, here are some interesting facts and numbers:
The number of drones
770,000 – This is the total number of drones that have been registered with the FAA in March 2017. By January 2018, this figure had increased to over 1 million. Although FAA registration of drones that weight more than 0.55 pounds less than 55 pounds was originally required by FAA’s small drone registration rule back in December 2015, the registration rate seems to have picked up in the last two years. By 2020, the FAA predicts that there will be about 7 million drones in the United States alone.
The number of drones owned surprisingly high considering that only 8% of Americans own a drone as of the end of 2017. This discrepancy seems to further emphasize that most drone owners probably own more than one drone. However, the prevalence of drones cannot be denied – a majority 59% of Americans have witnessed actual drone flight in person.
Of the approximately 1 million registered drones, 878,000 were for hobbyists and 122,000 were for commercial drones. Since hobbyists are only required to register once even if they owned multiple drones, the number of actual owned drones in the United States was likely even higher. The FAA estimates actual numbers to be well above 1.5 million.
By 2019, the number of drone registrations is expected to reach 2 million. The number of actual drones is expected to reflect this increase to about 2.4 million.
Global numbers are much harder to come by due to research firms having different standards as to what constitutes a drone. Conservative estimates of the total global drone sales in 2017 is more than 3 million units, corresponding to a value of about $6 billion. These numbers show an impressive 39 percent increase in number of units and a 34 percent increase in revenue from 2016. By 2020, the drone market is expected to have a value of more than $11 billion.
The dominance of DJI
DJI remains as the brand to beat in the drone industry with an estimated market share of up to 85%. In 2017, the dollar value of this market share was estimated to be around $2.83 billion – a whopping 80% increase from 2016. Although the DJI manufacturing facility is located in Shenzhen, China, 80% of the orders they receive are from overseas.
In the United States, the market for high-end drones has been dominated by DJI. They hold about 66% market share for drones that cost between $1000 to $2000, and about 67% market share for drones that cost between $2000 to $4000. They are not quite as big a presence in the lower priced market segment, but they are still significant with a 36% market share for drones that cost between $500 to $1000.
Across the whole spectrum of price ranges, DJI holds about 50% of the market. The only market segment where they are not dominant is for drones that cost less than $500, which are mostly toy drones.
Number of commercial drones
In the United States, commercial drones make up only 6% of the total drone sales. This number may be skewed by the prevalence of mini and nano-drones that are primarily used for toys, as Skylogic estimates that about 75% of all drones that weight more than 0.55 lbs. are purchased for commercial and professional purposed. This market includes both and government firms and private businesses.
By early 2018, FAA had already received 122,000 commercial drone registrations, and this number is expected to increase to more than 150,000 by the end of 2018. By FAA estimates, they have received more than 1000 registrations for commercial drones every week since registration became a requirement. The rate at which commercial drones are sold and registered is expected to accelerate in the future, with an estimated 442,000 commercial drones operational in the United States by 2021.
The commercial drone market has started to shift its preference towards more expensive drones. About one-third of all drone purchases in 2017 have been for models that cost more than $2,000. In terms of drone brands, DJI continues the dominate the market, accounting for about 74% of all global market sales for commercial drones. Their market dominance covers all price ranges. They even lead the market for sales of optional drone payloads and drone software.
The commercial drone service industry
Back in 2016, the commercial drone-based service industry was estimated to be worth $705.3 million. This is a measly amount compared to the forecasted value of the industry by 2022 – $3.6 billion. Between 2015 and 2025, the drone service industry is expected to have contributed more than $82 billion to the economy of the United States. Worldwide, there is about $100 billion market opportunity for drones for the period between 2018 and 2020.
By far, the dominant branch of the drone service industry is drone photography and real estate photography, which corresponds to about 47% of all commercial drone applications. The close runner ups are industrial applications such as inspection and mapping (28%) and agricultural inspection (17%). The fields of agriculture, construction, and mining are seen as the fastest growing segments of the drone-based service industry.
For commercial drone pilots, the most important feature of their ideal drone is an excellent obstacle avoidance system. Secondary to these are the drone software, drone AI and algorithms, and the quality of motors and actuators. Surprisingly, commercial drone pilots are least concerned with memory storage and energy management.
90% of commercial drone mapping services still use drones that cost $1500 or less, representing a potential improvement in technology for this sector. Meanwhile, the use of drones for emergency response and search-and-rescue operations is a very small 3% of the total number of drone applications. This is a sector of government-based work that can be further improved by the use of drones.
For commercial drone pilots that are looking for job opportunities, the top industries that are hiring drone pilots are agriculture, insurance, construction, police, and oil & gas. With the increase in value of the drone-based service industry, these opportunities are expected to increase accordingly.
With the prevalence of drones, drone-based risks have also become a cause for concern. Between December 2013 and September 2015, a total of 921 incidents involving drones and manned aircrafts were reported. Of the 921 incidents, 594 were considered mere ‘sightings’ – pilots or air traffic controllers spotting a drone flying near or within the flight paths of manned aircraft.
Although these incidents posed no threat, the other 327 were considered to have posed a ‘proximity danger’ where a drone got within 500 feet of a manned aircraft. 51 of these even came within 50 feet, and there were 28 instances where a pilot had to maneuver to avoid a collision with the drone.
More than half of the reported incidents occurred within 5 miles of an airport, while more than 90% took place above 400 feet. It is worth noting that these areas are explicitly restricted by the FAA for drone flight for the exact risks that the aforementioned incidents can bring about.
Part 107 waiver applications
Due to the restrictions implemented by the FAA using the Part 107 rules on Unmanned Aerial Vehicles, there are certain circumstances where commercial drone pilots are not allowed to fly their drones. If absolutely necessary, they are given the option to file a waiver with the FAA, which the FAA can approve with their discretion.
As of September 2018, the FAA has granted more than 2000 Part 107 waivers. A huge majority (92%) of these waivers were granted for flying at night. The second most common reason (5%) for filing a Part 107 waiver was for flying in restricted airspace such as those near airports and other government buildings. Multiple requests were approved for flying beyond visual line of sight, from a moving vehicle, over populated areas, and for operation of multiple drones but the cumulative number for these account for only 1% of the approved waivers.
Out of the 1828 operators who were granted Part 107 waivers, about 58% were representatives of service-based organizations. Only 26% of the granted requests were from individuals, while emergency personnel made up the remaining 11%. This statistic shows that the FAA puts more trust in organizations, perhaps due to their access to more manpower or to better technology.
The numbers objectively show how much the drone industry has grown through the past several years. The past 2 or 3 years have been exceptionally good years for the industry, and this trend is expected to continue at least up until 2025.
The increasing presence of drones in our airspace have resulted in safety concerns also becoming widespread. With the number of reported incidents of drones being in proximity with manned aircrafts, these concerns appear to be justified.
The government has started to step in by enacting the FAA’s Part 107 rules, but implementation needs a lot of improvement. It’s not an enviable job to regulate drone activities as they need to allay the public concerns for safety and privacy while ensuring that they don’t hinder the growth of the commercial drone industry. A delicate balance needs to be achieved, and it better happen soon as more and more drones take to the skies.