Droning on: what are the opportunities?

The local unmanned aerial vehicles could be about to consolidate, prompting a shake-up in the sector.

Mark Stevens predicts the days of people being able to do a short course, buy an inexpensive drone, then start charging $100 to $600 an hour to shoot stills or videos of landscapes, buildings and events may soon be coming to an end.

“It’s inevitable that UAVs [unmanned aerial vehicles] will become commoditised,” he says.

“In the market serviced by small UAVs, most of the work is small-scale engagements that can be measured in hours; it’s aerial filming for real estate, weddings, sports events, maintenance inspections and local surveying and it’s ripe for integration. This is an immature industry where low barriers to entry have led to lots of drone operators entering the market. Inevitably, there will be a consolidation process with a handful of larger companies emerging.”

Stevens is not a disinterested observer.

In 2009, betting that drones were going to take off and that most businesses would want to outsource their drone work, the former Australian Army officer launched UAVs Australia with his son, Aonghus​. Last year, he joined forces with the US-based, globe-spanning, drone-sourced data company Measure in a joint venture called Measure Australia.

“Certainly, Measure Australia plans to benefit from the consolidation of the local industry when it comes,” he says.

“We’re expecting the industry to experience strong growth over the next decade, especially as the technological advances made in military drones cross over into non-military drones. This is an industry that the Association for Unmanned Vehicle Systems International estimates will be worth US$82 billion ($104 billion) and employing 100,000 people globally by 2025.

“And as the market evolves, we expect operators will be required to meet higher standards in terms of certification, insurance, experience and risk management, something that will benefit larger businesses.”

While agreeing some degree of consolidation is inevitable, drone industry consultant Jon de Vos says there are still lots of opportunities for enterprising types.

“In a country this size, there are always going to be niches that the big operators aren’t going to bother with,” he says. “I can’t imagine the larger players wanting to provide wedding photography in regional areas, for example.”

While it’s not something smaller businesses will have pockets deep enough to develop themselves, de Vos believes the next growth area will be the move from unmanned to unpiloted aerial vehicles.

“Understandably enough, CASA [the Civil Aviation Safety Authority] now requires that UAVs remain within the line of sight of operators but, ultimately, the technology and regulatory environment will develop to the point where you can tap in a destination on your mobile phone and a drone will safely travel long distances without having to be monitored. That’s what companies such as Amazon are working on and once the technology is affordable and available, a modestly sized drone business in Australia could use it, for example, to deliver supplies to remote mining camps.”

Nick Smith, owner of Drones for Hire, Australia’s largest online drone business directory, says he’s yet to see evidence of consolidation but he agrees with de Vos that specialisation is a smart move.

“There are around 200 active commercial drone licences in Australia and that will probably increase to over 300 by the end of the year,” he says.

“Who knows what the future holds, but it’s entirely possible the technology and regulatory environment will make the barriers to entry even lower and encourage lots more operators into the market.

“That said, the key to building a sustainable, profitable drone business is differentiating yourself from the competition. Three things will come into play in doing that: the capabilities of the drone, particularly its camera and other hardware; the industries the operator has experience working in and the operator’s post-production or data analysis capabilities.

“A drone operator wanting to film TV programs or commercials needs to have a high-end 4K camera, understand cinematography, be able to work effectively with a director of photography and have some post-production experience.

“Likewise, specialist equipment and particular skill sets are needed for drone operators taking infrared images of power lines or calculating how many cubic metres of coal are piled up next to a mine.

“Obviously, those specialists are in a stronger position than a guy with limited skills and experience who’s using a basic drone and cheap camera to churn out aerial images of properties for the local real estate agent.

“But I’m not sure even that entry-level guy has a lot to worry about, given the applications drones are used for are going to explode and those applications will typically require specialist operators. He’ll still have plenty of other options if a large operator comes along and swallows up all the real estate work.”

Even if his prediction of industry consolidation comes to pass, Stevens agrees with de Vos and Smith that there will still be plenty of blue sky out there.

“As with any emerging market, there are significant opportunities to introduce new products and services and there is no doubt plenty more disruption to come from new entrants and new technology,” he observes. “I’d imagine the UAV industry will remain attractive to entrepreneurs.”