In 2012 we wrote an introductory article called Rise of the Drones which predicted the consumer drone industry would grow very quickly starting in 2013. This turned out to be the case and drones have captured the public attention (in both positive and negative ways) and have evolved from a DIY pursuit to one which is just now entering the mass consumer market. In this article we will look at the current state of the industry – how it got here and where we predict it is going. At the end of the article we will present an Executive Summary – a quick read for those who have less need for all the details!
Note: As is our forte, we focus on drones for the consumer and hobbyist – in general those under $2,500 at retail.
A Short Rehash of Consumer Drone History
The first consumer quadcopters appeared in approx. 2009-2010 with the introduction of the AR Drone from Parrot as well as some toy and hobby grade models from various Chinese manufacturers. Very few of these machines were reliable or easy to use – however those who persisted in the hobby were able to take flight and get some idea of what the future might hold. Models such as Hubsan X4 and Syma X1 were introduced in 2012 and provided budding pilots with inexpensive and ready-to-fly machines ($40-$60) to hone their skills.
At the end of 2012 DJI Introduced the Phantom 1 Ready-to-Fly quadcopter which had advanced features such as GPS, larger payload (GoPro holder) and long range. This machine turned out to be quite reliable and capable and kickstarted the consumer camera drone revolution.
2013-2015 saw the introduction and/or announcement of many additional machines…but many manufacturers misjudged the amount of engineering and design time needed to perfect these products. Many models were as much as year late (from original announcement) and turned out to be unreliable. Various kickstarter and other crowdsourced models raised millions of dollars – most have failed to deliver.
DJI, however, hired thousands of employees and threw tremendous resources at the many problems of drone design. They introduced new models regularly with groundbreaking features such as stabilized video (gimbals) and companion apps that allowed monitoring of the camera and control of the drone from a smartphone or tablet. These new machines gave many customers what they craved and defined a real-world use for the machines – that of Aerial Photography and Video.
Other companies scrambled for a piece of this fast growing market – but instead of innovating most of them released lower cost (and lower quality) copies of the original Phantom. None of these models offered the integration and/or reliability of the Phantom series.
And so, as we enter 2016 the consumer drone industry consists largely of one company – DJI – and others trying to gain a piece of the same market. Our prediction is that DJI will sell 80-90% of the mid-priced consumer drones this Holiday Season, leaving a very small slice to the other 1/2 dozen companies which may offer competing models. Unfortunately for these other companies, DJI has executed well…and the other companies have not. The technology has evolved so quickly that it has become impossible to develop a top end machine without hundreds of engineers and designers…an expensive proposition. It can best be compared to computer or phone/tablet operating systems where only companies like Google, Apple and Microsoft have the resources to develop and move the systems forward.
However, the above relates just to the “flying tripod and camera” mid-range of the market. To understand the entire drone revolution we have to break the pursuit down into separate and distinct categories as follows:
Aerial Photography (AP) Drones – these are, by far, the largest part of the market by revenue and we will likely see up to 3 Billion dollars worth (at retail) sold in 2016. They are GPS stabilized and full featured and can take video and pictures of impressive quality (not pro-grade, but still very high quality). AP drones often function as “crossovers” into light commercial uses such as roof inspections, public safety (some fire departments), etc.
Toy Drones – Millions of these machines are sold and they are somewhat disposable. They are used as pilot trainers and for fun and indoor flying. In general, the prices run from $15 to $100.
FPV and Racing Drones – These tend to be mid-sized machines with cameras designed to give the operator a “drone view”. Many operators use head gear (goggles) to get a real feeling of flying. These are usually not equipped with GPS as they are flown within relatively close proximity of the pilots. FPV drones are often sold ARF or “Almost Ready to Fly” and may require some additional parts and labor before they are ready to fly. Some companies are starting to offer RTF (Ready-to-Fly) kits at higher prices. The average price range for FPV quadcopters ranges from $250-$600 although you can certainly spend a lot more if you get high resolution goggles and other upgrades.
Hobbyist/Hacker/Developer Drones – A lot of hobbyists enjoy the pursuit of building as much or more than the actual piloting. The roots of the entire industry are in the hobbyist arena and these users often advance the technology by being the first to try various schemes and designs. The “build your own” hobbyists will often spend from $300-$700 on their frames, motors, flight controllers and other parts to build a mid-sized quadcopter. They do not get more for their money than prebuilt or mass-produced machines, but they learn a lot more and have the satisfaction of building something to their own specifications.
In addition to these 4 segments there are, of course, the agricultural, commercial and industrial (and military) uses. However, Droneflyers.com (this site) focuses on the consumer market.
State of the Segments 2015/2016
Below are some comments on each of the above segments:
Aerial Photography Drones – As mentioned in the introduction, DJI is almost a monopoly in this particular market and is driving the train (so to speak) by continually introducing new and upgraded models at lower prices. Other companies such as Parrot, Blade, Yuneec, 3DR and Walkera are trying to gain a foothold with little success. GoPro has mentioned that they are introducing a consumer Drone in 2016.
Toy Drones – sales are still exploding but nothing innovative or new has come out of this segment. These models are fun and very capable – but disposable unless you have a ready source of spare parts and the capability to troubleshoot and repair them.
FPV and Racing Drones – this segment is much smaller than the camera machines, but still growing quickly. Some manufacturers (Walkera, Blade and others) have started to deliver more finished (RTF) machines but the reviews are not yet in. We’ll keep a close eye on this market and review a number of new machines in 2016.
Hobbyist/Hacker/Developer Drones – This segment of the market is probably fading – at least as a percentage of the total sales. Most consumers don’t have the interest in soldering, programming and the other skills needed to be successful in this end of the hobby. For those who do enjoy DIY, prices have come down for all the major components. This allows for very reasonable experimentation. There is always room for the hackers/DIY crowd – in fact, the entire hobby owes them for driving it to this point!
The vast majority of Drone pilots and buyers are male and either Caucasian or Asian. They span all age groups and are, as a rule, high income and/or college educated. A sampling of our web site visitors is given in the graphic below along with the weighting of each category.
Growth in the industry has exploded the opportunities for those who seek employment or income from the pursuit. Opportunities run the gamut from engineering to marketing to writing/blogging and much more. A indication of the expanding workforce is that we recently had two friends/contacts, neither of whom we know through business contacts, be hired for major positions with well known drone companies. Although anecdotal, this suggests that many thousands of new employees entered the industry in 2015. This growth is likely to continue for the foreseeable future as the market grows and matures.
The Changes – Predictions and/or Possibilities for 2016
The above gives some basics in terms of the history and present of the consumer drone market. This section will delve into predictions of what may happen in 2016 along with our own opinions (expressed as a percentage – odds) that we would guess of the particular item coming true.
Will GoPro introduce a Drone in 2016 with volume production before June 1, 2016?
(90% chance in our opinion)
Can GoPro Drone capture sales of 50,000+ units in 2016 (5% or more of market in its price range)?
(60% chance in our opinion)
Will 3DR (3D Robotics) perfects the original Solo drone and gains 10% of 2016 sales (100K+ units)?
(30% chance in our opinion)
Will DJI Introduce an Inspire II or similar prosumer craft in late 2015/early 2016 at $2500 (approx) price point? Model contains obstacle avoidance as well as other newer features (zoom or micro-4/3rd cameras).
(80% chance in our opinion)
Will a new Drone player such as Tayzu enters the market with a model good enough to edge out 5% of the market or more.
(25% chance of at least one – in our opinion).
Will DJI Maintain at least a 70% market share in the 1K (approx) camera drone consumer market?
(90% chance in our opinion).
Will the first deaths and/or serious injuries from a consumer drone occur in the next year?
(95% plus chance in our opinion)
Will the FAA rules and other regs have a dampening effect on the industry in 2016?
(tough to predict, so we will guess a 50% chance).
Will consumer drone sales continue their upward trajectory in 2016 at the same levels they have in the past?
(80% chance in our opinion).
Will consumer drone sales continue their upward trajectory in 2017 at the same levels as the past?
(40% chance in our opinion – more likely growth will slow unless new “killer apps” hit the market)
Note – the questions above do not include the commercial, industrial and security ends of the market which should continue to grow especially at the low and mid-priced range. This will drive some sales of consumer models which can do double duty for smaller commercial entities.
Potential Roadblocks – there are two looming issues which should be mentioned in relation to the potential of consumer drone sales and use.
1. FAA and other Regulations – the FAA is being careful and deliberate in their study of the technology. They are expected to introduce new rules as to the use of hobby and light commercial drones in 2016. These regulations could either slow…or accelerate the sales of consumer drone models.
2. Customer Service and Warranty – flying machines which can be destroyed with one small crash present a conundrum when it comes to warranty and customer service. As of 2015 not a single company has set up a world class repair and/or warranty service center. This has resulted in consumer dissatisfaction and also keeps many from entering the hobby in the first place. Although the machines are getting more reliable there are still inevitable problems which require sending machines back to the manufacturer. Moving forward it’s possible the solution will lie in extra-cost extended warranties and/or 3rd party repair shops in addition to the companies investing more in their service operations.
Summary – The consumer drone market is just starting to hit its stride – largely due to advances made by market leader DJI. These updates make drones more reliable and easier to use for photography and video. DJI currently “owns” a large part of the mid-priced and prosumer market, however there are numerous companies chasing a piece of the quadcopter pie. However, it is likely to take at least a year or two before any can be considered serious competitors to DJI (due to the massive DJI lead and their aggressive program).
Other drone categories such as the toy segment and FPV are also growing quickly but development of new and novel models seems to have slowed. Instead, prices are falling and copies of existing models…as opposed to new and innovative units…are the rule rather than the exception.
The technology has still not advanced enough for the typical electronics or camera consumer to fly advanced models. This becomes somewhat of a limiting factor as many potential buyers are not willing to invest the time and dedication to learning piloting and other technical skills.
To quote Jeff Bezos, we are still at “Day One” in terms of consumer drones. Looking forward further than about 18 months is difficult – however, the past is often the best predictor of the future. If this is the case, large companies such as DJI and GoPro as well as other well capitalized new entrants will continue to drive the market. The days of a new quadcopter “built in a garage by a hobbyist” are over. This is due to the massive complexity of modern quadcopters as well as the difficulty of modern high volume manufacturing and distribution. Consumer quadcopters are now more similar to computers and smartphones than they are to the old R/C toy – meaning that their “operating systems” require massive amounts of man-hours to perfect and update.
As always, we are ready to be proven wrong. It will be interesting to look back at this report in a year or two and see what we got right…and what we missed the mark on.
Do you have predictions for 2016 and the future? If so, post them in the FB comment section below.
Thanks for Reading!