KEY POINTS

  • The drone industry gained momentum in 2015 as new entrants entered the consumer drone market and technology improved. We expect spending on drones to top $12 billion by 2021. Growth will be fueled by heavy adoption in the consumer and commercial drone markets, while militaries will continue to account for the bulk of drone spending.
  • Previously consumer drones were held back by price, but drones have recently become more accessible, especially as more drone companies have come to market. We expect consumer drone shipments worldwide to top 7.3 million in 2016 and reach 29 million by 2021.
  • The commercial drone segment remains nascent but will grow quickly as governments work out regulations for longer-range drones. Key commercial use-cases for drones include aerial imaging, video, and surveying; real estate and land development; energy, mining, and utility industry applications; and precision agriculture. We expect shipments of commercial drones to reach 805,000 shipments in 2021, up by a 5-year CAGR of 51%.
  • The US is the biggest potential market for commercial drones, followed by Europe and China. But the US has historically trailed behind Europe in terms of adoption due to slower passing of regulations. Europe had more than 2,500 commercial drone operators in July 2015, whereas the US had around 1,000.
  • The government drone market can be divided into two applications: the military, and the nascent use of drones for public safety. Technological innovations, like drone-to-drone communication, will increase government interest in drones for combat missions and helping emergency personnel in dangerous situations or inaccessible terrains. 
  • Regulations are constraining the growth of the nonmilitary drone market. New regulations due later this year could drastically alter that and allow for new drone use cases such as Amazon's highly-anticipated Prime Air delivery service. 
  • Technologies that can help monitor drone traffic — such as geo-fencing and an air traffic control system — should also make regulators comfortable with allowing more drones in the skies. The FAA's newly-launched consumer drone registry can also help law enforcement identify and track  drones that fly into prohibited air space. 

The Overall Drone Market

The nascent drone industry took a big step forward in 2015 as the Federal Aviation Administration (FAA) granted hundreds of new exemptions for companies to operate drones in the US. Those exemptions included many new use cases in a variety of industries including insurance, [...]