Case Study

Would you pay for video beamed from outer space?

Special to The Globe and Mail

screencap from Urthcast's 3D animation video

THE CHALLENGE

There are always many unknowns when launching a product no one has seen before. So when Scott Larson co-founded UrtheCast, a Vancouver-based company poised to install the world’s first high-definition video cameras on the International Space Station, there were a lot of questions facing his team around what the revenue model would look like.

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Streaming video of Earth from outer space, in what Mr. Larson describes as a “blend between Google Earth and YouTube,” can certainly capture most people’s interest. But how could they get people to pay for the privilege of watching?

Here was a product Mr. Larson and his partners knew no one else could deliver, and it was a product that could potentially have thousands of uses, but figuring out which of the revenue streams were the most “defendable” and had the most potential took some effort.

THE BACKGROUND

In the spring of 2010, an acquaintance of Mr. Larson’s had been doing business with the Russian Federal Space Agency when the agency asked for ideas on how to raise the public profile of the International Space Station.

The suggestion was to mount high-definition cameras on the outside of the space station to capture video and still images of Earth and stream them to the Internet, and the Russian Federal Space Agency liked the idea.

Knowing Mr. Larson had a background in finance and technology, the contact suggested that he stickhandle the project. Within six months, Mr. Larson was working out the general framework, which fell under the categories of: who would provide the cameras, who would install them and who would process the data.

“We’ve spent the first six months of this year cementing the relationship with the Russians,” says Mr. Larson. “We went through a series of agreements and joint venture documents, and were officially announced by the Russian Federal Space Agency in November 2011.”

He then set out to work out the technological and financial aspects of the deal.

For the technology he turned to Rutherford Appleton Labs in the U.K., which was building cameras with a resolution high enough to see objects on Earth as small as one metre in size – like a white golf cart on a fairway.

The next step was to figure out how to finance and make money from the deal.

THE SOLUTION

Mr. Larson and his team started brainstorming ideas for revenue streams. They consulted with experts, spoke to people at Rutherford Appleton Labs, and tried to get their name known in the Earth observation industry as quickly as possible.

“We broke the revenue into broad categories – data sales, advertising and web-based use,” Mr. Larson explains. “Then we looked at which one we really understand and which has the most maturity and could get traction the easiest.”

Since people sell this kind of data all the time, the data sales seemed like the logical place to start, he says.

At first, people became aware of UrtheCast through its marketing. Then the company stumbled across a competition called the Global Monitoring for Environment and Security in Europe, which was sponsored by the European Space Agency. They entered and won in the cloud-computing category. The publicity from that win put them in the spotlight, and more companies started contacting them to use the technology.

“We realized there’s a market for video, being able to go to media or news outlets and say, regarding the tsunami in Japan, for example, not only do we have recent pictures from yesterday, but we have video, and you can see smoke coming out of reactors,” says Mr. Larson. “It’s much more compelling than looking at a Google Earth picture that could be several years old.”

THE RESULT

With a revenue model in hand, Mr. Larson was able to go to investors to raise seed money in the spring of 2011 in order to have Rutherford start work on the cameras.

“As we talk to people and tell them what we’re doing, different people in different sectors suddenly think of things they need,” he says. “We’re talking to someone in the forestry monitoring industry, when suddenly his eyes light up and he says, ‘We could use that.’”

He’s learned that being able to watch an oil pipeline and monitor any leaks from the air, for example, could be valuable to the oil and gas industry.

Even the United Nations has reached out to UrtheCast to discuss accessing environmental information and the potential to monitor disasters.

“We’ve received letters of interest from around the world for the data and images that our cameras will generate,” says Mr. Larson, adding that, so far, industrial, media and news agencies are the ones stepping up.

UrtheCast intends to go live with its cameras in the latter part of 2012.

Jeff Kroeker is a lecturer in the accounting division at the Sauder School of Business at the University of British Columbia.

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