2016 Drones in the Channel and Drone Buyer Research Results

2. 2Copyright 2016 Skylogic Research, LLC | Objectives Survey: determine buyers purchasing experience and preferences • where and how do buyers purchase their drones (e.g., online or in a store)? the intended drone use--for hobby or racing or photography purposes, or for their employer? • what matters most about the purchase (e.g., price, availability of accessories, or service)? • the most popular drone brands by price point Study: Get the most comprehensive view of drone distribution and sales • U.S. market size for all drones and growth projections by segment (cost of drones, commercial activity, etc.) • brand market share • types of reseller outfits and the roles they play • the extent of big-box store penetration (what they carry, how many SKUs, etc.) • the major drone distributors (who they are, what they carry, how many, major customers, customers by industry segment) • the retail outlets carrying drones

4. 4Copyright 2016 Skylogic Research, LLC | Survey 13-questions on buyers purchasing experience and preferences Large sample size means the statistics are very reliable! Confidence level: 95% Confidence interval: ±3.5% Valid for a population of 5 million March2016 783qualifiedrespondents

6. 6Copyright 2016 Skylogic Research, LLC | Channel The market for drones of all kinds has exploded, leading to a wide range of reselling strategies: • Manufacturers selling direct • Those selling through drone-specific online and bricks-and-mortar stores • Distribution through hobby, photo, and broad Big-Box consumer outlets We estimate the total universe for drone distribution through retail (online or bricks and mortar) in North America at this point in time to be just under 35,000 locations. Drone distribution is fragmented and disorganized, but is maturing. insight ONE

7. 7Copyright 2016 Skylogic Research, LLC | Big store brand penetration NUMBER OF BRANDS CARRIED BY MAJOR RETAILER 47 21 13 12 5 5 3 1 0 5 10 15 20 25 30 35 40 45 50 Walmart Best Buy Target Fry's Cabela's Dick's BJ's REI Source: BZ Media and Skylogic Research Brand # of Retailers DJI 7 3DR 6 AEE 6 Yuneec 6 Cheerson 3 Estes 3 Odyssey 3 Parrot 3 Syma 3 Walkera 2 Ten Most Prominent Brands in Retail Source: BZ Media and Skylogic Research

8. 8Copyright 2016 Skylogic Research, LLC | Buyers Source: Skylogic Research 73% 15% 81% had a positive buying experience. Only 3% said it was negative. use a mobiledevice when purchasing drones online. purchase drones online. The rest in-person. The vast majority of drones are purchased online insight THREE

9. 9Copyright 2016 Skylogic Research, LLC | Purchasing trends 5% 1% 1% 1% 2% 4% 7% 18% 24% 38% 5% 1% 2% 2% 4% 5% 11% 19% 26% 26% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Other (DIY, used, etc.) Action sports / outdoor retailer General merchandise big box retailer Vertical market reseller General camera / audio / video retailer Big Box electronics retailer General hobby store Amazon or eBay Directly from manufacturer Dedicated drone dealer/distributor Past Future n = 640 Source: Skylogic Research Qs. Where did you buy / where will you buy your next drone? 83%purchasedinlast18months

10. 10Copyright 2016 Skylogic Research, LLC | Price points Q. What was the price of your last drone purchase? 17% 13% 34% 18% 9% 7% 2% 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% Less than $500 $500 - $999 $1,000 - $1,999 $2,000 - $3,999 $4,000 - $7,499 $7,500 - $34,999 $35,000 - $99,999 More than $100,000 n = 650 Source: Skylogic Research More than half of all buyers purchase drones costing between $1,000 and $4,000 insight SEVEN

11. 11Copyright 2016 Skylogic Research, LLC | Most popular brands Q. What was the brand of your last drone purchase? 50% 7% 4% 3% 3% 2% 2% 2% 2% 4% 20% DJI 3D Robotics Yuneec Blade Parrot Event 38 Hubsan FreeFly Systems Syma Custom Others (<2%) Source: Skylogic Research n = 647 DJI’s overall market share in North America is about 50 percent—not 70 percent as popularly described. So there is a substantial population willing to buy other brands at various price points. insight SEVEN

12. 12Copyright 2016 Skylogic Research, LLC | Intended use (detail) Q. What was the primary intended use? 29% 23% 10% 8% 7% 4% 4% 4% 3% 2% 2% 5% Hobby photo / video Commercial photo / video Survey and mapping Inspection / monitoring Hobby / recreation (no camera) Precision agriculture Academic research Cinematography Drone racing First responder Testing and R&D Other n = 640 Source: Skylogic Research More than half of all buyers purchase drones to take photos or shoot video insight FOUR

13. 13Copyright 2016 Skylogic Research, LLC | Seller services Q. What seller services matter most when purchasing a drone? 0.9 1.52 1.64 1.68 2.08 2.19 2.32 2.33 2.39 2.44 2.47 2.57 0 0.5 1 1.5 2 2.5 3 Financing Custom builds Availability of extended warranties Hands-on training Repair services Ready-to-fly bundles Order delivery speed No-hassle returns Knowledgeable salespeople Customer service reputation Availability of accessories Availability of repair parts n = 760 Source: Skylogic Research Anything above 2.0 (the red line) is considered ‘important’ to most buyers. Anything below that is considered somewhat or not important to the buyer.

14. 14Copyright 2016 Skylogic Research, LLC | Most popular accessories Q. What accessories were purchased for the most recent drone acquisition? 10% 8% 11% 13% 17% 23% 24% 25% 35% 36% 46% 46% 71% 85% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Other (various) Swag FPV goggles Landing gear Action camera Propeller guards RC transmitter or receiver Lens filters Charging unit Spare parts Micro SD Cards Carrying case / backpack Extra propellers Extra batteries n = 645 Source: Skylogic Research, LLC

15. 15Copyright 2016 Skylogic Research, LLC | Purchase complete research report AVAILABLENOW Get more detailed data and analysis Purchase Complete Report (PDF) $495 - Single User License $795 - Site License $1295 - Enterprise License Order here: http://droneanalyst.com/purchase-research/ 37pages 20figures 9datatables

16. 16Copyright 2016 Skylogic Research, LLC | About Skylogic Research, LLC is a research, content, and advisory firm supporting all participants in the commercial unmanned aircraft systems (UAS) industry. We provide research-based insights needed to make critical investment decisions with confidence. Our focus is on the needs of three constituents: • Manufacturers, suppliers, and business service providers – who need research and insight into buyer needs • Buyers of UAS technology and services – to help inform their acquisition decisions • Investors – who need to distinguish technical and market viability This focus, plus research as a foundation and reach into a community of more than 80,000 business executives and innovators through social media and media partnerships, allows Skylogic Research, LLC to deliver a high-value, low-risk method for achieving optimal understanding. Drone Analyst is the brand name and trademark of Skylogic Research, LLC Learn more: Web http://droneanalyst.com Twitter @droneanalyst Email colin@droneanalyst.com

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