Leading in to the 2015 holiday season, there were few technology categories that provided as much intrigue as drones. On top of drones being a new gadget with all the requisite buzz and interest from early adopters, privacy and security concerns, and an evolving use case have added some extra excitement to the category. FAA guidelines requiring drone owners to register their devices also went into effect on December 21, right in the middle of the holiday shopping season. Questions have loomed whether the pending guidelines would dampen consumer interest in this burgeoning product category, both for the 2015 holiday season and beyond.
Sales results during this holiday and the first weeks of 2016 indicate there was no reason to fret. The NPD Group is set to release drones as an official consumer technology product category in early 2016; however, a preliminary sample of retail sales data from 2015’s final weeks suggest the holiday season was as successful as many had hoped. Unit sales for the five-week period beginning with Black Friday week increased four times over last year’s holiday total, while revenue grew nearly five times. Even more, NPD’s preliminary data indicates 2015 holiday sales were 16 percent higher than the preceding 12 months (Nov ’14 through Oct ’15). Clearly, demand for drones this holiday season was high. NPD’s Weekly Retail Tracking Service data on drone sales also reports post-holiday dollar sales are four times higher than the same period in 2015 – an indication that demand for drones has continued after the holidays.
Despite the sales growth, opinions on drones continue to be mixed, according to a November Omnibus study commissioned by The NPD Group. When asked if they expected to buy a drone for themselves in the next two years, 12 percent of respondents indicated they would. Demographically, consumers 18-34 (17 percent) and 35-44 (18 percent) over-indexed for purchase interest as did those with incomes above $75K (14 percent). By comparison, 50 percent of those polled said they definitely would not buy a drone.
The large portion of “never adopters” are almost certainly impacted by the well-publicized privacy and security concerns around drones, but the device’s current niche-but-evolving use case is also challenging purchase interest. This is why I believe 2016 will be the year the drone market develops distinct segments. The 2016 CES was an indicator of which new subcategories will emerge. DJI’s recent stake in high-end camera company Hasselblad is an effort to appeal to pro-sumer photographers as well as serious hobbyists. The popular Lily will appeal to outdoor enthusiasts and extreme sports lovers looking to document their adventures. And Parrot’s recently-announced Disco is a departure from the quad-copter formfactor in favor of something more resembling an airplane, with its own set of capabilities.
The growing diversification in the market is aimed at finding a drone (and a buyer) for every occasion, which is hugely important for the category. Once the buzz around drones subsides, consumers will need practical reasons beyond simple curiosity to invest in these products. We’ve already seen the transformation of drones from interesting tech conference sideshow to bonafide market force. Now, drone makers must uncover the killer app (or apps) that can make these products a must-have for more households.