Vivid Sydney drone show cancelled after 'catastrophic failure' as drones fall into harbour

Vivid Sydney festival's drone show has been cancelled for now after a technical malfunction saw drones fall from the sky, in what one eyewitness described as a "catastrophic failure".

The incident occurred not long into Monday's 7.30pm "star-bound" show when almost 90 drones began falling out of formation and into the harbour around Cockle Bay.

One Darling Harbour worker, who wanted only to be identified as Robert, told the ABC he saw the drones "crashing" into the marina and almost hitting some workers.

"Everything seemed normal and then very shortly after that first image was displayed, on the southern side of Cockle Bay you started seeing drones dropping in the water and then from there it was a cascading failure of the drones," he said.

Robert said while the size of the drones themselves was hard to distinguish at night, they were big enough to make large splashes in the harbour upon impact, approximately a metre or so in size.

"They did look like they were well and truly outside their flying zones. They're not meant to fly over anyone or even close to anyone and it fell within metres of people I was with."

Vivid Sydney said to their knowledge no drones landed outside the designated exclusion zone.

Robert said it was "remarkable no one was hurt".

Radio frequency change prompted issue, says operator

Operator SkyMagic said the 89 drones landed in the water after an "unforeseen change in the radio frequency".

"This anomaly caused a number of drones in the fleet to enact failsafe landing procedures in response to compromised positional accuracy," their statement read.

A Vivid Sydney spokesperson apologised to attendees, saying the decision to discontinue the show was "in line with standard safety protocols".

"Public safety is always the number one priority and a full assessment is now underway with the specialist operators and relevant government agencies advising on next steps," they said.

Following Monday night's technical issue, the later 9:30pm show was also cancelled by organisers.

Vivid Sydney has since cancelled the drone shows scheduled for Tuesday and Wednesday to allow time for a full assessment.

No decision on the show scheduled for Sunday May 31 and beyond had been made yet.