Time is accelerating in the satellite industry, but it flows at different speeds depending on the satellite verticals and segments
The industry is experiencing a radical transformation in terms of number of satellites and market value. Euroconsult anticipates that satellite demand will experience a x4.5 increase over the next 10 years with 1,704 satellites to be launched on average every year (vs. 381 over the past decade). Compared to last year’s edition, our forecast features a +36% increase due a sustained demand from a handful of mega constellations in addition to many smaller ones.
The satellite industry was already experiencing transition before COVID. If the pandemic has a long-tail effect along the value chain (i.e., some its consequences continue to unfold even after the pandemic), then its biggest impact would be found in the accelerated transition towards more CAPEX-efficient, capable solutions in the context of intense competition and market uncertainty. After years of ramping up, the satellite industry is now fully experiencing structural changes that are affecting the global ecosystem.
The satellite market has entered a new era in which the yearly satellite demand will range from 1,200 to 2,100 satellites, dwarfing all reference points of the previous years. More satellites have already been launched during the first two quarters of 2021 than were launched in 2020, which had seen more satellites launched than were cumulatively launched in 2018-2019.
From 2021 to 2030, constellations will account for 80% of the demand in number of satellites, up 10% compared to the prior year forecast. However, this architecture will only account for 10% in manufacturing and launch revenues because they have low unit cost thanks to economies of scale in production and low launch cost on heavy lift vehicles. Commercial constellations introduce a different business-engineering rationale involving a large number of satellites with shorter lifetimes compared to larger satellites with more technical capabilities. The 2021 edition features an additional 21 constellations compared to the previous edition, with 111 commercial constellations looking to deploy assets.
OneWeb has now deployed 50% of its first generation satellites and SpaceX is now the largest satellite operator in terms of number of assets with more than 1,700 Starlink satellites deployed, but both are small players revenue-wise. In the next 10 years, five constellations (Oneweb, Starlink, Gwo Wang, Kuiper and Telesat) will concentrate 58% of total satellite demand over the decade (i.e., 9,900 units), but only 8% in manufacturing value and launch value. They have different go-to-market and vertical-integration industrial strategies, reducing the addressable market by retaining demand in-house or creating winner-takes-all deals.
The last few years saw intense debate about Old vs. New Space and subsequent orbits (GEO vs. NGSO). GEO demand will still be first in value by retaining 34% of the demand at $109B, of which $65B comes from 50 GEO comsat operators (similar value to past decade). After a record year in 2020, 2021 orders are down to 12, which we anticipate will remain the new standard. The GEO comsat replacement market is challenged by fleet rationalization, in-orbit life extension and traffic transition to upcoming broadband constellations. Moreover, the manufacturers’ product portfolios are diversifying with VHTS, small flexible satellites and microGEO platforms. Digital payloads have become the rule for a data-centric market (rather than a broadcasting market).
At $240B, governments will remain the first customers of the world space industry by concentration: 75% of satellite manufacturing and launch revenues over the decade (market share eroding by −5% compared to the last edition) despite being 32% of the demand in number of satellites. Investments by defense agencies are driven by milsatcom as well as SSA and COTS whilst civilian agencies’ demand for Earth observation and space exploration also fuels the demand. Smallsats and large constellations are not new to governments that supported these architectures, although they are now endorsing it as a combination of both types.
On the vendor side, incumbent satellite manufacturers will retain the lion’s share in value. In the past decade, four manufacturers won 50% of the market manufacturing value ($87B). As of today, 86 manufacturers have publicly received contracts from third parties to build 1,007 satellites, but the same four manufacturers have already booked 28% of the next decade‘s value.
Despite multiple projects involving large commercial constellations, only a handful have picked a prime so far. The only ones awarded contracts picked established players. With the exception of a few large deals, global competition remains limited with few competitive commercial RFPs, in particular for GEO comsats. Governments’ demand fuels competition between local suppliers. However, national preference limits suppliers’ ability to expand geographically. The single satellite vs. constellations backlog ratio is changing, with constellations growing their backlog in units (58%) and single satellite value concentration (79%) slowly eroding.
With a projected market value of $86B, demand for access to space is experiencing multiple changes. Despite a 52% increase in value between the two decades, we anticipate that the average launching price will be divided by a three-fold factor. New vendors have emerged, ranging from dedicated smallsat access to space to super-heavy reusable launchers with various design-to-cost value propositions. With a new generation of GTO-capable launchers expected, the market will experience a challenging transition.
Reusability, currently mastered by SpaceX, is gradually endorsed by competitors. It continues to test Starship as the first fully reusable launcher (among other players), paving the way for launch at marginal cost, which could disrupt current market standards.
Satellites to be Built & Launched is based on an in-depth analysis of satellite applications and missions, satellite operators and users, technology advances, and the impact of these factors on the manufacturing and launch industry. It includes a database of all satellites, regardless of mass, that was launched in the last decade, as well as satellites currently under construction, and launch forecast for the next decade. It also provides detailed status and maturity assessments of 55 commercial constellations of five satellites or more and discusses the business cases for the four mega-constellations and their differing vertical integration strategies.
It doesn’t matter if you’re a newcomer or an experienced space enthusiast, if space exploration fascinates you, here’s where you’ll find all the answers.
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