Space Industry Growth Trends: To Infinity and Beyond?

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According to Israeli sources, the demand for intelligence satellites for defense and homeland security will grow continuously in the coming years. This growth is part of the expanding space industry worldwide.

The Meidata research brief indicates that over 120,000 people are employed worldwide in the space industry, generating over $150 billion annual revenues in space-related products and services through recent years. The global space market is roughly divided into two-thirds commercial market, and one-third institutional market, with main applications that include telecommunication, Geo-positioning, environmental monitoring & remote sensing, meteorological services, earth observation and imagery, space exploration and micro satellites.

Meidata, the Market Research & Competitive Intelligence company, points in a new research brief that the satellite segment of the space industry is the most lucrative one. According to estimates of the Satellite Industry Association, the revenues derived from the wide variety of space-related products and services reached $150-185 billion in recent years. Over 50 countries have now dabbled with launching satellites into orbit, and Asian countries – China in particular – are outdistancing Europe in terms of launches. Trends in technology development suggest increased reliance on satellite-related services. This trend is estimated to affect positively the forecasts for subsystems manufacturers (such as payloads).

The two other segments of the industry are less lucrative in terms of expected market growth:

Ground equipment & satellite services (including mobile terminals, control stations, broadcast satellite dishes and VSATs), and the launch segment (including vehicles and other services).  Generally, EBIT margins significantly differ along the industry’s value chain, with a relatively high margin for Fleet Management and Operations.

Experts estimate that over the next decade the military satellite market alone will be valued at $168.1 billion. According to ASD, the industry value in 2012 stood at $11.8 billion and is predicted to reach $17.3 billion in 2022. As National Defense Magazine reported, military drone technology, which is turning out to be the next big thing in security and defense, is strongly dependent on military satellite capacity. Although analysts predicted a decrease in the United States’ satellite communication necessity with the conclusion of the Iraq and Afghanistan Wars, a proliferation of 24/7 surveillance satellites now requires more bandwidth than ever. A US army analyst recently stated that despite an increase in the amount of data that needs to be transferred, the United States will likely not get a new military communication system until 2025.

Meidata’s research identifies a dependency on the availability of government contracts, particularly in commercial satellite operators. How will decreased government spending impact the space industry? The United States had begun exercising the long dreaded Sequestration $500 billion defense cuts, $46 billion of which will be cut this year alone. Canada, the United Kingdom, and India, have seen similar budget cuts and defense spending deceleration. The space launching expenditures within national programs are predicted to decrease over time. Space launch will in turn rely strongly on commercial companies.

 Nevertheless, Meidata found that several unique market drivers power the space industry. While traditional space exploration science programs as well as defense & security initiatives are expected to suffer setbacks due to economic hardship, these might be balanced by the growing telecommunication and Geo-positioning markets. The telecommunication market has shown considerable growth despite the 2008 economic crisis, whilst the Geo-positioning market is expected to grow at a CAGR of 8-13% over the next decade.

The space industry will also be pushed forward by the entertainment industry. An increased in mobile entertainment and HD television will increase demand for satellite services. Data-transfer-dependent technology is expected to intensify the need for greater satellite capacity, encouraging commercial companies to launch more improved satellite into the final frontier.