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Euroconsult is predicting a dramatic increase in the demand for satellites in the coming decade, but that the concentration of that demand in the hands of a few key players could create headwinds.
According to the newest edition of their “Satellites to be Built and Launched” report, they anticipate that “over 2,500 satellites to be launched on average every year – or 7 satellites a day totalling 3 tons of mass – over 2022-2031.” Their estimate is that there will be over 24,400 satellites launched into orbit over that period.
The satellites that are most in demand are “NGSO” constellations: ones that are in Non-Geosynchronous Satellite Orbits. This includes both LEO (Low Earth Orbit) constellations and MEO (Medium Earth Orbit) constellations. These satellites are estimated to account for 83% of all satellites launched between 2022 and 2031, though they are also estimated to only account for 30% of manufacturing and launch value. Euroconsult said that “readers are therefore advised to go beyond raw numbers and look at market value to get an accurate picture of the market.”
According to the report, government and defence customers will remain critically important. They expect that it will hold the largest market value at US$29 billion per year, making up three quarters of the demand in space launch and satellite manufacturing. Of that, two thirds of the demand will come from the “six leading space-faring governments and organizations:” the United States, China, Russia, Japan, India, and Europe (through both European governments and the ESA.)
That said, they’re expecting a strong rise in commercial operators as well. Euroconsult’s release showed that a strong majority of satellites will be launched by commercial operators—even if actual launch value is dominated by governmental customers—with an estimated 17,900 satellites expected to be launched on behalf of commercial operators.
Half of the commercial demand will be for “emerging NGSO constellation broadband operators” like SpaceX’s Starlink and OneWeb. As discussed in previous SpaceQ coverage, Euroconsult expects a “trillion-plus dollars in satellite service revenue by 2031,” and that there will be a decline in direct-to-home satellite TV subscribers and satellite TV channels and a connected rise in demand for data applications and data-based services. This reflects the broad shift in the industry away from broadband television towards Internet-based streamed content.
The previous report also pointed to “the rapidly growing importance of NGSO in connectivity markets”, and a shift towards “a multi-orbit strategy” that was reflected in Eutelsat’s recent merger with OneWeb. Euroconsult now says, however, that they forecast a “a shift towards broadband business ramping up and not yet offsetting the previous one.”
There are several notable headwinds to overcome. The report pointed to the now-familiar issues of the COVID pandemic, the related supply chain disruptions, the conflict in Ukraine, as well as both stubbornly high inflation and potential economic recessions from central banks’ attempts to rein in inflation through raising interest rates.
Euroconsult also pointed to how “the satellite industry is currently facing significant changes as satellite demand is becoming increasingly concentrated towards a handful of NGSO broadband players,” and how “these constellations put high stress on current supply capabilities and challenge vendors’ addressability through their vertical integration.”
Even as satellite demand becomes more concentrated, Euroconsult said that over the long term, the supply for launch will be fulfilled by “a diversity of access to space suppliers ranging from micro to super heavy launchers.” In the short term, however, operators may face “a shortage of launch options due to multiple factors that put their deployment schedule at risk.”
Maxime Puteaux, Principal advisor at Euroconsult and editor of the report, said that increasingly concentrated demand will “put vendors’ margins under pressure.” He also said that Euroconsult has been “monitoring satellite ‘mega factories’ and noticed they are emerging ten times faster than the projected demand. As we expect the 20 legacy vendors to retain at least 40% of the future demand in value, manufacturing oversupply is real and sustainability is at risk.”
Euroconsult said that the report helps to address these issues, including “a reviewed and refined pricing model” that takes inflation-driven cost and price increases into account, as well as “reviewed and up-to-date forecast accounting for the economic situation and the ongoing impacts of war in Ukraine and COVID-19.”
