According to the annual report by Euroconsult on the global space economy, the value reached an all time high of US$424 billion, a 14.1% increase over the previous year.
Euroconsult released the Space Economy Report, 9th edition earlier month. According to the press release for the report “the fast growing commercial space sector enjoyed another year of significant growth and productivity during 2022, but did not escape unscathed from rising geopolitical tensions and operational challenges caused by inflation, high interest rates and the after-effects of previous years’ pandemic lockdowns on supply chains, according to Euroconsult.”
In the 2021 report Euroconsult estimated the global space economy at $370 billion, which was a 4% decline from the 2020 report which they reported as $385 billion.
In looking at the macroeconomics of supply bottlenecks and inflation, Euroconsult said “long lasting effects of the pandemic and the outbreak of the war in Ukraine have brought significant disruptions in the world’s economic and geopolitical context with direct or indirect impacts on the space industry” and provided these points;
- Supply chain bottlenecks and cost increases have become common in the space industry.
- High inflation has driven prices over comfortable thresholds, causing volatility in prices, unavailability of components (e.g., chipsets), and ultimately delays in the delivery and launching of satellites.
- On the other hand, the conflict in Eastern Europe has shed a light on the importance of certain satellite applications. Satellite imagery has gained a particular interest to monitor the unfolding of the conflict, while LEO constellations have shown their value in offering a resilient and vital service to people in Ukraine.
The press release also states that “one of the most impactful consequences of the turmoil that impacted worldwide financial markets last year has been a risk-averse approach to investment into the space ecosystem. This point is underlined by Euroconsult’s findings that investment operations recorded in the last year have decreased by more than 10% when compared to 2021.”
Euroconsult “reports that industry investors are now focusing on cash-generating companies or early start-ups that require low levels of capital rather than higher risk investments into pre-revenue enterprises that occurred regularly in the preceding years. This has led to a slowdown of new investment into the sector and a move towards a more results-oriented approach in what remains a very competitive and agile market, with the average investment value dropping dramatically between 2021 and 2022 from $71M to $33M.”
Euroconsult is also suggesting that we are now “entering the post New Space era” as a result of the “radical transformation in terms of the number of satellites and market value.” The market will see “yearly satellite demand will range from 1,200 to 2,100 units, dwarfing all reference points of the previous years.”
Two other key points Euroconsult made this year are that “cash is king” and that “public-private cooperation is the new ‘go-to’.”
On the “cash is king point” they say “with the increasing interest rates and rising inflation, investors tend to pull out of riskier investment to focus on businesses with stable incomes and cashflows. After almost a decade of high volumes of private investments in the space industry, topped by the SPAC phenomenon in 2021, we are now witnessing a shift in investors’ interest away from uncertain business models and CapEx-intensive businesses. For emerging companies, minimizing their cash burn becomes a priority to survive in an environment in which raising funds and gaining the confidence of prudent investors become more challenging. We are now witnessing a consolidation of the industry, with major M&As conducted (or pending approval) across the value chain: Eutelsat/OneWeb, Viasat/Inmarsat, Safran/Syrlinks, Kongsberg/NanoAvionics among others.”
On the “public-private cooperation is the new ‘go-to'” point they stated that “cooperation between the public and private sectors is a key element of space strategies to achieve a cost-effective, sustainable model. This reflects the willingness of space agencies to act as strategic partners and potential future customers of commercial services. In the last decade, the number of private space activities has grown significantly. This rise of commercial initiatives is having a significant impact on the strategic planning of governments, redistributing the cards between governments and industry in defining the agenda for space exploration. Ranging from transportation to communications to space resource utilization – to name only a few areas – businesses from the private sector now play a key role in public exploration programs. The opposite is also true: in an uncertain economic context, companies are relying more on a stable government procurement strategy, albeit the fact that some budget constraints may jeopardize public programs.”