[Satellite News 06-20-11] The Satellite Industry Association
’s (SIA) 2010 State of the Industry Report found that the overall satellite industry’s worldwide revenues grew 5 percent last year to $168.1 billion, and that satellite service revenues surpassed the $100 billion milestone led by a steady increase in DTH subscribers.
While the results show a decline from the 11 percent the sector enjoyed in 2009, SIA President Patricia Cooper told Satellite News that she was surprised by how well the industry performed — and even more so by the strength of the satellite consumer market in the face of a difficult economic climate.
“One of the things that was new for us this year is how we looked at the share of the satellite industry affected by consumer pocketbook issues,” said Cooper. “The last time there was a significant downturn in the global economy, satellite TV and radio were in a much earlier phase and satellite broadband hadn’t even emerged. So, we didn’t have to look as extensively at some of those big drivers that have a quick pocketbook affect. We weren’t really sure how those sectors might contract and affect the numbers as they took on a larger share of the overall revenues. I think that what we’ve seen is that consumer services are still fairly robust and that not highly responsive to contractions in personal pocketbook issues.”
Consumer satellite television services led 2010 with 10 percent growth — representing nearly 80 percent of total satellite services revenues. About 5.5 million global satellite pay TV subscribers were added in 2010 to bring the worldwide total to about 147 million. U.S. satellite pay TV subscribers exceeded 35 million, maintaining a one-quarter share of the global subscriber base, however, a majority of subscriber growth was seen in Asia. Consumer satellite broadband service revenues also grew slightly — from $1 billion in 2009 to $1.1 billion in 2010.
The study, performed by Futron Corp., included data collected by surveys of 80 key companies, including 40 SIA members, augmented with publicly available data and research to derive industry revenues and statistics. The response rate among all companies surveyed was about 50 percent.
Futron Senior Analyst David Vaccaro said that the firm took a new approach to organizing this year’s results in order to paint a more accurate picture of the satellite industry’s health. “While we were doing this study, we tried to put the industry in better context because we find that historically, the commercial satellite industry had not been considered a part of the space industry as it is now. Commercial on-orbit inventory is such a significant part of the overall space infrastructure picture that we thought this was a more useful approach.”
The report also showed some surprising decline. Satellite manufacturing revenues fell by 20 percent, due to fewer high-cost government spacecraft launched in 2010 compared with 2009. Satellite launch industry revenues also declined by 4 percent, due to lower-value launches in 2010.
“The manufacturing numbers are perhaps less indicative of a trend than in other sectors. We came up with this result after adding manufacturer’s revenues from satellites launched that were launched within the 2010 timeframe,” said Vacccaro. “And the launch industry decline can be explained by the fact that there were much smaller satellite being launched in 2010 compared to other years.”
Satellite ground equipment revenues increased by 3 percent in 2010. Cooper said slower growth in consumer equipment was offset by slightly faster growth in network equipment, and that market trends in the United States should be watched closely during the next few years.
“Infrastructure investments usually take two to three years before the spacecraft is up and the floodgates are open to see a return. It will be interesting to see how quickly some of these investments find uptake. In the United Stated, you saw some remarkably quick examples with WildBlue and ViaSat,” said Cooper. “The loading of new customers and the response to new infrastructure in the United States was very quick and allowed those companies to commit to further infrastructure investments. In Europe, those infrastructure investments are just now in orbit. It will be interesting to see how those percentages change and uptake changes.”
Mobile Satellite Service revenues increased by 5 percent — from $2.2 billion in 2009 to $2.3 billion in 2010 — despite a mobile voice services decline. Cooper said that SIA is interested to see whether the mobile satellite industry will reach, “the same tipping point where many of the mobile satellite capabilities are not in standalone devices that can be counted, but are integrated in chipsets found in several devices. We could easily lose track of how diffused and ubiquitous these service could become. But, that situation may be a long way off.”
The SIA report also outlined the state of the satellite jobs market, which was, as expected, in-line with recession trends. The U.S. satellite industry shed 6,856 jobs, or 2.7 percent of its total workforce, during the first three quarters of 2010. While this number was lower than the 12,219 jobs lost from 2008 to 2009, the satellite services sector shed 5,882 jobs and launch Industry employment declined by 3,404 jobs.
Vaccaro said the numbers could change depending on fourth quarter job data, which Futron expects to have by August. “We’re still waiting for the year-end data, which can really change the numbers. It’s hard to say by how much, but I think it will be interesting to see what the fourth quarter numbers reveal.”
Overall, Vaccaro said the satellite industry should view the State of the Industry report as positive. “The fact that consumer growth is still strong was encouraging to me as an analyst. In other related consumer industries you see a drop-off, where consumers have decided to cut back and do without luxuries. If you look at the report’s DTH subscriber numbers, that hasn’t happened for satellite.”