Services Drive Satellite Performance in 2008
Demand for communications and other services helped drive a strong 2008 performance for the satellite sector. Via Satellite takes a closer look at developments that shaped the business and how some of those factors, such as long-term contracts and increased demand, will help keep satellite players in the black through a tougher economic climate.
Global satellite industry revenues were $144.4 billion in 2008, up 19 percent from 2007, according to the "State of the Satellite Industry Report" prepared for the Satellite Industry Association (SIA) by Futron Corp. Revenues have nearly doubled from $74 billion in 2003, as the industry has averaged annual growth of more than 14 percent during this period.
"The satellite industry continued to post growth in 2008, led by satellite services and ground equipment sales," says Patricia Cooper, president of SIA. "The results for the past year are encouraging and frame the need for policy decisions that can affect the industry’s future growth such as export controls, broadband stimulus and U.S. government communications requirements."
Futron conducted the study for SIA, polling more than 70 satellite companies to determine aggregate revenues in each of the satellite industry’s sectors: satellite services, satellite manufacturing, launch industry and ground equipment.
Revenues derived from satellite services improved 16 percent, moving from $72.6 million in 2007 to $84 million in 2008, and accounted for 58 percent of total revenues, according to the study. Satellite services also have more than doubled in the last six years. The increase has been fuelled by growth in satellite television services. The sector accounted for $64.9 billion in revenues in 2008, and satellite television services now have more than 130 million subscribers around the globe, a 30 percent increase compared to 2007.
Transponder agreements accounting for $10.2 billion of a total of $14.5 billion in fixed satellite services revenues. Transponder agreements saw 6 percent growth since 2007. Managed networks services, which include VSAT services, contributed $2.8 billion in revenues, while end-user broadband revenues doubled from $400 million in 2007 to $800 million in 2008.
The ground equipment segment also has recorded huge gains throughout the last five years, reaching $46 billion in 2008, compared to $34.3 billion in 2007. Consumer-oriented products, including satellite TV and broadband, mobile satellite, and GPS devices, led the growth in this sector.
Launch industry revenues improved 20 percent to $3.9 billion, with the growth attributed to an increase in launch prices. Satellite manufacturing revenues fell from $11.6 billion in 2007 to $10.5 billion in 2008 due to fewer satellite launches. This was the second consecutive year satellite manufacturing revenues have fallen. The sector remains above its 2003 and 2004 figures but now accounts for only 7 percent of total satellite industry revenues, down from 13 percent in 2003.
Commercial In – Orbit Activity
Transponder agreement revenues for fixed satellite services (FSS) providers were $10.2 billion in 2008, up 6 percent from revenues of $9.6 billion in 2007 and maintaining a steady growth rate since 2004.
FSS giants Intelsat and SES account for nearly 34 percent of the on-orbit commercial FSS satellites, operating 50 and 38, respectively. Eutelsat, with 17 satellites, and Telesat, with 12, account for another 10 percent of the total.
Regional and other operators combine for more than 56 percent of the overall non-low-Earth orbit commercial communications satellites in orbit, increasing their share from 52 percent in 2007.
Satellite broadband continues to show growth due largely to the success of WildBlue and Hughes in the United States as well as the steady growth of Thaicom’s IPStar initiative in Asia.
In the United States, both WildBlue and Hughes made steady progress in 2008. WildBlue added nearly 87,000 subscribers in 2008, while Hughes added more than 53,000 subscribers. With the U.S. government set to pump billions of dollars into providing better connectivity to rural areas, there could be further opportunities for the two operators to increase their subscriber numbers. In Asia, Thaicom continues to progress with IPStar. By the end of 2008, the operator had sold more than 150,000 user terminals, an increase of more than 50,000 compared to the end of 2007.
There also are more satellite broadband initiatives around the globe, with Eutelsat and ViaSat planning high-powered Ka-band satellites to tap into satellite broadband markets in Europe and the United States. SES Astra is seeing some success with Astra2Connect in Europe, and Avanti Communications also hopes to become a major player in Europe.
Commercial Launch Activity
After an unusually slow 2007 with only 10 missions to place commercial satellites in geostationary orbit, the launch industry rebounded in 2008 with 17 missions, as two of the largest launch providers returned to full service. This was the most missions conducted by the big three launch providers since 2002.
International Launch Services and Sea Launch were hobbled in 2007 by launch failures, but returned to the market with six and five missions in 2008, respectively. ILS placed Thor 5, AMC-14, Inmarsat-4 F3, Nimiq 4, Astra 1M and Ciel 2 into orbit. Sea Launch lofted Thuraya-3, DirecTV 11, Galaxy 18, EchoStar 11 and Galaxy 19 into orbit and also conducted the first mission with its Land Launch variant in 2008 carrying Amos 3.
Arianespace performed five missions in 2008, down from six in 2007. (This does not include a mission that carried the Automated Transfer Vehicle for the European Space Agency). Each Ariane 5 launch carried a pair of commercial satellites into orbit, and the manifest included: Hot Bird 9, W2M, Superbird-7, AMC-21, ProtoStar 1, BADR-6, Turksat 3A, Star One C2, Vinasat-1 and Skynet 5C.
While revenues in the satellite manufacturing sector have fell, the number of satellites ordered held steady, according to the "State of Industry Report." Global satellite manufacturing revenues in 2008 were $10.5 billion, compared to $11.6 billion in 2007. The decline "can be attributed largely to the reduction in the number of satellites launched," which fell from 48 in 2007 to 21 in 2008.
The U.S. manufacturing industry has been particularly hard hit in 2008, as revenues declined nearly 40 percent from $4.8 billion in 2007 to $3.1 billion in 2008. The U.S. share of manufacturing revenues dropped from 41 percent in 2007 to 29 percent in 2008. Global manufacturing revenues from commercial customers grew to $5.2 billion in 2009, as the proportion of manufacturing revenues from commercial customers compared to government and military customers rose from about 33 percent in 2007 to nearly 50 percent in 2008.
The number of new commercial geosynchronous orbit satellites placed in 2008 was 21, the same as in 2007. The U.S. share of orders held steady at about 52 percent, while the share of European manufacturers slipped from 43 percent to 33 percent. Those orders went to Chinese (China Great Wall Industry Corp.), Japanese (Mitsubishi Electronic Corp.) and Russian (JSC-ISS) manufacturers, which saw their share of the market jump from 5 percent to 14 percent.
High-definition TV (HDTV) continues to be seen as a major growth driver for satellite operators around the globe. With direct-to-home (DTH) operators facing more competition than ever from cable and telcos in the TV space, having strong HD content is seen as a way of staying a step ahead of the competition.
The number of HDTV channels worldwide grew by almost 170 percent between the end of 2006 and May. There are a total of 1,492 HD channels broadcasts around the globe, compared to 556 HD channels at the end of 2006. About 60 percent of those channels serve the North American market, according to the SIA study. The remaining channels primarily serve the European and Asia-Pacific markets.
IMS Research, says its it expects total worldwide HDTV households to reach 255 million by the end of 2013, with DTH to be the market leader with 38.1 percent of these households. Cable is expected to follow second with 26.5 percent of households and IPTV third with 12.3 percent.
French research company Idate is forecasting that in Europe’s six biggest markets: France, Germany, Italy, Poland, Spain and the United Kingdom, there will be more than 100 HD channels being broadcast by the end of 2009.
Idate also expects really strong growth over the next four years, and by the end of 2013, it expects there will be close to 250 HD channels being broadcast, including pan-European channels being distributed in these six largest markets, according to "Which Network to Deliver HDTV in Europe."