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Finding a New Normal in the Hype of Industry Transformation

By Carolyn Belle | January 11, 2019
      Photo: Via Satellite

      Photo: Via Satellite

      The terms “transformation” and “space industry” are time and again thrown together by industry leaders and picked up by mainstream media. Hardly a day goes by without an innovative technology, smallsat constellation, or funding round lauded as a significant development for the industry at large. Financial community estimates for industry growth range from less than $400 billion today to a headline-grabbing $1 trillion — or even $3 trillion in annual revenue by the 2040s. But does all of this hype add up to real transformation, or just an attractive soundbite?

      The traditional behemoth of the space industry — the satellite communications that have fueled a majority of commercial growth since the 1980s — is the first yardstick by which to assess potential transformation. Geostationary Orbit (GEO) satcom operators have hastened their adoption of new ideas in recent years, no longer looking for incremental improvements in cost or capacity per satellite — but for wholly new satellite designs, fleet architectures, and ways of engaging with customers that enable greater system-level flexibility and responsiveness. Implementation of this change is yet to come, but the commitment to a new approach by key operators will drive innovation forward. Additionally, new players are finding opportunities to deploy communications systems that are distinct from incumbent counterparts.

      We have also seen the emergence of new markets and space-based business models at a more rapidly growing rate since 2011. Commercial Earth observation and Global Navigation Satellite System (GNSS) applications emerged in the 1990s, but these few companies, though successful, did not translate to a broadening or diversification of the space industry at large. This has changed today, as new companies are opening opportunities for partners and consumer demand and available technology supports new uses of space. A full ecosystem has developed around smallsats and the rise of big data via satellite. Markets that have remained merely talk and undelivered promises are on the cusp of implementation; Virgin Galactic’s successful test flight in December 2018 sets the stage for space tourism to (potentially) become available in 2019, and the first non-government entity has announced launch readiness for a 2019 mission to the lunar surface. These players are not alone, with multiple competitors nearing market availability along similar timelines.

      Ultimately the hype does reflect real transformation in the space industry: a change in the traditional market and development of new markets. But this is not a single turning point for the industry, as is often implied. It is rather an approach to engaging with space that is evolving into a new normal. The technology advancement — from within the industry and beyond — demand evolution, and financing are fueling today’s transformation, and will continue to exert this force as the industry progresses.

      The development of in-space servicing capabilities, with the first commercial mission to launch in 2019, will grow into a long-term driver of ongoing transformation. If successful, in-space servicing (and ultimately, robotic assembly and in-space manufacturing) will fundamentally alter the way we relate to space infrastructure and how we approach risk. By mitigating launch constraints and removing commitments to fixed assets, this will impact not only the traditional space industry, but will shape the approach of emerging players and applications. Low cost launch, whether through reusability or other approaches, could likewise facilitate transformation, but industry has not yet achieved the level of price elasticity to make this happen.

      Also fueling much of this change is greater financing availability. The progression from angel investing, which championed certain causes to venture capital that spread greater volume of funding across startups, has finally graduated to a level of more informed and calculated investing, involving institutional and strategic players. These diverse funding streams, often associated with new partnerships, can help to realize novel ideas enabled by changing consumer demand and advanced technologies.

      We are witnessing significant change in the space industry, yet there is much more transformation to come — capabilities such as commercial space stations and asteroid mining are in nascent stages, with myriad applications yet unimagined and disruption possible in any existing market. The industry itself is simply becoming more dynamic, and we must consider today’s consistent innovation and the regular emergence of new markets and capabilities as business as usual. The stage has been set for a more expansive and interactive space-based economy moving forward, and I look forward to seeing what we achieve in 2019.

      Northern Sky Research analyst Carolyn Belle. Photo: NSR.

      Carolyn Belle engages in space industry growth and diversification, with expertise in the market dynamics of emerging satellite applications, in-space servicing, and the creation of diversified space architectures. She currently supports communications for smallsat constellations and beyond in her role at KSAT.