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The latest findings from NSR’s Global Satellite Capacity Supply & Demand, 13th Edition indicate a satellite industry in the midst of a sea of change, with choppy waters threatening to overturn operators sticking to the status quo.
However, the research firm suggests that blue oceans do offer billion-dollar opportunities for those able to successfully change with the times. The widebeam capacity and dozens of transponder-satellites of yesteryear face enormous pricing pressures across a number of verticals, with NSR forecasting widebeam revenues to drop by over $1.25 billion from 2015 to 2025. Alternatively, HTS capacity creates a renaissance of sorts for the satellite industry, with over $7 billion in new revenues paving a growth path for operators able to pivot towards new business models and new ways of selling capacity.
As macro factors, such as TV viewing habits, data consumption, and Internet penetration in the developing world change rapidly over the coming decade, the satellite supply picture will change markedly. Satellite operators will need to look to volume for growth, with over 12 Terabits per second of HTS capacity (GEO, MEO, and LEO) to launch by 2025. While much of this will be the proposed LEO-HTS constellations of next decade, there will be over 3 Tbps of GEO-HTS capacity globally by 2025. At a minimum, this equates to triple the amount of traditional FSS capacity in orbit today, and depending on bits per hertz efficiencies, it could be even more than that.
“The telecom industry as a whole has seen Moore’s Law applied to the cost of data over the past 15 years. Satellite, today, is not competitive in 99 per cent of the telecom market, but with HTS there is hope to address a much bigger piece of the pie and, ultimately, operators must deploy HTS or die,” notes Blaine Curcio, Senior Analyst and report lead author. “With this in mind, our study forecasts price drops in data verticals upwards of 60 per cent by 2025, with this leading to significant elasticity of demand across these applications.”
On the demand side, nearly 4 Tbps of data/broadband demand will be sold over satellite by 2025, up from just over 250 Gbps today, for a CAGR of over 30 per cent. Revenue growth will be more modest, but with only a 17 per cent CAGR boosting top-line revenues from $1.9 billion to $9 billion to 2025.
“While revenues are expected to increase at a dramatic pace, this is not the same industry as 10, or even just 5 years ago. These new verticals offer big revenue potential, relatively speaking, but the days of 80 per cent EBITDA margins are most likely gone, with operators seeing lower CAPEX through launch/manufacturing advancements traded for higher OPEX, as operators have much more capacity to sell, and need to get much closer to the end customer to sell it,” notes Curcio. “This will be a very complex balancing act—driving down price points, pivoting towards new customers, launching radically different types of capacity. There will unquestionably be winners and losers, and likely less operators playing the game as the industry sees consolidation,” concludes Curcio.