SATELLITE VALUE CHAIN: SNAPSHOT 2017

KEY TRENDS AND INDICATORS ON SUPPLY & DEMAND

OF THE WORLD COMMERCIAL SATELLITE INDUSTRY – AN EXTRACT

A Euroconsult Executive Report

THE SATELLITE VALUE CHAIN

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WHO WE ARE / WHAT WE DO

TRAINING

THE SATELLITE VALUE CHAIN

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 TABLE OF CONTENTS OF THE FULL REPORT
THE BEST OF EUROCONSULT’S RESEARCH
INTRODUCTION TO THE SATELLITE VALUE CHAIN
REPORT CONTENT COMES FROM: THE VALUE CHAIN CONCEPT
OVERVIEW OF THE COMMERCIAL SATELLITE VALUE CHAIN IN 2016
• SATELLITES TO BE BUILT & LAUNCHED BY 2026 THE THREE COMMERCIAL SATELLITE VALUE CHAINS IN 2016
• SATELLITE COMMUNICATIONS & BROADCASTING MARKETS SURVEY
SATELLITE MANUFACTURING & LAUNCH SERVICES
• SATELLITE-BASED EARTH OBSERVATION: MARKET PROSPECTS TO 2026 SATELLITES LAUNCHED OVER THE DECADE
• TRENDS & PROSPECTS FOR EMERGING SPACE PROGRAMS COMMERCIAL SATELLITES LAUNCHED OVER THE DECADE
• HIGH THROUGHPUT SATELLITES: VERTICAL MARKET ANALYSIS & FORECASTS SATELLITES LAUNCHED IN 2016
SATELLITE MANUFACTURING
• PROSPECTS FOR IN-FLIGHT ENTERTAINMENT & CONNECTIVITY GEO SATELLITE MANUFACTURING
• PROSPECTS FOR MARITIME SATELLITE COMMUNICATIONS SMALL SATELLITE MANUFACTURING
• PROSPECTS FOR THE SMALL SATELLITE MARKET LAUNCH SERVICES
LAUNCH RATE NEW!
GEO LAUNCH SERVICES
STRATEGIC ISSUES

SATELLITE COMMUNICATIONS
SATELLITE OPERATORS
SATELLITE OPERATORS – SATELLITE CONSTELLATIONS
SATELLITE OPERATORS – M2M AND IOT CONSTELLATIONS NEW!
VIDEO SERVICES
SERVICE PROVIDERS LANDSCAPE
STRATEGIC ISSUES

EARTH OBSERVATION
SATELLITE OPERATORS
SATELLITE OPERATORS – THE NEW SPACE ENVIRONMENT
COMMERCIAL DATA MARKET
FREE- AND LOW-COST SOLUTIONS NEW!
VALUE-ADDED SERVICES
STRATEGIC ISSUES

SATELLITE NAVIGATION
GNSS SYSTEMS
GNSS DEVICE MARKET
GNSS SERVICE MARKET
SELECTED GNSS MACROTRENDS NEW!
THE SATELLITE VALUE CHAIN
STRATEGIC ISSUES
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 INTRODUCTION TO THE SATELLITE VALUE CHAIN
THE VALUE CHAIN CONCEPT

SATELLITE LAUNCHER The satellite industry is an infrastructure supplier to government

MANUFACTURING MANUFACTURING
agencies and commercial companies. It operates upstream of a value
SUB SUB chain that flows downstream to the end-users of satellite capabilities.
UPSTREAM

SYSTEMS SYSTEMS

The satellite value chain permits the delivery of space-based services

PRIME PRIME
reliant on satellite technology, and includes a wide diversity of
stakeholders, active at five levels of the chain:

1. Government agencies who fund space technology R&D for their

LAUNCH SERVICES own uses and for dual-uses: public R&D efforts remain highly
SPACE AGENCIES
concentrated in a limited number of countries;
INVESTORS 2. The space industry (upstream) that includes a limited number of
players who design and manufacture space systems and their
INSURERS
launch vehicles;
SATELLITE OPERATORS REGULATORS 3. The satellite operators who own the satellite systems and
market their capacities to the service providers (downstream)
who deliver communications, navigation and geographic
GROUND
SEGMENT
information services to the final users by integrating the satellite
signal into packaged solutions;
4. Ground segment and terminal suppliers, who design and
deliver a large variety of software and equipment for both the
MILITARY
DOWNSTREAM

management of satellite infrastructure, and for the access to

PUBLIC CIVIL

services by the users. Customers stand along the value chain;

5. The final users, whether governmental (civil/military) or
BUSINESS

commercial (business or customer), do not ask for the satellite

CONSUMERS

SATELLITE SERVICE technology per se but for solutions tailored to their needs,
PROVIDERS whether for better communications, navigation or geographic
information services.

THE SATELLITE VALUE CHAIN

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 INTRODUCTION TO THE SATELLITE VALUE CHAIN
OVERVIEW OF THE COMMERCIAL SATELLITE VALUE CHAIN IN 2016

Figures include commercially-active companies with at least 1 satellite in operation or under construction; satellites equal to or greater than 50kg.
THE SATELLITE VALUE CHAIN
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 SATELLITE MANUFACTURING & LAUNCH SERVICES
SATELLITES LAUNCHED OVER THE DECADE

SATELLITES LAUNCHED BY CLIENT (2007-2016) SATELLITES LAUNCHED BY REGION OF OPERATORS (2007-2016)

120
Middle East & Africa Latin America
# satellites (5%) (2%)
100
Europe
Commercial North America
(16%)
80
(31%)

60

Civil government 963

40
satellites
20 Russia &
Military Central Asia
(18%)
0 Asia & Oceania
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(29%)

SATELLITES LAUNCHED BY APPLICATION (2007-2016) • A total of 963 satellites have been launched worldwide over the decade
by government agencies and commercial clients, i.e. an average of 96
Exploration units/year. The rise of small satellites and mega constellations in the next
(3%) 10 years will dramatically increase this number.
Science
(6%) • Governments remain the primary client of the space industry, launching
80% of the 963 satellites during the decade (i.e., 771 units). However,
Technology Satcom due to the rise of constellations, commercial satellites are expected to
(6%) (41%) replace government satellites as the largest market next decade.
963
• Telecommunication is the largest application, with 375 satellites
Security satellites launched over 2007-2016, while Earth observation programs launched
(7%)
259 satellites. Together these two applications accounted for 68% of the
total. The remaining six applications together accounted for 329
satellites.
Navigation Earth Observation
(11%) (27%) • Asia/Oceania and North America launched together 578 satellites (60%
of the global total), predominantly for governments. North America led
THE SATELLITE VALUE CHAIN the commercial demand, with 129 of 252 total global satellites.
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 SATELLITE COMMUNICATIONS
SATELLITE OPERATORS

SATELLITE OPERATORS WHOLESALE REVENUE FSS WHOLESALE REVENUE BY REGION (2016)

(2007-2016)
14 Russia & Central Asia Asia & Oceania
$ in billion (5%) (27%)
12
MSS
Latin America
10 (13%)

8
$10.9
6 billion
FSS
4 Europe
Middle East & (20%)
2
Africa
(16%)
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
North America
(19%)
MSS WHOLESALE REVENUE BY REGION (2016) • The wholesale of satellite capacity is the primary revenue source for both
FSS and MSS operators. After the significant drop in revenues recorded in
Latin America 2015 (more than 5% decrease), total wholesale revenue from satellite
North America
(7%) (37%)
operators slightly decreased by -0.7% in 2016 and reached $12.4 billion. The
reduction was entirely due to a decline in FSS operators revenue, which
nevertheless accounted for ~88% of total wholesale revenues.
• Following a period of limited growth for the FSS industry in recent years,
Asia & Oceania
$1.47 revenues declined by ~7% in 2015 and 0.8% in 2016, to $10.9 billion. While
(15%) billion the strengthening of the U.S. dollar explained a significant part of the
decrease in 2015, it played a marginal role in 2016. The decline was entirely
driven by the fierce price competition throughout the year with the
oversupply of regular satellite capacity, exacerbated by the rapid expansion
Middle East & of HTS capacity.
Africa
Europe (22%) • Total MSS wholesale revenue reached $1.47 billion in 2016, with a 0.8%
(19%)
growth y-o-y. The speed for MSS operators to adapt to the new market
environments (new product, new pricing, new distribution, etc.) has helped
THE SATELLITE VALUE CHAIN
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MSS operators to control the churn to VSAT and terrestrial competitors.
 EARTH OBSERVATION
COMMERCIAL DATA MARKET

COMMERCIAL DATA SALES: OPTICAL & RADAR (2007-2016) $/km² COMMERCIAL DATA PRICES*
Optical
Revenues ($ million)

SAR
Highest resolution
has different
SAR Note: New TSX commercial mode at
prices according
to SAR-band: 0.25m resolution is not included here;
highest prices are priced at approximately $500/km²
High-medium X-band, then C-
resolution (>1 m) Shift and L-bands
toward
higher res.
and
accuracy
Very high resolution Pressure on price data for
(≤1 m) high–moderate resolution
data, less stringent on The lower the resolution of SAR,
geolocation accuracy the more similar in price to optical

ground
resolution (in m) * Newly acquired Level 1 data, data prices from the last 12 months
COMMERCIAL DATA SALES: END-USERS (2007-2016) and refers to standard tasking catalogue price only
Revenues ($ million)

• The commercial data market totaled $1.8 billion in 2016; this represents
7% growth over 2015 and a five-year CAGR of 5%.
Non-Defense
market • Defense markets dominate, topping $1.1 billion in 2016. Non-U.S.
defense spending continues to grow strongly, reaching $712 million in
2016 for a five-year CAGR of 10%.
• The VHR optical data market is valued at $1.2 billion, primarily defense-
Non-U.S. driven. Very High-Resolution and High- to Moderate-Resolution
Defense account for 83% of the total market.
• The remaining 17% corresponds to SAR data. SAR has not experienced
the same ramp-up in sales as optical data; however, in specific
U.S. Defense application areas, such as maritime domain awareness, it is gaining
more traction. Higher SAR data costs also remain an issue.
• Data pricing is driven by ground resolution and geolocation accuracy:
THE SATELLITE VALUE CHAIN higher resolution and accuracy = more complex and costly systems.
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 SATELLITE NAVIGATION
GNSS SERVICE MARKET

100 GLOBAL GNSS MARKET SIZE (2007-2016) GNSS REVENUE BY REGION (2016)
90
$ in billions
80
Europe
70 North America (23%)
(25%)
60

50
$94.6
Russia & CIS
billion
40
(7%)
30

20 South America
Asia-Pacific (6%)
10
(35%) Middle East & Africa
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (1%)
Source: Euroconsult & GSA
• The GNSS market, estimated at nearly $95 billion in 2016, includes both
sales of GNSS devices (i.e. terminals) and revenues generated by GNSS
GNSS REVENUE BY APPLICATION (2016) added-value services (services which leverage GNSS technology, such as
fleet management, navigation services, etc.).
• Sales of devices will grow steadily (forecasted at 6% annually until 2020,
Road and 3% afterwards as the market matures), while revenues from services,
Maritime (1%) (49%) which overtook revenues from devices in 2015, will experience very strong
Aviation (1%) growth (20% annually) until 2020, slowing to 10% through 2025. By 2020,
Timing & Synchronization (1%)
revenues from added-value services will double revenues from terminals,
Agriculture (1%) driven by trends such as 5G, IoT, Automated Driving, Smart Cities, etc.
Surveying (3%)
$94.6
• The GNSS market has tripled in value over the past decade, driven by the
billion LBS and road segments, and forecast to reach over $300 billion by 2026.
• Though LBS accounts for 96% of GNSS shipments in 2016, Road is the
largest segment in revenues (49% of GNSS market), mainly driven by in-
LBS vehicle systems (IVS), accounting for 40% of total road revenues. IVS
(44%) represent strong commercial opportunities, especially for navigation and
connected cars, meaning that automotive manufacturers are becoming the
Source: Euroconsult & GSA largest integrators of GNSS solutions.
THE SATELLITE VALUE CHAIN • GNSS industry revenues are heavily concentrated: 75% of revenues are
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generated roughly equally in the US, Europe and Japan, with China at 11%.
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CONSULTING 2017 RESEARCH REPORTS

 Satellite Communications for Defense & Security

BUSINESS STRATEGY
 Prospects for In-Flight Entertainment & Connectivity
Market analysis & forecasts • Competitive analysis &
benchmarking • Customer surveys • SWOT assessment  Government Space Programs: Benchmarks, Profiles & Forecasts
 High Throughput Satellites: Vertical Market Analysis & Forecasts
 Prospects for the Small Satellite Market
DUE DILIGENCE
 Prospects for L-Band, IoT & M2M Markets
Independent business case assessments • Pricing
valuations • Revenue forecasts & DCF modeling •  Satellite Communications & Broadcasting Markets Survey
Feasibility study  Satellites to be Built & Launched by 2026
 Satellite-Based Earth Observation
GOVERNMENT POLICY  Satellite Value Chain: Snapshot 2017
Policy & program evaluation • Impact assessments •
Socio-economic & cost benefit analysis • International
benchmarking and best practices

PROGRAM MANAGEMENT

Program specifications & procurement • Management

and process optimization • Marketing and sales
strategy

THE SATELLITE VALUE CHAIN

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THE SATELLITE VALUE CHAIN

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THE SATELLITE VALUE CHAIN
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THE SATELLITE VALUE CHAIN

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