NSR’s Global Satellite Capacity Supply & Demand, 15th Edition report, published today, finds satellite capacity revenues continue a long-range growth path of 6.8% CAGR over the next decade. However, near term caution persists as business models pivot to data-centric & HTS applications, amidst a projected video-centric capacity revenue loss over $2 billion by 2027. Emerging data use cases, such as Mobility, Cellular Backhaul and Broadband Connectivity, will undoubtedly propel the next wave of satcom growth.
The slope may flatten a bit, but capacity pricing continues downward. Unlike previous pricing instability, where cyclical supply and demand disconnection was the main driver, technology is behind current declines. As Space Segment and Ground Segment continue to reduce CAPEX/Mbps at an accelerated pace, NSR does not expect pricing to rebound in the foreseeable future; however, this is not necessarily bad news for the industry. “Lower capacity prices, advances in ground segment and innovative business models matched with insatiable demand for connectivity everywhere, anytime will unlock new use cases propelling industry growth,” notes Lluc Palerm, NSR Senior Analyst and report author. “HTS satellites load x100 times the capacity at 1/10 fraction of the cost per Mbps of traditional satellites. This presents both opportunities and challenges, but operators cannot expect to sell capacity using the same business models and pricing strategies as before, ” stated Palerm.
The HTS ecosystem is still underdeveloped for many applications and regions across the globe, which hints at sizable growth opportunities for players that can adapt to the new paradigm. Operators face one of the most challenging times ever when designing satellite payloads, as they need to balance legacy widebeam capacity providing today’s revenues, albeit from eroding verticals, with HTS, which is the growth engine for the future, but requires intense efforts to develop the market. “A growing number of operators are incorporating hybrid and flexible payloads to their designs. They cannot discontinue FSS-based legacy services and need to stay flexible in front of future disruptive forces like LEO constellations, 5G or emerging space powers like China, for which commercial success is not always the primary objective,” stated Palerm.