NSR’s Global Satellite Capacity Supply and Demand, 16th Edition report, released today, confirms despite a challenging current climate for capacity sales, long-term projections are promising with revenues doubling over the next 10 years. While video demand faces hurdles in all markets, data applications will drive the industry forward at a 6.8% CAGR as HTS capacity in both GEO and LEO/MEO orbits unlocks demand via exponentially more bandwidth and lower prices. Many areas are still in the early days of HTS adoption, but it will progressively capture a larger portion of revenue. By 2028, 2 of every 3 capacity dollars will be generated on HTS vs. FSS capacity.
Video continues to be the industry cash cow. Even with continued declines due to the impact of compression and price degradation, video revenues are still critical for the health of the industry. However, a decline of $1.8 billion in video revenue by 2028 signifies a dire need to transition the satellite business into a more data-centric model where large volumes and low prices ignite growth. This new HTS capacity also expands the total addressable market (TAM) for satcom where satellite solutions are increasingly more cost competitive.
"Although capacity pricing has declined across segments, applications like backhaul and maritime showcase the opening up of low pricing demand via elasticity, spurring growth across several regions in the world,” comments Gagan Agrawal, NSR Senior Analyst and report co-author. As the industry shifts to services; video, especially C-band distribution, continues to decline quickly, due to spectrum issues and changing priorities. Stabilizing profitability via improving fleets and unlocking low-price demand remains absolutely critical for operators’ financial health.
“HTS is undoubtedly the key enabler for long term data growth; however, there is divergence in fleet strategies. Some invest in large VHTS payloads to minimize CAPEX/Mbps hoping demand will fill them rapidly. Others follow a step by step approach, launching smaller HTS payloads, anticipating rapid technology evolution to minimize cost per Mbps sold. While, operators who currently have significant exposure to FSS try to balance profitable legacy customers, like video, with growth coming from data on hybrid FSS-HTS satellites”, states Lluc Palerm, NSR Senior Analyst and report co-author. Business models need to adapt. From investing in ground segment to offering managed services, to co-investing with MNOs for accelerated rural deployments or participating in subscriber acquisition; operators need to take bigger responsibilities stimulating demand.