The Dawn of the Trillion-Dollar Space Economy
The building and servicing of rockets and satellites, security of satellite data, space tourism, and more provide the potential for massive industry expansion.
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Generally speaking, aerospace serves five key markets: military aircraft, commercial airliners, general aviation, missiles — and space. While innovation and new ideas are continually pushing the entire industry’s growth, these days it’s clearly the young space sector transforming aerospace into an even more dynamic, diverse, and economically powerful industry.
No offense to the Wright boys, but the space economy has its own origin narratives, which, frankly, are much more adrenaline-driven. They include riveting historical stories about early satellite and rocket launches, the moon landing, and everything NASA. Since its early years, even science fiction films and books have influenced the development of applications to research, explore, and utilize “space” for humans. We even have a new military branch, the United States Space Force (USSF), with its own need for state-of-the-art space tech and workers.
Amazing Space: a Trillion-Dollar Sector?
Perhaps one of the most extensive yet easy-to-digest analyst reports about the space sector and its future was published in May 2022 by Citi GPS: Global Perspectives & Solutions, a business of Citigroup. Titled “Space: The Dawn of a New Age,” the authors predict the space industry will reach a jaw- dropping $1 trillion in annual sales by 2040. Already the global space economy was valued at $424 billion after expanding 70 percent since 2010, according to research from the Space Foundation.
Traditional applications [of satellites] such as video broadcasting will cede to newer applications such as consumer broadband and space-as-a-service. The satellite market, which currently comprises more than 70 percent of the today’s space industry, will continue to lead, but demand is expected to drop in the days ahead. “Traditional applications such as video broadcasting will cede to newer applications such as consumer broadband and space-as-a-service,” according to Citi. “Satellite imagery and better analysis tools for large amounts of data could be crucial in helping nations and companies address many [sustainability goals], particularly monitoring greenhouse gas emissions, deforestation, and biodiversity.”
Revenue from manufacturing, launch services, and ground equipment will make up the majority of the sales growth in the satellite sector. “However, the fastest growth rate is expected to come from new space applications and industries, with revenue forecast to rise from zero to $101 billion over the period,” notes the report.
More robust growth could come from innovative space applications and industries — like space-based solar power, moon/asteroid mining, space logistics/cargo, space tourism, intercity rocket travel, etc. — that are forecast to bring in about $100 billion in annual sales by 2040. A major reason behind this revenue bonanza is the fact current expensive launch costs are predicted to drop by 95 percent in the next two decades. In turn, this will create greater opportunities for a wide variety of large and small space businesses waiting for lower entry costs into the game.
“The launch industry is seeing a secular shift from being largely cost-plus pricing-based to being value-based in order to open up new markets and maximize profitability,” says the report. Specifically, when SpaceX business launched the Falcon 9 in 2010, that helped the space industry lower its launch costs to a level 30 times below NASA’s space shuttle costs.
“NewSpace” Players Shake Things Up
As of 2019, the world’s largest aerospace companies ranked in terms of total revenue were Boeing, Lockheed Martin, and Northrop Grumman, Airbus, and United Technologies, which merged with Raytheon in 2020 to become Raytheon Technologies Corporation.
However, these goliaths aren’t the only entities trailblazing new space products and applications. These days fascinating breakthroughs are coming from commercial newcomers collectively called the “NewSpace” firms, says Jim Bell, Ph.D., director of the NewSpace Initiative and professor at Arizona State University’s School of Earth and Space Exploration. They’re “usually the smaller, nimbler, more entrepreneurial kinds of companies” like SpaceX, Virgin Galactic, Planetary Resources, and Deep Space Industries.
Robust growth could come from innovative space applications and industries — like space-based solar power, moon/asteroid mining, space logistics/cargo, space tourism, intercity rocket travel, etc. — that are forecast to bring in about $100 billion in annual sales by 2040. For example, look at the sexy sub-sector of space tourism. In July 2022, Virgin Galactic (thought to be the world’s first commercial space line) announced the leasing of a manufacturing facility in Phoenix for its next-generation Delta class spaceships. They are designed to fly weekly in late 2025 and start private astronaut flights in 2026. Then, in August, Virgin announced it soon will build an astronaut campus in New Mexico for the training of astronaut customers.
Competitor Blue Origin, founded by billionaire Jeff Bezos, launched its sixth New Shepard passenger flight in August. It safely took six space tourists to the edge of space, 66 miles above Texas, and back. The company also is developing commercial projects, including a moon lander to carry astronauts to the lunar surface in 2024 via NASA.
Private Financiers Ramp Up Space Investments
In 2021, space infrastructure companies were awarded $14.5 billion of private investment. This is a new annual record representing a 50 percent increase from 2020, according to a report released January 2022 by New York-based Space Capital.
“As we look ahead, we see tremendous opportunities to scale mass adoption of the existing infrastructure as we look for radically new approaches to build and operate space-based assets,” wrote Chad Anderson, founder and managing partner. This seed-stage venture capital firm not only invests in the space economy — specifically GPS, geospatial intelligence and communications — but also tracks about 1,700 companies that have raised $258 billion in cumulative global equity investments since 2012. In Q2/2022 alone, 92 companies Space Capital tracks received $6.1 billion in investment monies. The company’s quarterly reports divide investment in the industry into three technology categories: infrastructure, distribution, and application. Infrastructure includes what would be commonly considered as space companies, such as firms that build rockets and satellites.
The Space Capital leader thinks the majority of space companies are counter-cyclical and resilient to otherwise unfavorable economic trends. “We do not believe that the space economy is at existential risk,” said Anderson in his firm’s July 2022 Space IQ webinar. “In fact, we believe that the majority of space companies are countercyclical and resilient to macro market conditions. That’s because space technology is our next-generation digital infrastructure. They’re the invisible backbone that powers our global economy. Satellite technology…geospatial intelligence and satellite communications already play a critical role in most major industries, and enterprises and governments see these space technologies as critical infrastructure.”
Changes Ahead for the Space Economy
Debra Facktor, head of U.S. Space Systems for Airbus U.S. Space & Defense, is one of the highest-ranking female executives in the aerospace sector. She foresees a space economy and workforce that will look a lot different than what exists today.
One of the most important things we can do is to continue to invest in talent and encourage young people…to go into fields like aerospace. I really want to see space companies and agencies have equal representation of women and minorities. Debra Facktor, head of U.S. Space Systems, Airbus U.S. Space & Defense By 2030, Facktor predicts there will be major advances in human space flight. “In planning your 2030 vacation, you might be able to choose between a quick trip to Florida or taking a quick trip to space,” she says. Also, since thousands more satellites will be orbiting the Earth by then, “a new opportunity in space may be the on-orbit servicing [or repairing] of satellites.”
In fact, overcrowding in space is one of the greatest threats to the continued growth of space activity, she believes. “With all the [increased number of] satellites and the human space flight missions going on, there’s more debris and a greater likelihood of things hitting each other.”
Another future space concern is the protection of information and cybersecurity, she notes. To protect the physical assets and the way satellite data is delivered securely, one solution may be to use the “promising technology of laser communication,” she says. “When data is communicated by laser, it’s less easily intercepted or jammed.”
By 2030, Facktor thinks the space ecosystem will still be a mix of government and military industry players, but they’ll play different roles. “Government will take risks where industry is not able to, and continue to provide a reliable infrastructure, common regulatory regime, and a predictable contractual and legal business environment. All that is important for commercial [aerospace] companies to succeed.” However, commercial companies are expected to continue to innovate by “coming up with new applications for existing technologies — including [those] we don’t even know we need,” she adds.
Regarding tomorrow’s space workforce, Facktor loves that young people are excited about space, and many children want to become astronauts. “One of the most important things we can do is to continue to invest in talent and encourage young people…to go into fields like aerospace,” she says. “I really want to see space companies and agencies have equal representation of women and minorities.”
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