Home >> July 2009 Edition >> — BEAM — Satellite Industry Association
— BEAM — Satellite Industry Association
009 State of the Satellite Industry Report

As far as the health of our industry, Patricia Cooper, the President of the Satellite Industry Association (SIA), said, “The satellite industry continued to post growth in 2008, led by satellite services and ground equipment sales. The results for the past year are encouraging, and frame the need for policy decisions that can affect the industry’s future growth such as export controls, broadband stimulus and U.S. government communications requirements.”

The SIA’s 2009 State of the Satellite Industry Report was released at ISCe 2009, revealing a 19 percent growth in overall world satellite industry revenues — with revenues totaling $144.4 billion in 2008. Global revenues for the satellite industry continue to increase, averaging an annual growth rate of 14.2 percent from 2003 to 2008.

SIA commissioned the Futron Corporation to conduct its 12th annual State of the Satellite Industry Report. Futron polled more than 70 satellite companies, both SIA members and non-members, to determine aggregate revenues in each of the satellite industry’s sectors: satellite services, satellite manufacturing, launch industry and ground equipment.

In 2008, the ground equipment sector was the fastest-growing satellite industry segment, followed by the satellite services sector, which continues to demonstrate increased growth. The report shows that:
  • Satellite Services revenues maintained a steady growth of 16 percent, with satellite television leading this sector, amounting to a total of $67.3 billion in 2008.
  • Satellite Manufacturing revenues decreased slightly from $11.6 billion in 2007 to $10.5 billion in 2008, as fewer new satellites were launched.
  • Launch Industry revenues increased by 20 percent in 2008, with United States launch industry revenues remaining relatively constant at $1.1 billion.
  • Ground Equipment revenues grew fastest at 34 percent, increasing to $46 billion, second only to satellite services. Consumer-oriented products, including satellite TV and broadband, mobile satellite and GPS devices, led the growth in this sector.

The SIA chart titled “World Satellite Revenues” shows revenues expressed in real-year U.S. dollars (not adjusted for inflation.) Next are two SIA charts that reveal the “World Revenues By Sector.” As is readily discernible:
  • Overall worldwide industry revenue growth was 19 percent from 2007 to 2008, compared with a 15 percent increase from 2006 to 2007
  • Satellite Services increased by more than 16 percent from 2007 to 2008, largely due to growth in satellite television revenues
  • Satellite Manufacturing revenues declined slightly, reflecting fewer satellites launched
  • Launch Industry revenues grew by 20 percent from 2007 to 2008, fueled by a general increase in launch prices, despite fewer launches
  • Ground Equipment revenues grew by 34 percent in 2008, a significant increase over the 19 percent growth in 2007

According to SIA, Satellite Services experienced a growth rate of 16 percent in 2008 — quite robust — which paralleled the 17 percent growth in 2007. Additionally, satellite television (DBS/DTH subscription revenues), which represented three-quarters of total satellite services revenues in 2008, maintained a steady growth, increasing by 17 percent to $64.9 billion. Satellite pay TV subscribers grew by more than 30 percent over 2007 levels, surpassing 130 million globally.

In the U.S., satellite pay TV subscribers exceeded 30 million in 2008. Representing the core of the FSS sector, transponder agreement revenues continued to increase by 6 percent in 2008. That figure includes contracts for full or partial transponders and occasional use video services.

Data applications continued to drive mobile satellite services growth, with mobile data services revenues increasing by 22 percent, as compared to 14 percent in 2007 — this now represents almost 70 percent of all mobile satellite services.

Revenues for mobile telephony declined by 24 percent in 2008, largely due to the recent decline in Globalstar voice services. Satellite broadband revenues doubled, driven by subscriber growth in the U.S., Satellite radio (DARS) continued to experience strong growth, although at a lower pace than previously experienced. Subscription revenues increased to $2.45 billion, reflecting an 18 percent growth rate versus the 29 percent growth from 2006 to 2007. Subscribers grew by 13 percent to 20.5 million, roughly half the growth rate of the previous year.

This chart, “Satellite Manufacturing Revenues,” shows revenues decreasing slightly from $11.6 billion in 2007 to $10.5 billion in 2008. The overall revenue decline can be attributed largely to the reduction in number of satellites launched — 94 satellites were launched in 2008, versus 102 in 2007.

Meanwhile, U.S. manufacturing revenues declined from $4.8 billion in 2007 to $3.1 billion in 2008. The U.S. share of manufacturing revenues also fell, from 41 percent of the world total in 2007 to 29 percent in 2008. In 2007, 48 launched satellites were manufactured in the U.S., but in 2008, only 21 launched satellites were manufactured in the U.S.

Global satellite manufacturing revenues from commercial customers grew to $5.2 billion in 2008. The proportion of manufacturing revenues from commercial customers (versus government and military customers) rose from about 33 percent of manufacturing revenues in 2007 to nearly 50 percent in 2008.

In regard to future commercial spacecraft orders:
  • 21 new commercial geosynchronous orbit (GEO) satellite manufacturing orders were announced in 2008, the same number as in 2007
  • U.S. manufacturers received 52 percent of these orders, the same proportion as in 2007
  • European manufacturers received 33 percent of these orders, down from 43 percent in 2007
  • Russian, Chinese, and Japanese manufacturers each received one order, together constituting 14 percent of new orders —up from 5 percent in 2007

Worldwide Launch Industry revenues increased by 20 percent in 2008, slightly higher than the previous year’s growth.
  • Revenues were virtually evenly divided between launch procurements by commercial entities and those commercially contracted by governments
  • Launch prices rose on average
  • This was reflected both in input provided by survey respondents, as well as widespread industry media reports
  • One factor influencing launch price increases was fluctuating exchange rates of the U.S. dollar versus other currencies
  • 37 spacecraft were commercially launched on behalf of government clients, while 41 spacecraft were on behalf of commercial clients
  • While global commercial launch revenues rose in 2008, U.S. revenues remained relatively constant at $1.1 billion
  • vDespite stable revenues, the U.S. share of worldwide launch revenues declined from 31 percent in 2007 to 28 percent in 2008
  • However, future U.S. geosynchronous (GEO) commercial launch orders doubled—from three announced orders in 2007 to six announced orders in 2008

This chart graphically demonstrates the launch industry revenues.

SIA’s ground equipment findings uncovered the fact that overall revenue in this sector grew by 34 percent from 2007 to 2008, making it the fastest-growing satellite industry segment. Ground Equipment is second only to Satellite Services as a proportion of satellite industry revenues, contributing 32 percent of all revenues in 2008, up from 28 percent in 2007.

Consumer equipment revenues led growth in this sector, with users of consumer-oriented products such as satellite TV and broadband, mobile satellite, and GPS devices responsible for hardware sales growth. GPS device sales accounted for slightly more than half of ground equipment revenues, with new applications and services driving subscriber churn, which also increased sales of new hardware.

The table above shows end-user terminal number growth across all sectors. Growth of end-user broadband between 2007 and 2008 occurred primarily in the U.S., with U.S. satellite broadband subscribers growth ranging from approximately 622,000 in 2007 to approximately 842,000 in 2008. Mobile satellite TV is currently offered mainly in Asia, although service is also starting in the U.S. and Europe.

Growth in satellite carriage of High Definition Television (HDTV) continued to drive both transponder and DTH service revenues. The number of HDTV channels worldwide grew by almost 170 percent over 2.5 years (between the end of 2006 and May 2009) and more than 60 percent of HDTV channels currently serve North American market.

Remaining HDTV channels primarily serve European and Asia-Pacific markets.

When dealing with employment in the satellite industry, SIA and Futron found that the U.S. satellite industry managed to add more than 2,000 jobs between 2006 and 2007, led by satellite services employment growth of 21 percent.

The overall satellite industry growth of 19 percent indicates fundamental robustness. Relative industry composition demonstrates the increasing weight of the Satellite Services and Ground Equipment segments, as these two segments, combined, constituted 86 percent of satellite industry revenues in 2006 and have now grown to 90 percent.

Consumer services, both satellite TV and satellite radio, continue to lead overall Satellite Services growth and fuel revenue growth in the Ground Equipment segment. Launch price increases, rather than more launches, fueled an increase in Launch Industry sector revenues between 2007 and 2008. Despite fairly constant revenues, the U.S. share of world launch revenues decreased from 31 percent in 2007 to 28 percent in 2008, with lower Satellite Manufacturing revenues reflecting fewer spacecraft launched in 2008 than in 2007. To reiterate, the U.S. share of manufacturing revenues fell from 41 percent in 2007 to 29 percent in 2008. Some industry-wide trends continue...
  • Commercial satellite operators replace and realign their fleets
  • Robust global appetite continued for consumer satellite applications, mobility, and convergence
  • Carriage of HDTV continued to reach critical mass in major markets globally
  • The full impact of the global economic downturn on the satellite industry is not yet reflected
  • Economic downturns have historically had a delayed impact on the satellite industry, but growing interdependence among all four sectors may serve to shorten negative business cycles

  • The preceding information is excerpted from the SIA’s annual report that offers comprehensive satellite industry statistics. Conducted by Futron Corporation, the report included surveys of more than 70 SIA members and key companies in the industry, and was augmented with publicly available data and research to derive industry revenues and statistics. For more info on the SIA, access the graphic below.