Medium-term growth outlets
IDATE has just released its “Satellite Markets” report. This report analyses the key satellite markets, both civilian and military, and allows readers to gain real insight on future market opportunities and the outstanding medium-term issues for satellite market players. It also pinpoints the central challenges that satellite operators are having to contend with – hybridization with terrestrial networks being undoubtedly the main one – and the assets they have to forge a solid foothold in the various future markets.
“Considering the main satellite services being examined in this report, IDATE believes that video broadcasting services in emerging countries, as well as high definition and 3D TV – despite lingering uncertainties over the standard itself, the price of equipment and whether users will embrace it – all have the greatest medium-term market potential for satellite operators, in all corners of the globe combined”, comments Maxime Baudry, project manager and senior consultant at IDATE. “We also expect to see strong growth in the military segment and in the areas of telecommunications and imaging. Broadband access is another field of opportunity, albeit to varying degrees depending on the region, offering moderate prospects in Europe and North America but very healthy ones in Africa and the Middle East.”
New Growth outlets emerging
- The digital TV broadcasting market continues to develop, and regions such as Asia and Africa/the Middle East offer sizeable growth potential. But it is HDTV and 3D that represent an especially important source of growth for satellite operators. Their inherent assets of coverage, network capacity and their ties with premium pay-TV services are still substantial ones when it comes to distribution. HDTV offers in particular are expected to spur a rise in demand for satellite broadcasting capacity: an expansion of existing offers and the launch of new channels and even new packages. HDTV is also expected to become the new TV broadcasting standard. However, upcoming technical transitions (spread of MPEG-4, rollout of DVB-S2 which will mean a roughly 30% gain in capacity on each transponder) along with the relatively slow take-off of 3D could well mean that this rise in demand for satellite capacity will take place only gradually.
- The two-way Internet access market is another significant source of growth, but to different degrees depending on the region. While potential is rather limited in industrialised parts of the world, such as Europe and North America, especially because of competition from terrestrial and government policies that clearly favour mobile terrestrial networks, Africa and the Middle East do appear to be fertile ground for a satellite-based solution because of the high proportion of rural dwellers there and the lack of suitable telecommunications infrastructure.
- The military market has been growing since the start of the war in Afghanistan in 2001. Occupying 80% of American commercial satellites’ capacity, the US government is the biggest user of civilian payload and, even though it is building satellites for its own use, they will not be able to satisfy all of the military’s needs. This huge increase in demand is due mainly to the growing use of drones that are piloted via satellite, and whose role is expanding from reconnaissance into combat missions. This trend is also underway in Europe with the current development of several combat drone programmes, although the situation is different in that European armed forces relay mainly on dedicated military satellite capacity.
- One last major source of growth for the satellite industry is Earth observation. There are two distinct clienteles for this market: the military which accounts for around 70% of demand for satellite images, particularly for gathering intelligence on warzones (surveillance of nuclear installations, terrorist camps, etc.); the other major segment being the one driven by the Internet giants who acquire massive quantities of high resolution images for their online mapping services, such as Google Maps and Microsoft Virtual Earth. This market does appear to be tapering off slightly, however.
- There are also niche markets that offer room for growth, even if they represent less than 10% of the satellite capacity used around the globe. Of particular note is M2M (machine-to-machine solutions) via satellite in desert/maritime regions, along with maritime and aeronautical telecom solutions which, by definition, rely on satellite. For MSS operators, the in-flight communications market is a small one, but if it brings in money for airline companies and finds a big enough user base, it could become a lucrative niche market in the same way maritime telecommunications have.
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