It’s time to dust off the crystal ball and make our predictions for the year ahead. The one thing we can say about 2023 is that it will be gripping, with many opportunities to capitalize on and challenges to overcome.
We asked analyst firm NSR to provide us with their foresight and insights as our first guest blogger in the new year. Hope you enjoy their Top 10 Predictions for 2023 curated by their team of expert analysts. We added our own commentary at the end, we’d love to hear yours!
GET MORE INFORMATION ON NSR’S REPORTS HERE!
NSR’s Satellite Industry Financial Analysis, 12th Edition (SIFA12)
- Space Financial Outlook in 2023
Joseph Ibeh- NSR Analyst
The economic outlook for 2023 looks challenging, with interest rate hikes, inflation, and a potential recession. Space will be somewhat resilient compared to the broader securities sectors, given stable cash flows from long-term contracts. However, startups with negative cashflows and revenue expectations farther into the future will be disproportionately affected. We expect more delisting of non-revenue generating de-SPACed companies. Startups with enough run-rate will wither the storm. Highly leveraged established companies with stable cash flows will attract private equity buyouts, while deep-pocketed legacy primes will make strategic acquisitions for complementary assets. Consolidation of the satcom value chain is a trend we expect will continue from 2022. 2023 will witness an additional dimension to the trend, with operators looking to build application-level differentiation in niche markets. Intelsat and SES are positioned to make further strategic bets with cash from accelerated C-band clearing proceeds.
- Monetize Mbps in Mobility Markets
Brad Grady- NSR Research Director
Selling ‘pure Mbps’ is a dying business in satcom mobility markets, as satellite operators buying or building services-focused business units is the norm. We expect more verticalization between infrastructure owners and service providers/integrators in 2023. Next-up, monetization of the network management layer via SD-WANs, 5G Private Networks, and other terrestrial management standardization is in play. Stitching together LEO constellations alongside other connectivity paths on planes, trains, and ships will help maintain margins for service providers (and their new satellite operator owners.) In all, look for more ‘bit monetization’ strategies in 2023 as satellite operators and service providers look to push into the application layer – including monetization of network management services, cybersecurity, and business operations apps.
- At Least One Smallsat IoT Constellation to “Pull a Hiber”
Alan Crisp – NSR Senior Analyst
In 2023, at least one player will abandon plans to launch dedicated satellites for IoT services. This could take the form of an official announcement, or the company could simply go silent. Instead of declaring bankruptcy or exiting the market, the IoT company will form a strategic partnership with an existing operator, perhaps Inmarsat’s ELERA network. With extreme competition in the IoT space, and the launch of new direct-to-handset services, including that from Apple/Globalstar, it will be increasingly difficult to be able to recoup revenues for systems that have huge CAPEX requirements for new infrastructure. Further, expect smallsat IoT companies to introduce new turnkey applications and data analytics services/partnerships to boost revenues as IoT connectivity costs continue to be a “race to the bottom.”
- Cyber Attack on Satellites: not Sci-Fi
Charlotte VanCamp – NSR Analyst
The industry should expect more cyber-attacks on space and ground segment with software-defined satellites and constellations such as Starlink, who are the more likely to be targeted, given their high-profile role in the war in Ukraine. Indeed, interventions/services in conflict regions will put satellite operators at higher risk of such attacks from both government-led and activist hackers.
- Year of the “Gov/Mil Upgrade” Ahead
Sarah Halpin – NSR Research Analyst
Lessons learnt in Ukraine will see tech updates across nation states, and cyber-attacks will be increasingly prominent. Expect older Gov/Mil satcom terminals to get an upgrade in both ability and security. Manned- Unmanned Interoperability requirements will also expand (driven by programs such as the U.S. B-21 Raider). These new operational paradigms are driving architecture designs where multi-dimensional networks spanning across bands, orbits, frequencies, and owners become the norm. In all, more nations will develop national space strategies, which include a focus on ‘space as a warfighting domain’.
- Direct Satellite-to-Device Becoming Real
Lluc Palerm – NSR Principal Analyst
2022 was big for Direct Satellite-to-Device with the inclusion of Satellite and NTN in 3GPP Release 17, initial in-orbit testing by Lynk and AST, and the rush of announcements by the likes of Apple/Globalstar and SpaceX/T-Mobile. But 2023 will be even bigger as this market takes off to become the largest satellite opportunity by the end of the decade. Next year will see Apple/Globalstar expanding services globally, early monetization of Lynk and AST constellations and more players joining the race, both established like Iridium (highly anticipated deal upcoming) and startups like OmniSpace. More importantly, 2023 will see initial mainstream chipsets designed for general public smartphones with satellite capabilities. Once Qualcomm and Mediatek are in the mix, the satellite ecosystem will change forever, unlocking a market worth tens of USD billions per year.
- Satellite Manufacturing: Services, Software and Struggles
Hussain Bokhari – NSR Senior Analyst
The trend towards hosted payloads and satellite-as-a-service as well as software-defined satellites will give more diversified work for satellite manufacturers, many who also build satellites for their own constellation (Spire, Satellogic) and are branching out. This is a welcome transition to leverage expertise in-house and in the face of funding challenges, could help start-ups. But the same space start-ups will face increasing difficulty in obtaining financing in an inflationary market, leading to consolidation. The satellite value chain will also have more struggles, this time due to the lack of…talent (and not components) as a highlight competitive human resources market will create a bottleneck and could mean more manufacture and launch delays. Besides the possibility that SDA’s Tranche 2 contract award could go to SpaceX, whose pivot toward government via its Starshield service did not go unnoticed, manufacturing facilities abound, and there will not be enough work for all of them.
Our Take on 2023
At ST Engineering iDirect we echo NSR’s predictions, and we’d like to make a few of our own. Here are our top 5 for 2023:
- Industry Transformation: As the industry continues to struggle with economic, political and supply chain issues, we are reiterating and reinforcing our commitment to working side-by-side with our customers to mitigate as many hurdles as possible and to enable their expansion and growth. With the strong financial backing of the ST Engineering group, we expect to see continued investment in the satcom market. We also believe that the changes within the industry are creating a lot of opportunities for us to look at growth not just within us, but also in adjacent areas and we look forward to embracing those different market openings.
- Hot Markets for Value Added Services: This year, we will be placing heavy emphasis on enabling our customers to offer and monetize new, value-added services on top of their existing infrastructure. We will be introducing our new SD-WAN solution that will enable customers to get the most value from seamless integration with terrestrial networks, multi-orbit constellations and end-to-end QoE. We’ll also see the SKYflow ecosystem taking off, which is reshaping satellite over-the-top (OTT) delivery, enabling service providers and telcos to deliver content to any device in any location for a plethora of use cases. In the government and military space, our portfolio of Resilient Integrated Solutions (RIS) will offer a one-stop-shop of ground segment technology and solutions that embrace the complexity of milsatcom networks with innovative technologies. This will support seamless connectivity across land, sea and air.
- The Year for IoT – We are in total agreement with NSR that 2023 is the year for IoT. Argentinian service provider ARSAT has become an early adopter of our IoT solution, leveraging its existing infrastructure to gain first mover advantage and providing its customers with advanced technologies to address new applications such as smart agriculture, fleet tracking, rainfall monitoring and deforestation. The solution is easy-to-deploy, agile, and flexible. We anticipate that many more customers will adopt and rollout IoT applications to fuel their growth.
- A boost to the Media & Broadcast market – Our new MCX8000 multi-carrier satellite gateway is set to make waves in the industry this year, enabling broadcasters to cater for every type of broadcast scenario, including high IP encapsulation rates for Over the Top (OTT) applications. Coupled with the SKYflow, a breakthrough multicast ABR ecosystem the result of multi-vendor collaboration, we are poised to position the Satellite OTT market for success across a variety of use cases.
- Continued ecosystem convergence with New Space and Telco – We will continue to highlight the New Ground philosophy, as the satellite industry continues into its most significant transformation, taking us into new orbits and converging with the telco and IT worlds, all moving towards 5G. We will continue to work on the standards and virtualization that is necessary to make the critical shift to the cloud. Be prepared for significant technological milestones and developments with a host of partners as we begin to productize these concepts so our customers can prepare their networks for the future.
It’s going to be an exciting year and we look forward to navigating it with our partners and customers!