Main Trends & Challenges in the Space Sector 2nd Edition December 2020 Version 1.7 – Updated 05/03/2021 Introduction 05 Major trends in the space sector 09 Earth Observation 15 Satellite communication 21 Navigation 25 Access to space 29 Space Situational Awareness 35 Space exploration 37 Space law, regulation & procedures 41 PwC Space Practice PwC dedicated space practice with leading edge insights and global reach The PwC/Strategy& Space Practice in 5 points Recent publications Market perspectives of Ground Segment With a global reach, and a dedicated strategy and policy team based in Paris and as a Service Toulouse, the PwC Space Practice is unique among large professional services firms. It November 2020 1 Provides a comprehensive understanding of combines focused space expertise with a significant reach into the broader downstream. GSaaS, its current context, market and its potential evolution in the future. It explores the market drivers that could impact the The core space team is currently involved in assignments for public and private entities in GSaaS market in the future and assesses 2 Europe and worldwide. their potential impact. Trends and challenges in the space sector Our core team notably works on strategy assignments (e.g. market sizing, go-to-market, October 2020 business plan development, commercial due diligence, etc.), commercial due On the occasion of the Indian International Space Conference, we have published a diligences and support to M&A, socio-economic impact assessments related to public report on the current trends and challenges in investment in space, analysis of governance & organizational structure (at the space sector, with a specific focus of the 3 programme, company or country level) and regulatory analysis (e.g. impact of existing & Indian space industry. prospective regulations, assessment of regulatory requirements in the cycle market- Resilience of the Space Sector to the regulation, etc.) COVID-19 Crisis April 2020 Learn more With the PwC Data Lab – an entity from PwC France specialised in the development of Provides an assessment of the impacts and innovative applications – we provide services (PwC Insights from Space) using space resilience to the COVID-19 crisis of the pwc.fr/space various domains in the space sector. 4 data to public and private decision-makers (often non-familiar with the space-based data derived capabilities). Emerging Space Nations March 2020 The PwC Space Practice is part of the wider PwC Aerospace and Defence network Provides an understanding of the role of emerging space nations in supporting 5 which is composed of more than 2,000 consultants in the world. sustainable development and economic growth. PwC - Space Practice - www.pwc.fr/space December 2020 4 Introduction 1. Table of Content/Scope 2. The Space Value Chain 3. Space Market Sizing 4. Trends at a Glance The space sector is driven by complex macro-level dynamics that go beyond simple market forces, requiring an holistic view A sector with multiple specificities The “Main Trends & Challenges in the Space Macro trends in the Space sector Sector (2nd Edition)” provides PwC Space Practice views on major trends and dynamics Space domains trends impacting the civil and commercial space sector globally. • Multiple domains with different trends and specificities The document is organised into 8 sections: an Earth Observation introduction to macro trends impacting the • An ever evolving regulatory and policy environment space sector; 6 dedicated chapters per space Satcom domain; and a closing section on governance, • A significant reach and policy and regulation. implications into other industrial Navigation sector, with subsequent dependency on general macro- Disclaimer on Scope Access-to-space trends The present document focuses on civil and • Considerable wider societal and commercial space, only providing some minor Space Situational economic impacts, justifying the pointers touching military space. Awareness still prevalent government As such, it should not be considered comprehensive or spending in the sector representative of trends related to military space and Space Exploration defence. A separate piece of thought leadership dedicated to space and defense is currently being prepared by PwC. Governance, policy and regulation Source: PwC analysis ; Image Credits: CNES, Arianespace, NASA PwC - Space Practice - www.pwc.fr/space December 2020 5 Introduction 1. Table of Content/Scope 2. The Space Value Chain 3. Space Market Sizing 4. Trends at a Glance Space is experiencing significant mindshare growth, as well as increasing implications in multiple downstream industries Upstream Downstream End users Key take-aways Technology push – Applications • The space value chain is System & Data & Advanced products Operation evolving, with the traditional infrastructure Processing & services upstream driven technology push User demand pull – Services (upstream creates new applications for the downstream market to follow) transitioning into Launch systems and vehicles Data and satellite services (direct-to- Consumer, industry, a market demand pull governments, non-profit Satellite AIT and manufacturing home, broadband, navigation, etc.) (downstream drives space organisations systems development with needs Ground segment systems and network Value-added services A variety of sectors (energy, for new services) equipment (e.g. gateways, VSAT, etc.) User equipment (e.g. GNSS devices and infrastructure, agriculture, • Space has attracted an important Launch service provision, satellite and chipsets, TV dishes, radio receivers, marine, defence and security, etc.) number of actors in the past ground segment operation Location-Based Services, etc.) decades, with New Space and non-space companies entering Example of companies (non-exhaustive) Example of companies (non-exhaustive) Examples (non-exhaustive) the different streams of the value chain • Space retains its status as a halo sector, with positive impacts and spillovers over a large pool of end users, in the global economy Source: PwC analysis Source: PwC analysis PwC - Space Practice - www.pwc.fr/space December 2020 6 Introduction 1. Table of Content/Scope 2. The Space Value Chain 3. Space Market Sizing 4. Trends at a Glance Sizing the global space economy is a complex exercise due to the lack of a unified taxonomy and difficulties in setting up boundaries Measuring the space economy Sources Market estimate Notes on the assessed perimeter and granularity • Upstream (USD 23 Bn): launch services; satellite manufacturing • Midstream (USD 40 Bn): ground infrastructure & operations; fleet ops • Space is not recognised as a category in international USD 371 Bn • Downstream (USD 226 Bn): consumer equipment, space services (2020) standards of industrial classification. Therefore, worldwide • Institutional budgets (USD 82 Bn): research & science; space market sizing studies differ in definition, coverage and exploration; military; etc. methodology. This makes it difficult to compare the results Source: PwC, 2020 in global estimates. • Commercial revenues (USD 336.9 Bn): • The boundaries between space and non-space activities • Space infrastructure (USD 119.2 Bn); USD 423.8 Bn are often blurred, leading to different ways of assessing the • Space products & services (USD 217.7 Bn); (2020) overall space economy. This is specifically critical when • Governmental spending (USD 86.9 Bn). setting the boundary between the downstream space Source: Space Foundation, 2020 industry and end-user economy: as the analysis moves down the value chain, the assessment of the direct causal • Satellite Services (USD 123 Bn): telecommunications, remote sensing, relationship (called paternity) between the space industry science & national security; and the benefits brought to end-users become complex • Ground Equipment (USD 130.3 Bn): network & consumer equipment; USD 366 Bn • Government Space Budgets & Commercial Human Spaceflight to isolate and accurately measured. Indeed, benefits (2019) derived from space tend to only represent a tiny part of the (USD 95 Bn): non-satellite industry; value created for end-users. • Satellite Manufacturing (USD 12.5 Bn); • Launch Industry (USD 4.9 Bn). • Given the above, when considering global and regional Source: Bryce, 2019 figures related to space market sizing, it is extremely important to understand what they encompass in their This figure refers to commercial satellites revenues only: • Upstream (USD 8 Bn): satellite manufacturing, satellites launch, ground perimeter. USD 298 Bn (2019) equipment manufacturing; • Downstream (USD 290 Bn): satellite operation, services. Source: Euroconsult, 2018 PwC - Space Practice - www.pwc.fr/space December 2020 7 Introduction 1. Table of Content/Scope 2. The Space Value Chain 3. Space Market Sizing 4. Trends at a Glance Cross cutting macro-trends and main trends per domain at a glance Macro-trends impacting the space sector transversally Overview of trends in space domains (focus on civil and commercial space) While the EO domain remains geared towards defence and security COVID-19 Digital Drivers Earth markets, an increasing demand from a diversified pool of customers is leading the rapid evolution of Earth Observation, with more supply from The COVID-19 crisis has mainly impacted Observation Companies that are combining multiple digital new entrants, and innovative delivery models for data and analytics to operational and manufacturing activities during technologies such as Cloud, Artificial support situational awareness.