Satellite Capacity Pricing Continues Decline as Industry Struggles with Oversupply
NSR Report Finds Value Chain in Transition as Operators Implement Downstream Strategies to Arrest Pricing Declines
Cambridge, MA – March 12, 2018 – NSR’s Satellite Capacity Pricing Index, 4th Edition (Q1 2018), released today, finds capacity prices falling for a third straight year as operators seek out innovative strategies to arrest the decline. On average, capacity price declines for the period 2016-2018 ranged from 32-57% across various applications & regions, and the road ahead appears unclear as greater supply enters the scene, demand lags in some markets and competition intensifies.
Operators are now implementing strategies such as vertical-specific market entry partnerships and framework agreements on discounts, but these endeavors haven’t stopped the impact of the widening gap in supply-demand economics. This trend is further accentuated by the competitive sales positioning by operators in each region. NSR’s pricing forecast suggests the decline is not over yet, and despite 2019 expecting to see smaller decreases, the industry must wait longer for prices to bottom out.
“With Video Hotspots facing pressure from both global pricing declines and OTT opportunities for non-streaming content, along with Consumer Broadband over Ka-band HTS consistently in the $150/Mbps/Month range – the chances of recovery remain uncertain. However, with CAPEX/Gbps for new satellites marking new lows, declining lease prices come as a blessing to Service Providers in Data and Mobility, so they can fund expansion of their businesses and create mini telco businesses backed by satellite in the scaling process,” states Gagan Agrawal, report author. “The satellite operator segment also increasingly looks to jump on this downstream opportunity where managed services are expected to represent 15%-25% of the entire business portfolio in the next 3-4 years.”
Innovation in ground equipment and increasing spectral efficiencies are expected to partially divert the pure play MHz lease business to Mbps leasing opportunities. In doing so, as the economies of scale with Video Distribution, Backhaul and Broadband increase, prices and EBITDA will decrease for operators moving closer to the customer. This trend is already underway amidst a hyper competitive market and may also hasten a consolidation push as M&A is one option for distressed parties.
About the Report
NSR’s Satellite Capacity Pricing Index, 4th Edition (Q1 2018), provides the industry’s leading and longest running analysis of satellite capacity worldwide. SCPI4 study covers all major applications under Video Broadcasting, Data networks, Mobility and Gov-Mil segments, across 10 regions of the world and FSS and HTS frequency bands. The report is unparalleled on the depth of insight provided through index prices, ranges and forecasts. Both the proprietary SCPI4 pricing tool and analysis are definitive resources to predict the near to medium term scenarios for the industry and differentiate regional/vertical based forecasts to answer strategic questions on the evolving business models in the satcom industry. SCPI4 is a multi-client report now available from NSR.
For additional information on this report, including a full table of contents, list of exhibits and executive summary, please visit www.nsr.com or call NSR at +1-617-674-7743.
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