“It is likely that commercial satellite operators will feel some discomfort over the next 12 to 18 months,” according to Patrick French, NSR Senior Analyst and the report’s author, “but it will be more on the order of a few quarters of somewhat slower demand growth compared to the last few years, rather than outright transponder demand contraction. More importantly, the launch of numerous new satellites in the 2009-2010 time period, both strengthening existing orbital locations and opening new slots, should come just in time to address reemerging demand in many sectors as economic conditions improve. This could well lead to a sharp boost in demand in the 2010 to 2011 period.”
Between 2007 and 2017, NSR forecasts that global demand for commercial C- and Ku-band transponders will increase by more than 1,500 36 MHz transponder equivalents, and revenues will grow at the average annual rate of 4.5 percent. Unsurprisingly, NSR anticipates that the majority of transponder demand growth in the coming ten years will be generated by various video services. In fact, 83 percent of the newly leased transponders will be for video distribution, direct-to-home (DTH) and video contribution & occasional use television services.
Direct-to-home is by far the single most important market for the satellite industry, not only because of transponder demand for new DTH platforms, but because DTH drives competition with cable and IPTV services and leads them to require new transponder capacity for HD channels, HITS (headend-in-the-sky) and other SD channel bouquets, as well as news and sports programming in the eternal battle to have the best content to attract and keep subscribers. NSR’s only concern in this area is the extent to which the current economic crisis may lead to DTH platform consolidation. “Some countries have two, three and even five DTH platforms, not even counting cable or IPTV pay-TV services,” stated French. “The failure of a few of these DTH services might hurt in the short-term but probably is a very healthy process that will lead to a smaller, stronger set of players in the long-term that are better able to honor existing transponder contract obligations and, better yet, to expand their service offerings.”
On the revenues side of the picture, NSR estimated that the industry generated US$8.33 billion in 2007 from commercial C- and Ku-band capacity leasing, and this should grow to US$12.90 billion in 2017. While NSR does not expect all aggressive pricing tactics to disappear, it does appear as general rule the industry has learned that below cost pricing hurts everyone, and there will be a gradual but definite increase in average capacity pricing for the next several years in most markets around the world.
