{"id":60270,"date":"2020-03-03T00:31:28","date_gmt":"2020-03-02T16:31:28","guid":{"rendered":"https:\/\/wp-productionenv-bjg9h2g2bgg5b8aa.southeastasia-01.azurewebsites.net\/news\/u-k-analysts-see-tipping-points-for-incumbents-and-disruptors\/"},"modified":"2020-03-03T00:31:28","modified_gmt":"2020-03-02T16:31:28","slug":"u-k-analysts-see-tipping-points-for-incumbents-and-disruptors","status":"publish","type":"post","link":"https:\/\/starpath.global\/news\/u-k-analysts-see-tipping-points-for-incumbents-and-disruptors\/","title":{"rendered":"U.K. Analysts See Tipping Points for Incumbents  and Disruptors"},"content":{"rendered":"<p>The satellite business is at a double fulcrum, U.K. market analysts say \u2014 both incumbents and would-be disruptors face their own moments of truth in the next few years, and neither has a clear path to success.<\/p>\n<p>For the European incumbents, SES and Eutelsat, the Direct-to-Home (DTH) video market, long the satellite industry\u2019s cash cow, will struggle to get back to positive revenue growth globally, and only very slowly. At the same time, both companies have to deliver on the golden age of high bandwidth they promised investors a few years ago when they sunk big money into a new generation of technology.<\/p>\n<p>\t\t\t\t<img loading=\"lazy\" width=\"300\" height=\"225\" src=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2020\/03\/rzRWmG8SwKBrGUcEEHMI_ShowDaily20_Cover_Day1_DGTL-300x225.jpg\" class=\"attachment-medium size-medium\" alt=\"\" style=\"width: 120px; height: auto;\" decoding=\"async\" srcset=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2020\/03\/rzRWmG8SwKBrGUcEEHMI_ShowDaily20_Cover_Day1_DGTL-300x225.jpg 300w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2020\/03\/rzRWmG8SwKBrGUcEEHMI_ShowDaily20_Cover_Day1_DGTL-800x599.jpg 800w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2020\/03\/rzRWmG8SwKBrGUcEEHMI_ShowDaily20_Cover_Day1_DGTL-640x480.jpg 640w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2020\/03\/rzRWmG8SwKBrGUcEEHMI_ShowDaily20_Cover_Day1_DGTL.jpg 1280w\" sizes=\"(max-width: 300px) 100vw, 300px\">\t\t\t<\/p>\n<h3 class=\"fs-5 mt-0\">Explore the Show Daily 2020 Day 1 Issue<\/h3>\n<p class=\"mb-0 fs-smaller text-balance\">Check out more from this issue and find your next story to read.<\/p>\n<p>\t\t\t<button class=\"btn btn-primary\" type=\"button\" data-bs-toggle=\"offcanvas\" data-bs-target=\"#offcanvasMENU\" aria-controls=\"offcanvasExample\" aria-label=\"button\" style=\"white-space: nowrap;\"><br \/>\n\t\t\t\tView More <i class=\"bi bi-arrow-right-circle\"><\/i><br \/>\n\t\t\t<\/button><\/p>\n<p>\u201cThe satellite industry in 2020 has now launched more or less all of its first generation of High Throughput Satellites,\u201d explains Jeffries analyst Giles Thorne. \u201cThey are in orbit, they are sold, they are generating revenue. \u2026 So we are at a point where you would expect to see the great promise of [those investments in] 2016-17 really coming through.\u201d<\/p>\n<p>But questions surround new entrants into the market, Thorne says. The new small sat, Low-Earth Orbit (LEO) constellations \u201clook very exciting. But they are yet to be proven technically, commercially and financially viable.\u201d That, he adds, is why \u201cAt this point, the only people funding these LEO constellations are maverick visionaries, who have a lot of money \u2014 people like Elon Musk and Jeff Bezos and the Softbank Vison Fund.\u201d<\/p>\n<p>\u201cIt might be that these LEO constellations are just a big science project that won\u2019t mean anything,\u201d Thorne warns.<\/p>\n<p><script>var AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a096f9;googletag.cmd.push(function(){var AIMAP_29b58f13885ebf8ea6b032f958eb0748 = googletag.sizeMapping().addSize([992, 100], [[970, 90], [970, 250]]).addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_737ce075cc05dd766c8f8ea08f3faa73 = googletag.sizeMapping().addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_21fe3bcfb86a8660aba4e721ee9338f3 = googletag.sizeMapping().addSize([1200, 100], [970, 250]).addSize([768, 100], [600, 300]).addSize([320, 100], [300, 250]).build();AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a096f9 = googletag.defineSlot('\/987\/satellitetoday.com\/via-satellite-digital-issue-ads', [ [600, 300], [300, 250], [970, 250] ], 'div-gpt-ad-1774631144891- 0-6a6b290a096fa').defineSizeMapping(AIMAP_21fe3bcfb86a8660aba4e721ee9338f3).setCollapseEmptyDiv(true).addService(googletag.pubads());   });<\/script><script>googletag.cmd.push(function() { googletag.display('div-gpt-ad-1774631144891- 0-6a6b290a096fa'); });<\/script><\/p>\n<p>Paul Sidney, an analyst with Credit Suisse, is also \u201cvery skeptical\u201d about the new LEO constellations. He points to the example of Iridium, the LEO pioneer that first developed a plan for a next generation LEO multiple satellite constellation as far back as the late \u201890s and completed its final plan in 2010.<\/p>\n<p>Iridium CEO Matt Desch publicly painted a portrait of the company\u2019s struggles to launch its new generation constellation, Iridium Next, Sidney said. <\/p>\n<p>\u201cIt took them the best part of 10 years, the best part of $3 billion, getting the financing in place, successfully executing on eight or nine successful launches, just to get 76 satellites in the Next constellation up there and working. \u2026 Desch joked at SATELLITE 2019 that he and his company needed monumental effort and a large slice of luck for the Iridium Next stars to align,\u201d Sidney recalls.<\/p>\n<p>And the constellations SpaceX and OneWeb are putting up are orders of magnitude larger than that, he points out. \u201cLaunch is very safe, but it\u2019s not 100%. You can get delays \u2026 every additional launch adds risks to your timeline.\u201d<\/p>\n<p>Sidney predicts that small satellite constellations will not be delivering global connectivity for at least four or five years, and will then face steep competition from market incumbents.<\/p>\n<p>\u201cAre you going to compete with SES\u2019s O3B for the cruise market, or with Inmarsat for the maritime market \u2026 or with Iridium for its differentiated global connectivity? That would be hard to do now, let alone in four or five years,\u201d Sidney says.  <\/p>\n<p>He argues that existing Geostationary (GEO) and Medium-Earth Orbit (MEO) satellite constellations are delivering good connectivity to end users, and smallsat companies are launching capacity \u201cwithout necessarily having the end users that want that capacity over and above what is already available.\u201d <\/p>\n<p>But that ignores a key feature of the new constellations, says Sarah Simon, an analyst with Berenberg, who points out that these businesses are funded by deep-pocketed backers who may not want or need a quick return on their investment. And that means, Simon says, they could pose a serious threat to the incumbents \u201cas long as they keep getting that backing. They don\u2019t need to be making a profit.\u201d<\/p>\n<p>Sidney says LEO operators have a long list of issues to address, including ethical ones around the disposal of satellites falling out of orbit; questions about whether the thousands-strong constellations will make space too crowded; and about light pollution. <\/p>\n<p><script>var AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a09b7b;googletag.cmd.push(function(){var AIMAP_29b58f13885ebf8ea6b032f958eb0748 = googletag.sizeMapping().addSize([992, 100], [[970, 90], [970, 250]]).addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_737ce075cc05dd766c8f8ea08f3faa73 = googletag.sizeMapping().addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_21fe3bcfb86a8660aba4e721ee9338f3 = googletag.sizeMapping().addSize([1200, 100], [970, 250]).addSize([768, 100], [600, 300]).addSize([320, 100], [300, 250]).build();AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a09b7b = googletag.defineSlot('\/987\/satellitetoday.com\/via-satellite-digital-issue-ads', [ [600, 300], [300, 250], [970, 250] ], 'div-gpt-ad-1774631144891- 0-6a6b290a09b7c').defineSizeMapping(AIMAP_21fe3bcfb86a8660aba4e721ee9338f3).setCollapseEmptyDiv(true).addService(googletag.pubads());   });<\/script><script>googletag.cmd.push(function() { googletag.display('div-gpt-ad-1774631144891- 0-6a6b290a09b7c'); });<\/script><\/p>\n<p>The would-be disruptors may be engaged in a high-stakes gamble, but if it pays off the incumbents don\u2019t look well positioned to fight back. <\/p>\n<p>\u201cThe rhetoric and the body language suggest the incumbents don\u2019t see LEO constellations as a threat,\u201d Thorne says. \u201cWe have yet to see any kind of reactive or proactive response to any potential threat from LEO. \u2026 They really kind of dismiss it.\u201d<\/p>\n<p>Incumbents have non-GEO plays, like SES\u2019s O3B MEO constellation that covers the tropics, and Eutelsat\u2019s LEO constellation. But Eutelsat is aiming at an Internet of Things (IoT) network. <\/p>\n<p>\u201cThat\u2019s very very different from what the [market entrants\u2019 LEO constellations] are trying to do\u201d notes Thorne, who says that out of all the satellite operators, only Telesat has a LEO plan similar to OneWeb and SpaceX. <\/p>\n<p>Nor does the industry\u2019s history provide any confidence about its ability to weather approaching storms, Thorne warns. Despite the wise investment in new High Throughput Satellite (HTS) technology, \u201cThe satellite industry has not showered itself in glory \u2026 it has experienced repeated execution issues, which is analyst-speak meaning they didn\u2019t do a very good job of getting the satellites up and running, getting an effective strategy for selling capacity, and for converting that capacity into dollars of revenue.\u201d Thorne calls the sector a \u201cpretty hairy place\u201d for investors.<\/p>\n<p>In addition, Simon says new HTS supply a \u201ccrazy amount\u201d of bandwidth, but the key differentiator in the market is likely to be price, which is bad news for operators. \u201cIt\u2019s going to vary from operator to operator, obviously, but globally is everyone going to make the return they expected from HTS? No,\u201d Simon says. <\/p>\n<p>So, what of the video market \u2014 long a revenue mainstay for the industry, but now a drag on growth? The outlook is mixed, according to Credit Suisse\u2019s Sidney. <\/p>\n<p>\u201cWith video, I think there is respite on the horizon. \u2026 Direct-to-Home linear delivery of TV via satellite is being challenged globally by alternative ways of viewing TV content,\u201d Sidney says, pointing out Over-the-Top (OTT) competitors in the U.S. like Netflix and Hulu, who offer high quality video much more cheaply than the prices consumers there pay for pay TV.<\/p>\n<p>In emerging markets like Russia and Turkey, Sidney says, the incumbents face similar challenges, \u201cIt\u2019s just that there is less pressure in those countries because the terrestrial networks, both wireline and mobile, aren\u2019t really able to deliver, either in terms of the bandwidth or the geographical coverage\u201d to support OTT.<\/p>\n<p><script>var AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a09fa5;googletag.cmd.push(function(){var AIMAP_29b58f13885ebf8ea6b032f958eb0748 = googletag.sizeMapping().addSize([992, 100], [[970, 90], [970, 250]]).addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_737ce075cc05dd766c8f8ea08f3faa73 = googletag.sizeMapping().addSize([768, 100], [728, 90]).addSize([320, 100], [320, 50]).build();var AIMAP_21fe3bcfb86a8660aba4e721ee9338f3 = googletag.sizeMapping().addSize([1200, 100], [970, 250]).addSize([768, 100], [600, 300]).addSize([320, 100], [300, 250]).build();AIAD_fcd45f981d570e35cee941b23edc69c7_6a6b290a09fa5 = googletag.defineSlot('\/987\/satellitetoday.com\/via-satellite-digital-issue-ads', [ [600, 300], [300, 250], [970, 250] ], 'div-gpt-ad-1774631144891- 0-6a6b290a09fa6').defineSizeMapping(AIMAP_21fe3bcfb86a8660aba4e721ee9338f3).setCollapseEmptyDiv(true).addService(googletag.pubads());   });<\/script><script>googletag.cmd.push(function() { googletag.display('div-gpt-ad-1774631144891- 0-6a6b290a09fa6'); });<\/script><\/p>\n<p>\u201cDTH remains a hugely efficient way of providing multi-channel TV over very large areas with low population density, like Russia. But these pressures, now that we\u2019ve rolled out 4G over so much of the world, mean we will likely get stable to low-single-digit video revenue declines globally going forward rather than the slight growth you might still expect from an emerging market.\u201d<\/p>\n<p>Sidney predicts video revenues for the bigger satellite operators will become less in 2020, and the drag from the declining U.S. market will lessen as it shrinks. <\/p>\n<p>\u201cSES now say the U.S. market is less than 10% of their video revenues, so even though it will continue to be a very difficult market, the impact is diminishing,\u201d Sidney notes. \u201cWe see Europe as more or less stable in revenue terms, although Eutelsat does face a major renegotiation with Sky Italia, one of its biggest European customers.\u201d<\/p>\n<p>Berenberg\u2019s Simon is more pessimistic on video. \u201cVideo will be a cash cow for quite a while, but I don\u2019t think we\u2019ll see a return to growth. There\u2019s so much competition and increasingly I think consumers will be moving straight to OTT,\u201d which she says is one of the threats posed by the new smallsat LEO constellations. Simon predicts that if LEO and 5G make real high-speed broadband a global reality, then consumers will leapfrog DTH and move directly to OTT services.<\/p>\n<p>Incumbents and would-be disruptors are both facing a moment of truth, Thorne says. <\/p>\n<p>\u201cIt might be that traditional incumbents can coexist with these disruptive new market entrant small satellite operators with their Low-Earth Orbit constellations. It might be that there is enough latent demand out there that they can just coexist if not be complementary to each other and you might see partnerships.\u201d Thorne argues. \u201cI for one don\u2019t have a good answer to what\u2019s \u2026 going to happen, but it does make it a very interesting time to be an analyst.\u201d <strong>VS<\/strong><\/p>\n<p>,<\/p>\n<h2 class=\"widget-title\">In This Issue<\/h2>\n<p>\t\t\t\t\t<!-- post id 384:  \/code\/wp-content\/themes\/ai-beehive\/template-parts\/content\/post-snippet.php --><\/p>\n<figure class=\"overflow-hidden w-100 me-3\">\n<p>\t<img loading=\"lazy\" width=\"300\" height=\"200\" src=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/8Bzu1LWS3SaCDJ5t18kO_Satshow_DC_Background-300x200.jpg\" class=\"img-responsive wp-post-image\" alt=\"\" style=\"\" decoding=\"async\" srcset=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/8Bzu1LWS3SaCDJ5t18kO_Satshow_DC_Background-300x200.jpg 300w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/8Bzu1LWS3SaCDJ5t18kO_Satshow_DC_Background-800x533.jpg 800w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/8Bzu1LWS3SaCDJ5t18kO_Satshow_DC_Background-640x427.jpg 640w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/8Bzu1LWS3SaCDJ5t18kO_Satshow_DC_Background.jpg 1280w\" sizes=\"(max-width: 300px) 100vw, 300px\">\t\t\t\t\t<\/figure>\n<h3 class=\"fs-4 w-100 line-clamp-3\">\n<p>\t\t\t\tTech Execs Preview SATELLITE 2020<br \/>\n\t\t<\/h3>\n<p><!-- .post-snippet --><\/p>\n<hr class=\"my-3 d-block d-md-none\">\n\t\t\t\t\t\t<!-- post id 382:  \/code\/wp-content\/themes\/ai-beehive\/template-parts\/content\/post-snippet.php --><\/p>\n<figure class=\"overflow-hidden w-100 me-3\">\n<p>\t<img width=\"300\" height=\"200\" src=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/DNsUzQxSeOm5Zv3ZC1cU_Satshow_DC_Background-300x200.jpg\" class=\"img-responsive wp-post-image\" alt=\"\" style=\"\" decoding=\"async\" loading=\"lazy\" srcset=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/DNsUzQxSeOm5Zv3ZC1cU_Satshow_DC_Background-300x200.jpg 300w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/DNsUzQxSeOm5Zv3ZC1cU_Satshow_DC_Background-800x533.jpg 800w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/DNsUzQxSeOm5Zv3ZC1cU_Satshow_DC_Background-640x427.jpg 640w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/DNsUzQxSeOm5Zv3ZC1cU_Satshow_DC_Background.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\">\t\t\t\t\t<\/figure>\n<h3 class=\"fs-4 w-100 line-clamp-3\">\n<p>\t\t\t\tThe Operators Speak Ahead of SATELLITE 2020<br \/>\n\t\t<\/h3>\n<p><!-- .post-snippet --><\/p>\n<hr class=\"my-3\">\n<p>\t\t\t\t\t<!-- post id 385:  \/code\/wp-content\/themes\/ai-beehive\/template-parts\/content\/post-snippet.php --><\/p>\n<figure class=\"overflow-hidden w-100 me-3\">\n<p>\t<img width=\"300\" height=\"200\" src=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/qJ5dGGUSluStJYsV7pw2_Satshow_DC_Background-300x200.jpg\" class=\"img-responsive wp-post-image\" alt=\"\" style=\"\" decoding=\"async\" loading=\"lazy\" srcset=\"https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/qJ5dGGUSluStJYsV7pw2_Satshow_DC_Background-300x200.jpg 300w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/qJ5dGGUSluStJYsV7pw2_Satshow_DC_Background-800x533.jpg 800w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/qJ5dGGUSluStJYsV7pw2_Satshow_DC_Background-640x427.jpg 640w, https:\/\/www.satellitetoday.com\/wp-content\/uploads\/2017\/01\/qJ5dGGUSluStJYsV7pw2_Satshow_DC_Background.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\">\t\t\t\t\t<\/figure>\n<h3 class=\"fs-4 w-100 line-clamp-3\">\n<p>\t\t\t\tUAE Space Agency  Calls its Ambition \u2018Limitless\u2019<br \/>\n\t\t<\/h3>\n<p><!-- .post-snippet --><\/p>\n<hr class=\"my-3 d-block d-md-none\">\n","protected":false},"excerpt":{"rendered":"<p>The satellite business is at a double fulcrum, U.K. market analysts say \u2014 both incumbents and would-be disruptors face their own moments of truth in the next few years, and neither has a clear path to success. For the European incumbents, SES and Eutelsat, the Direct-to-Home (DTH) video market, long the satellite industry\u2019s cash cow, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":60271,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-60270","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/60270"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=60270"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/60270\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/60271"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=60270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=60270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=60270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}