How to build and grow a business in the space sector? Examples of mature business models

In one of our previous posts, we introduced business models – we explained what they are, what their components are, and how they can be thought of in the context of the space sector. Now we will take the next step and discuss a few examples of existing business models in this industry. We hope that this overview will help you gain proficiency in this topic and serve as inspiration when you are refining your company’s business model.

Before we get to the heart of the matter, one note: this is by no means an exhaustive overview. It should be treated as a teaser and a starting point for further research. Let’s take a look at launch services, satellite communications, satellite manufacturing, and Earth observation (EO).

Launch services

Companies in this category are widely known, including SpaceX, Rocket Lab, and Blue Origin. The value they offer is easy to grasp, as it lies in delivering a specific payload into orbit at a specific price, reliability standards, and safety level. The customers of such providers are primarily satellite and space mission operators, but due to the development of rideshare transport, such services can be used by virtually any company or organization wishing to place its objects in Earth orbit. An important growth factor in this area is undoubtedly the progress in the construction of reusable rockets, which enable further reductions in operating costs and thus greater availability of launch services.

Key activities include primarily rocket construction and launch organization. These are complemented by repairs and R&D work, which in the long term lead to technological improvements and lower service prices. The most important partners are primarily spaceports and suppliers of rocket components, while the cost structure includes expenses for employees (skilled and very expensive), R&D, and infrastructure rental.

How do companies like SpaceX acquire customers? We are talking about the B2G and B2B sectors, so the formulas typical for mass marketing do not make much sense here. It is necessary to lobby decision-makers working in government agencies, as well as to have a strong sales department to acquire commercial customers. In addition to direct contacts, communication channels include websites, social media profiles, and participation in trade fairs and industry events.

Satellite communication

Alongside launch services, this is one of the oldest business models in the space sector – or rather, one of several. However, they are currently undergoing a dynamic transformation, evolving from traditional television and radio services to much more advanced broadband solutions using low Earth orbit (LEO) satellite constellations. There are currently three main models for generating revenue and delivering value in satellite communications:

• subscription-based, the best example of which is Starlink with monthly fees of around $99 – the customers are individuals and companies who need Internet access in places where standard connectivity is unreliable

• B2G and B2B contracts for government institutions and enterprises requiring a certain redundancy typical for critical communications – not only the military, but also, for example, aviation and the navy

• hybrid “Satellite-as-a-Service,” which offers ground terminals together with communication services in packages. This allows them to serve large customers who need full support in building and operating their networks. Examples include new companies such as Get SAT, but also industry veterans such as Viasat, who are reorganizing their businesses and adapting to changing market conditions.

In addition to private users and government and military agencies, this market is characterized by a growing demand for satellite communications in IoT applications, which means that the customer base also includes industry, transportation services, energy, medicine, financial services, and others. Key activities include the management, maintenance, and in some cases production of satellites, the development of communication technologies, and sometimes the operation of infrastructure for large customers. The most important partners include launch service providers, component manufacturers, and ground infrastructure operators.

For companies operating in the B2G and B2B sectors, communication and sales channels will be similar to those used by launch service providers. In the B2C sector, the development of online sales on e-commerce platforms, intensive social media activity, search engine marketing (SEM), content marketing, and email marketing/marketing automation will prove effective, not only to acquire new customers, but also to retain existing ones.

Satellite production

Companies providing satellite services do not necessarily build satellites themselves, in some cases, this is done by specialized manufacturers. The best known include Boeing Satellite Systems, Lockheed Martin Space, and Thales Alenia Space. The added value lies in high-quality end products, i.e., satellites that meet technical and durability requirements and safety standards, delivered on time and at an agreed price. This is a classic example of narrow specialization, which, thanks to the concentration of highly qualified employees, leads to an increase in quality and a simultaneous decrease in price, which in turn lowers barriers to entry and enables market development.

The customers of such suppliers are primarily telecommunications companies/satellite operators, government agencies, the military, and research agencies. The revenue structure consists of orders placed well in advance and acquired through the sales department and lobbying activities. In principle, only the B2B and B2B sectors are involved, so the communication channels for customer acquisition are similar to those described above.

Key activities include everything directly related to satellite production, with component suppliers being the most important partners. The cost structure consists of employee, material, and production line maintenance costs.

Earth observation

This is the last business model discussed in this article, but another one that has its roots in the Cold War era and is developing dynamically thanks to technological progress and the commercialization of the space sector. Examples include Planet Labs, Maxar Technologies, Iceye, and Airbus Defence and Space.

The value in this case lies in the aggregation of data from the monitoring of selected areas of the Earth and then making it available in the form of decision-support tools to companies in industries such as agriculture, insurance, environmental protection, transportation, and local government. Thanks to the rapid identification of specific phenomena or problems, these organizations are able to take more effective action, e.g., in traffic management, crisis management, insurance valuation, or crop protection measures. Over time, the data becomes more granular and is obtained almost in real time, which increases the accuracy of observations and forecasts, and, consequently, decisions.

The revenue structure consists of the sale of data and analytical services/tools, which often take the form of a subscription model. Costs include the production of observation tools, server rooms, and R&D. Key partners include launch service providers and satellite manufacturers, as well as server room or cloud technology maintenance.

The recipients of Earth observation tools tend to be large organizations: companies, associations (e.g., farmers), government agencies, or NGOs, so the dominant communication channels will be participation in conferences, thought leadership, social media, direct sales, and lobbying.

We hope that the above overview sheds some light on the most mature business models in the space sector. We strongly encourage you to explore the topic further; more articles will be posted on the blog soon.