US commercial space launch industry at a tipping point with the rising of small rocket players

  • The commercial space launch industry witnessing a transition towards Low Earth Orbit (LEO) satellite launches
  • Emergence of numerous small rocket start-ups
  • Increased consumer affordability for space launches


In the past decade, the global commercial space launch industry witnessed a boom in both the interest and the development, mainly from the communication sector, especially on the back of growing high-speed ubiquitous internet connectivity demand in remote locations around the globe. The promising space-based internet systems working towards providing high-speed internet connectivity are OneWeb and SpaceX’s Starlink.

The global commercial space launch industry was valued at USD 8.88 billion in 2017 (Source: MarketsandMarkets) and is projected to reach USD 27.18 billion by 2025, at a CAGR of 15.01% (2017-2025). The United States has been at the forefront with over 40% of the market share (2016).

Conventionally, in the United States, ‘Geostationary Equatorial Orbit (GEO)’ satellite launch form the backbone of commercial satellite launch operations, though these are time-consuming and costly (owing to the large size and higher altitude for launches) and are limited only for a few large players. However, with the advent of new players like SpaceX in 2010, the launch costs have reduced with a focus on innovation and reusable boosters. Elon Musk, the SpaceX CEO, tweeted in Feb. 2018, that ‘Falcon Heavy costs $150 million against more than $400 million for the competition’. The reduced costs further diluted the entry barriers and opened up the market for many private players. However, the game changer was the advent of smaller satellites (with advances in technology and computer chips). The ‘Low Earth Orbit (LEO)’ satellite launches catering to these small satellites gained traction in recent years, which provided a cheaper alternative to the GEO satellite launches. The new entrants flocked towards the LEO market with recent launches by the US-based ‘Rocket Lab’ and many more following the suite. All this has shifted the demand from GEO to LEO satellite launches. Currently, the global GEO market is catered by only three players.

Furthermore, some of the prominent players in the US space launch industry, which have launched GEO and/or LEO satellites are Astra Space, Inc., Blue Origin, Energia Logistics, Ltd. (ELUS), Lockheed Martin Commercial Launch Services, Orbital ATK, Orbital Sciences Corp., Rocket Lab USA, Space Exploration Technologies Corporation, United Launch Alliance, Virgin Galactic and Virgin Orbit, LLC.

In the United States, the smaller satellites have led to the miniaturization of rockets and have placed outer space within the reach of a broader swath of the economy. The LEO satellite launch revolution is led by a host of small rocket businesses, which have different approaches and capabilities to reduce cost and compete in order to gain the market share in this growing segment.

The most notable is Rocket labs, a private aerospace manufacturer founded by Peter Beck in 2007, which has developed a lightweight (using ultra-light composite material and a battery-powered turbo pump) rocket called ‘Electron’ that provides dedicated launches for smallsats and cubesats (small satellites built from prefabricated kits). The company’s first commercial rocket (‘It’s business time’) was launched on Nov. 11, 2018, from its own launch site in New Zeland’s Mahia peninsula and carried 6 satellites. Further, about a quarter of the size of SpaceX’s Falcon 9 (56 feet tall) having a payload capacity of up to 500 pounds, which costed just $5.7 million vis-à-vis $50 million for the Falcon 9 rocket, the Electron marked a new era in the space launch business and has paved the way for countless small rockets taking off from spaceports around the globe. It is in no mood to stop at just one launch and plan to launch a commercial rocket on a monthly basis and further reducing the time to weekly launches by 2020.

Growth Drivers for small rockets:

  1. Technological advancements have led to the miniaturization of launch rockets and have brought the costs down. This has helped to boost the demand by bringing affordability to a swath of new consumers
  2. Reduced wait time for consumers. For instance, ‘Electron’ promises to reduce the wait time to six months from around two years for Falcon 9 currently
  3. Growth is expected from the telecommunication industry over the mid-term, with global demand for ubiquitous fast internet services

In conclusion, the small rocket start-ups like Electron have created ripples in the largely capital-intensive rocket launch industry globally and in the US. While Televisory believe, GEO would continue with its large operations which require broader scale and coverage, the LEO technology seems to change the way this industry operates. The bigger players are already feeling the heat wherein they are working upon to reduce costs or enhance efficiencies for each and every launch. The emphasis is on reuse vehicles, for instance, Falcon 9 Block 5 rocket is being developed, which can be reused up to 10 times, this will help SpaceX compete with smaller and cheaper rocket companies. Additionally, some players have started exploring the LEO segment along with the GEO, which they have been operating. Further, the changes in the commercial launch industry have sparked the growth in the allied businesses that build satellites, sell satellite imagery and satellite communications’ services, and manufacture ground equipment necessary to operate and use satellite services as well.

The market has opened up very recently and the future will hold the key on how the players will fare in the long-run, however, the prospects appear promising as compared to the present scenario.

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