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Amaresh Kollipara, Managing Partner, Earth2Orbit LLC

Michael Leventhal, Attorney/Consultant, mc² The Law Firm

State of the Commercial Space Industry

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Themes

Space is not a destination

Space is an enabler for a variety of business verticals

Space accelerates and expands business verticals by providing new, disruptive ways of doing business

• Faster

• Cheaper

• Better

Governments can catalyze and accelerate space related businesses

Infrastructure is a precursor to space-related applications

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-Commercial Space Market Segments-Space is an enabler: it enhances existing market verticals.

In-Space &Surface

PlatformsLaunchSatellites

Infrastructure

Applications

Healthcare Earth Observation Science Research

Energy and Mining Defense

Media and Entertainment

Navigation and Communications

Governance

Transport Operations

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-Porter’s Five Forces-Framework for Discussing State of the Commercial Space Industry

Framework developed by Michael Porter in the late 1970s which assesses competitive environment, market trends, and other

factors to determine the profit potential of an industry.

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Two Example Industry Segments

Sub-Orbital Space Tourism Orbital Launch Vehicle Segment

Not an exhaustive list of companies – examples only.

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Threat of New EntrantsBargaining Power of

CustomersBargaining Power of

Suppliers

• Low concentration of companies

• Low volume of buyers at current prices

• Cost of switching is high• Once companies are

established switching costs may be lower

• Low customer price sensitivity in the early stages

• High at first, but, as the companies become established, more suppliers, less leverage

• Companies can take manufacturing in-house

• Because of the lack of bargaining power of customers, not as important

• Technological barriers to entry

• Financial barriers to entry• Loyalty if early entrants have

solid safety record• So, Long Lead Times,

Surprise Unlikely

Five Forces Analysis

Sub-orbital Space Tourism Segment Analysis

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Competitive RivalryThreat of Substitute Products/Services

• Thus far, little competition; just branding

• Later, most companies will support each other to establish the industry

• Finally, there will be competition, but, as prices drop, demand will outstrip supply for the foreseeable future

• Extreme vacations are available now

-Titanic,

-Mt. Everest

-HALO

-Zero G,

-Antarctica

-Virtual reality space trips• BUT . . . If you want the real

thing, you have to buy a ticket

Five Forces Analysis

Sub-orbital Space Tourism Segment Analysis

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Threat of New EntrantsBargaining Power of

CustomersBargaining Power of

Suppliers

• Low concentration of companies

• Low volume of buyers due to launch costs

• Cost of customer switching is extremely high

• Moderate price sensitivity• Low bargaining power in

current market

• High due to specialized parts and inputs

• Suppliers are highly specialized

• Low presence of substitute inputs

• High launch costs are attributable to high input costs (in part)

• Sizable technological barriers to entry

• Massive financial barriers to entry (~$200M+)

• However, low customer loyalty – they’ll go with whomever

• Policy, regulatory, and legal obstacles also prevent easy entry

Five Forces Analysis

Orbital Launch Vehicle Segment Analysis

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Competitive RivalryThreat of Substitute Products/Services

• Minimal competitive rivalry existed for decades

• New entrants are redefining the landscape

• Few companies in this industry segment, results in low competitive market behavior

• Substitute products/services do not exist

• Not many alternatives to ELVs• Disruption via substitute

products requires paradigm shift in product/service offerings.

Five Forces Analysis

Orbital Launch Vehicle Segment Analysis

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Conclusions

Commercial/New Space Industry is slowly maturing

We can use traditional methods to analyze this industry

Fundamentals look strong

Comparing and contrasting with established industries produces insights for investors and others

As launch costs go down demand for industry will increase and diversify