Originally posted on February 15, 2022 @ 5:49 pm
The space tourism market will be subject to a variety of changes over the next 5 to 10 years. Market dynamics that are expected to transform the space tourism market include:
- government policy, regulations, and oversight,
- service provider safety records,
- changing customer demographic and customer motivations,
- number of competitors and nature of competition, and
- competition from product substitutions.
Government policy, regulation, and oversight
Government policy, regulation, and oversight can easily make a space tourism business unsustainable overnight. For space tourism businesses based in the United States, government regulation and oversight have been kept intentionally light in order to allow the space tourism industry to develop. However, following a learning period scheduled to end in 2023, the government is expected to implement more formal industry regulation and oversight. These changes could include mandating safety features related to passengers which may require significant changes and certification of the space vehicle, launch and recovery systems.
Currently, SpaceX is uniquely positioned because their spaceflight system is already certified safe for human spaceflight by NASA, and has a growing history of flight safety.
Virgin Galactic is the most exposed of the space tourism businesses because of their lack of a passenger escape system. Moreover, Virgin Galactic has a track record of safety issues which are well documented in the 2021 equity report entitled “Putting the Zero in Zero-G“. Of particular note, in September 2014 during a test flight the spacecraft broke up, killing the co-pilot and seriously injuring the pilot.
Service providers safety records
The space tourism market faces the existential threat of an accident – any accident, by any space tourism business – that involves death or injury to customers or individuals on the ground. Such an accident would have a chilling impact on customer demand and would result in lengthy accident inquiries culminating in the implementation of new government safety regulations and oversight.
Changing customer demographic and motivations
The nature of the customer demographic will change, for example –
The Space Tourism Market Study and other studies show that the space tourism market is very price elastic and as ticket prices decline, the number of prospective customers will increase. When ticket prices decline to approximately $100,000 per passenger, the space tourism market demographic will expand to include high net worth individuals, which represents an additional 18.5 million individuals.
Currently space tourism experiences are primarily English-centric and Russian-centric. Customers will soon expect space tourism experiences in different languages, for example Japanese, German, and Mandarin.
The nature of customer motivations will undergo changes. For example, one of the top three motivations to be a space tourist is the desire to be a pioneer, i.e. one of the first. At some point in the future space tourism will cease to be perceived as a pioneering activity and that may have an effect on customer demand.
Customer motivations will certainly be influenced by service provider marketing, trusted opinion leaders, and public sentiment (e.g. environmental impact). Service providers can be expected to focus on amplifying motivations that align with their product experience and their targeted customer type (e.g. Innovators, Early Adopters, Early Majority, Late Majority, Laggards).
Number of competitors and nature of competition
Today suborbital and orbital space tourism are dominated by vertically integrated organizations such as Blue Origin, Virgin Galactic, Roscosmos, and SpaceX; each is responsible for designing and manufacturing all their core technology including space capsules, launch boosters, spacesuits, and launch facilities.
The number of competitors and nature of competition are expected to change over time –
New vertically integrated competition
Additional vertically integrated competition is expected to emerge from the United States (e.g. Boeing, Sierra Space) , China, and Europe (Ariane).
Complementary and competitive
There is also a new breed of vertically integrated companies such as Axiom Space who are focused on building and operating orbital destinations for use by their customers. Axiom is responsible for private astronaut mission recruitment and management for their space tourism customers. They contract with other organizations to transport their customers to and from the ISS and their orbital facilities. They have announced that they will be using SpaceX for their first 4 launch missions. Axiom plans to launch up to 2 private astronaut missions per year to the ISS subject to aligning with flight opportunities made available by NASA.
Axiom Space is expected to be the major supplier of private astronaut missions to launch service providers.
By 2023 it is expected that Boeing will be providing launch services. Axiom Space has agreements in place with both SpaceX and Boeing.
Axiom Space will be complementary because they will provide a steady supply of private astronaut missions. They will be competitive because they will be the ones controlling which launch provider is offered the private astronaut missions.
Axiom has some interesting projects lined up that will further sustain demand for private astronaut missions:
- Axiom and the Discovery Channel are collaborating on a Reality TV show called “Who Wants To Be An Astronaut?“. The TV show will air on the Discovery Channel in 2022. The winner will fly on the second Axiom private astronaut mission Ax-2.
- Axiom was selected by Space Entertainment Enterprises to build an inflatable multipurpose entertainment and content studio in orbit. The studio will be integrated with the Axiom Segment of the ISS and is expected to be operational by the end of 2024.
A new type of competition
The pioneering, vertically integrated companies have made great progress in reducing the barriers to market entry caused by challenges associated with: technology; market development; and Government policy and regulatory environment. This progress is a double edged sword for the pioneers, since it also facilitates the emergence of new competition in the form of horizontally integrated competition.
A business ecosystem of horizontally integrated companies is already emerging. These companies specialize in building-block products and services such as propulsion systems, life-support systems, space suits, flight control systems, launch vehicles, training, launch facilities, mission planning and management, etc. Out of this ecosystem, companies will emerge which will focus on delivering space tourism products and services based on economies of scale and best-of-breed. An example being that of a private astronaut mission recruitment and management, business such as Space Adventures who focus on delivery of tailored space experiences to their customers. Space Adventures contracts for the launch services and training with other organizations such as NASA, NASTAR, Zero-G, SpaceX and Roscosmos. Another example is that of spaceports. Spaceports are commercial facilities for launching and receiving spacecraft. There are commercial spaceports popping up around the world. The US currently has 13 FAA licensed spaceports.
The coming tsunami of competition and innovation
The space tourism market is likely to experience a vertical to horizontal market transformation over the next 10 years. Such transformations have happened in the past in markets originally dominated by large vertically integrated companies, e.g. personal computers, telecommunications equipment. The emergence of the business ecosystem mentioned above, is the beginning of such a transformation. The transformation is expected to be fueled in part by venture capital investment in commercial space companies. The benefits to customers will be reduced costs and increased choices.
Suborbital and orbital space tourism businesses will also face new competition in the form of product substitutions. Competition is expected to come from: high altitude balloons; high fidelity telepresence experiences; zero gravity parabolic airplane rides; ground based simulations; and media experiences (e.g. virtual reality, documentaries, reality TV).
Space Perspective is offering high-altitude balloon flights which will take their customers to an altitude of 30 km. Each flight carries one crew member and up to 8 passengers. Tickets are $125,000. There are no preflight training or health requirements. If you’re healthy enough to board an airplane you are good to go. Flights will start in 2024. They have over 500 tickets reserved with fully refundable deposits, giving them potential sales revenue of $62.5 million. They are fully booked for 2024 and are taking reservations for 2025 and beyond.
The increasingly affordable Virtual Reality (VR) headsets such as Oculus are bringing us closer to the tipping point where VR matures into a mass market which can sustain customized VR experience businesses.
There is an immersive space tourism experience that is currently available on Oculus called “SPACE EXPLORERS: The ISS Experience”. The “SPACE EXPLORERS” Oculus experience was created over a period of two years during which time the production company worked directly with ISS astronauts.
The article “SPACE TOURISM – Is this what the future looks like?” provides more insight into how the space tourism market may be disrupted by telepresence based on virtual reality headsets and robotics.