Into Orbit: Spending On Space

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Anna Bliokh/E+ via Getty Images

By Michael Barr

With increased spending on space technology from the U.S. government, commercial applications appear set for expansion.

In May, the U.S. announced the results of its largest-ever commercial imagery contract, awarding contracts to leading commercial space enterprises. Such government contracts are valued at billions of dollars and tend to span decades of commitment, development, and deployment. It appears to us that this could be just the beginning of such spending by governments on a global basis.

In a recent press release, the Director of the National Reconnaissance Office noted that “the NRO has a long-standing strategy of ‘buy what we can, build what we must.'” Apparently, there is more to buy today, as governments have begun to outsource such complex and major projects to the “pros.” With billions of dollars worth of contracts at stake, this has spurred increased competition, which in turn has driven improved efficiencies and sparked innovation. This improvement, in turn, has helped drive easier access to the vast capabilities of space technologies, including satellite imaging.

One of the major benefits of commercial satellite imagery is its unclassified and shareable nature: Commercial operators can provide this valuable resource at high incremental margins and with high performance as well. The remote sensing data that can be accessed from these companies offer important benefits, including increased transparency, situational awareness, and even humanitarian assistance. Over the past 18 months, several global events have prompted the use of satellite data including the obstruction of the Suez Canal by the Ever Given ship in March 2021 and the initial military escalations during the Russia/Ukraine war. We now rely upon satellite imagery across a range of situations as it allows for real-time information sharing and helps enhance decision-making.

Space technology is becoming further integrated into everyday lives, a trend we expect to continue and even accelerate. We believe that as capabilities in space continue to improve, even more commercial, private demand could materialize, allowing for additional revenue streams that can help drive continued innovation and the emergence of new businesses and business models.

We appear to be just getting started.

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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