The global small satellite (smallsat) industry continues to exhibit resilience and robust growth, according to Novaspace’s recently published Prospects for the Small Satellite Market report.
Forecasting a market value of approximately $113.3 billion over the next decade, the report underscores the significant expansion potential driven by constellation replenishments and increasingly complex government missions.
Novaspace, the company authoring the report, is a space consulting and market intelligence firm formed through the merger of Euroconsult and SpaceTec Partners. They delivers insights, strategic guidance and professional services to clients around the world. The company is also the organizer of the World Space Business Week.
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Constellations driving growth amid challenges
Alexandre Najjar, lead analyst for the report, emphasized the critical role of constellations in shaping the smallsat market. “The smallsat market remains primarily driven by constellations, a highly opportunistic but challenging segment,” he stated. These systems, which account for 70% of projected smallsat deployments, play a pivotal role in capability-building for emerging space actors and established operators alike.
However, the report acknowledges significant challenges, including inflationary pressures and intense competition, which could lead to scope reductions or consolidation among new constellations.
Furthermore, while the technical and market feasibility of mega-constellations has been demonstrated—notably by SpaceX’s Starlink—replicating such successes may prove difficult for other operators without access to similar vertical integration and low-cost launch capabilities.
A key trend highlighted by the report is the increasing regionalization of demand and a shift toward vertical integration among emerging countries. These nations are not only acquiring smallsat systems but are also developing domestic manufacturing and launch capabilities, thereby reducing export opportunities for commercial players.
This evolution is expected to narrow the addressable market for many smallsat suppliers, making long-term government contracts a critical growth driver.
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Exclusion of Starlink and its implications
Notably, the 10th edition of the report excludes Starlink from its projections, a departure from previous editions where it significantly influenced forecasts. The exclusion stems from Starlink’s transition to larger satellites exceeding the 500-kilogram threshold that defines smallsats.
Consequently, this year’s forecast of 13,984 smallsats to be launched between 2024 and 2033 reflects a smaller total market compared to last year’s projection of 26,000 satellites. This adjustment, however, provides a clearer and less skewed representation of the smallsat industry.
Despite Starlink’s absence, this market demonstrates steady growth, with a 7% increase in projected deployments compared to the previous edition’s forecast. This growth is attributed to a mix of constellation projects and single-satellite missions, emphasizing the industry’s stability and resilience.
The strategic role of smallsats in geopolitical contexts
Recent geopolitical tensions and conflicts have underscored the strategic importance of smallsat constellations, particularly in commercial satellite communications (satcom) and Earth observation. These systems have proven their utility in active combat scenarios, driving interest in advanced technologies such as direct-to-device (D2D) connectivity and low Earth orbit positioning, navigation, and timing (LEO PNT) systems.
The Ukraine conflict, for example, highlighted the value of smallsat applications in providing critical communication and Earth observation services. Rapid deployments of Starlink terminals to Ukraine demonstrated the importance of resiliency and responsiveness in such scenarios.
Additionally, demand for synthetic aperture radar (SAR) imagery, which performs well under cloud cover, has surged, further validating the strategic role of smallsat capabilities.
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Supply chain challenges and profitability concerns
Despite its resilience, the smallsat market faces several challenges, including supply chain disruptions, inflation, and profitability pressures. Many smallsat companies—both public and private—continue to struggle with achieving sustainable revenue and margins in a highly competitive environment. High upfront capital expenditures (CAPEX) and uncertain returns further deter investors from committing to large-scale projects.
To counter these challenges, several players are diversifying their offerings. For example, some launch providers are expanding into subsystems manufacturing, space logistics, and downstream services, which tend to offer higher margins. Additionally, the adoption of Satellite/Data as a Service models is gaining traction, allowing customers to lease services without significant upfront investments.
The role of SpaceX and emerging disruptions
While SpaceX’s Starlink has been excluded from this year’s report, the company’s influence on the smallsat market remains substantial. Its Transporter missions have democratized access to space for numerous smallsat operators, but its vertically integrated capabilities also pose competitive risks to traditional suppliers and operators.
Furthermore, SpaceX’s diversification into new verticals, such as Earth observation through its Starshield constellation, has the potential to disrupt additional market segments. Starshield, developed in collaboration with the U.S. National Reconnaissance Office (NRO), could significantly impact the Earth observation market.
With its hundreds of satellites offering enhanced revisit times and higher resolutions, Starshield may reduce demand for imagery and data from existing commercial providers. This development underscores the competitive pressures and evolving dynamics within the industry.
The smallsat sector is also witnessing the early stages of consolidation, particularly in the launch and manufacturing segments.
Business failures, mergers, and acquisitions are becoming more common as companies seek to enhance profitability and scale. Additionally, securing long-term government contracts remains vital for newspace companies, providing financial stability and demonstrating the enduring relevance of smallsats in the space sector.
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