A Billionaire Space Race: Future of the Commercial Space Industry
A New Look at Space Tourism and the Commercial Space Industry
As Jeff Bezos steps down from the role of Amazon CEO, he is turning his attention to Blue Origin, his private commercial space company that hopes to establish a permanent base on the moon. This is not the only piece of news in the commercial space industry; Virgin Galactic, another billionaire-owned company in the 21st century space race, is about to launch its first test flight at the end of February. If successful, Virgin Galactic “ will be nearly ready to launch its commercial business” in November 2021 (Smith 2021).
These movements have generated new interest in what the future of space exploration will look like in the coming decades, and how the commercialization of the space industry will impact research and economic growth.
What Does the Commercial Space Economy Look Like?
Although space tourism is one of the most exciting prospects of private space companies, the use of space assets as a business model has been in use for some time. One of the main uses of the space industry has been the collection of data through satellites. In 2019, SpaceX launched hundreds of low-cost satellites in order to help create a global internet service, one of many companies to do so. (Wharton 2019).The need for data to supplement AI, advertising, and emerging technologies has made the applications of big businesses in the space industry nearly unlimited. According to projections by Morgan Stanley, “the global space industry is expected to generate revenue of $1.1 trillion or more in 2040” (Wharton 2019) as a result of new technological advances like reusable rockets, and emerging applications for satellite data. As the possibility of space tourism becomes more imminent, it is likely that this projection will increase in the future.
Most of the interest in the commercial space economy has been generated by wealthy entrepreneurs like Jeff Bezos, Elon Musk, and Richard Branson, who dream of opening space to every-day consumers. This “space race between billionaires” (Wharton 2019) has made space stocks become a popular speculative investment, or an investment with a great deal of risk associated with it. Although SpaceX and Blue Origin are not yet available for public investment, Virgin Galactic (SPCE) shares have increased by nearly 200% in preparation of the upcoming testflight, despite the company’s lack of “annual and quarterly profit growth” (Krantz 2020). ETFs like Procedure Space EFT (UFO) manage the risks of space investment by combining several space, defense, and aerospace stocks.
NASA has embraced the increasing commercialization of space by awarding contracts to companies like SpaceX, Virgin Galactic, and Blue Origin to create space assets and to assist with the launching and refueling of rockets. In October 2020, NASA announced that private companies would be allowed to send astronauts to the International Space Station in order to “enable commercial manufacturing and production” in space (Sheetz 2019). This partnership between NASA and private companies saves important portions of NASA’s budget — new contracts have resulted in private companies “paying for at least 25% of the program’s total costs” (Sheetz 2019) — which renews NASA’s resources for important scientific research. For instance, NASA is working on sending astronauts to the moon in 2024 — the first Americans in over half a century — including the first woman (Singman 2021).
The Future of Space
As the space race between billionaires heats up, the role of the government in space exploration and space commerce may lead to important changes. According to a policy study by Reason Foundation, increased cooperation between private companies and government can maximize economic benefits and sustain important research (Greason and Bennett 2019). Past collaborations between NASA and private companies have already proven that harnessing the power of private space companies is a worthy endeavor. One example of this collaboration is Made in Space, a company whose contract with NASA has advanced 3D printing technology (Sheetz 2019) and has opened up discussion about the possibility of manufacturing goods in space. Future collaborations between NASA and private companies will harness reusable rockets and less expensive flights. In order to achieve these goals, the policy recommendations from the Reason Foundation include forming treaties with other countries interested in space exploration and the protection of space assets such as refueling stations (Greason and Bennett 2019).
The Biden administration may support such changes in the commercial space industry. Dave Nadig, chief investment officer at ETF Trends and ETF Database, said the Biden administration will renew a “focus on international cooperation around infrastructure”, as well as encouraging traditional research and exploration (Gurdus 2020). Although no broad-reaching legislation about the commercialization of the space industry currently exists, future advances in technology will no doubt usher a new era of economic growth and collaboration between the private sector and government agencies.
