As more interest builds up surrounding the NASA/SpaceX launch of people to the International Space Station (ISS) in May, the inevitable (and purely avoidable) references to other yet-to-be-implemented services provided by Virgin Galactic or Blue Origin always seem to surface. Even research groups have offered reports pairing these two very different types of businesses together. Why? Both reporters and researchers understand the fundamental differences between a rocket launching a capsule to orbit and a rocket/rocket-plane used for a sub-orbital rollercoaster ride.
Maybe the justification for lumping them together is this: they represent steps to more commercialization of space.
It sounds exciting and the phrase "commercialization of space" has been a siren call for over a decade. However, since these are different businesses, it's logical to think their approaches for commercializing their parts of the space business are facing different challenges and require different solutions.
Starting with SpaceX's and Boeing's NASA commercial crew efforts.
In “Human Spaceflight, Its Future under NASA, and the Moon,” the analysis raised questions about the future of NASA’s Commercial Crew Transportation Capability (CCtCap--commercial crew) systems from Boeing and SpaceX. But the other observation within that post is that even though the label “commercial” is pasted on the program, the systems are primarily for government missions.
Even if SpaceX or Boeing decides to offer rides in their capsules (something they are allowed to do), it’s doubtful there is a persistent demand for commercial purposes. The potential costs to ride are still very high (tens of millions), which potentially narrows an already niche market. And the market for commercial crew-type service is very, very niche. With this fact in mind, this part of a larger NASA rationale for allowing Boeing and SpaceX to sell capsule rides seems overly simplistic and optimistic:
The costs of developing human-capable spacecraft will be shared because the spacecraft companies can sell flights to customers other than NASA.
Existing Spacecraft Markets
While they are contracted out by the same NASA office under an overarching program, commercial crew is not just different from the Commercial Resupply Services (CRS) in mission, but also in the addressable market. The market for a rocket developed under CRS was already generally established before the program’s inception. Building a rocket was no guarantee of success, but if it was inexpensive and reliable enough, a CRS rocket would be useful for all three mission drivers--civil, commercial, and military. And each mission driver contained established business models and customers.
This established market for spacecraft services rewarded SpaceX when it developed the Falcon 9 rocket. Below is a small sampling of the customers/spacecraft launching with SpaceX:
A few things to note about the chart above: yes, I understand it’s all transportation, but certain programs seemed to be worth putting in this category specifically. And, notice how in the Civil segment, “Transportation” and “CCtCap” are highlighted? More on that later down the page.
The chart shows SpaceX serving through nearly all established customers and businesses in all mission segments--plus some new ones (IoT entrants from Swarm and Hiber, etc.). SpaceX is also serving a lot of international customers, while serving all mission segments (Govsat/SES=Luxembourg, Iceye=Finland, Bangabandhu=Bangladesh, etc.). CRS-developed rockets have benefited quite a few customers (not so much using Northrop Grumman’s Antares)--including commercial crew, which is why it’s highlighted on the chart: it’s a small part of a much larger market. And where companies like SpaceX had an established market with CRS, it’s a much broader market than commercial crew.
A sample of the customers for commercial crew based on the last decade’s history of humans flying through space:
Not quite as large as the market for CRS, which is a problem (even if Boeing and SpaceX can sell rides to customers other than NASA). Undoubtedly the customers on that list will pay plenty to be ferried with SpaceX’s or Boeing’s rockets. So much so, that both companies’ primary customers will probably be the government, which will provide enough money to distort the true value of a ride to space.
This does mean, however, that Boeing and SpaceX must work much harder--they must find and develop a commercial market instead of stepping into one that is already established. There have been a lot of loud voices promoting the “fact” that a commercial market for human spaceflight with these systems exists. If it does, will enough people pay $50-60 million for a ride to space to make this market a reality?
Catering to Space Tourists
The market is different for companies with suborbital offerings that have humbler mission aims and costs: space tourism. While space tourism itself isn’t a truly established market, there is evidence in other markets (theme parks, recreational experiential tourism) that people pay for the chance at a once-in-a-lifetime experience. This is where Virgin Galactic and Blue Origin step in.
Each company has their own take about how to launch people to space--for a few minutes. Each company has taken a different approach to funding these projects as well. Blue Origin benefits from having a patron, Jeff Bezos, who believes in the business enough that he’s providing the billions to make it a reality (and the R&D will help with Blue Origin’s larger rockets). Virgin Galactic went public, a different way from Blue Origin, but no less valid.
There appears to be a market for suborbital space tourism, even as both companies are charging $250,000 per seat. While there are no public numbers for customers reserving a spot on Blue Origin’s New Shepard, Virgin Galactic has mentioned that over 600 customers have reserved a spot for flying on SpaceShipTwo. While this is conjecture, I believe that if Blue Origin had exceeded Virgin Galactic’s customer numbers, it would have probably marketed that fact. Both companies have mentioned an intent to literally launch their customers sometime in 2020.
Who are their customers? Virgin Galactic and Blue Origin do face at least a few challenges similar to those faced by the commercial crew companies: 1) the market is not established, and 2) they need to develop the market.
For the first challenge, both companies actually sit in a worse situation than what the commercial crew companies--there is not a ready list of past users. There is one sector in the air industry that offers "weightless" experiences. Zero G is an example of that type of company, offering eight minutes of weightlessness for $5400. The company offers its services for research and education as well as the commercial recreational experiential side. If the company's addressable market were put into a "space industry format," it might look something like below:
Blue Origin and Virgin Galactic appear to be offering their suborbital rides to that spread of customers as well, and so let's adopt the chart above for their suborbital services. Blue Origin has launched some NASA payloads as it tested its New Shepard vehicle. NASA (and other government entities), may take advantage of the relatively low pricing from each company for suborbital testing. But the majority of customers appear to be private individuals. The question for both companies is if there is a strong and persistent demand for their services--at $250k per ride?
It may also depend on what Virgin Galactic and Blue Origin do once their businesses are operational. Note that the addressable market chart above does not contain a transportation box for any of the mission segments. That's because neither appear to be pursuing human transportation for their business currently.
Blue Origin is using New Shepard as a stepping-stone. The company is using everything it’s learning from launching and landing New Shepard to build its New Glenn launch vehicle. New Glenn will be a launch vehicle capable of inserting spacecraft into and beyond Earth’s orbit. But the company hasn’t publicly committed to plans for launching humans into space with New Glenn.
Virgin Galactic might go a different direction. If it becomes profitable, then the company can also develop other launch vehicles. These vehicles would not be for moving spacecraft to orbit, but just for people traveling from one point on the planet to another. While this type of business isn’t necessarily a direct route on the path of space-focused step-stones, it does start to entire a business that is strong and persistent--traveling to and from different places on the planet. It’s also a business that the Virgin group is intimately familiar with.
It’s not clear if SpaceX’s or Boeing’s commercial crew efforts are true stepping-stones to humanity’s future in space. Boeing has a history of being bottom-line-focused (certainly not human-focused lately), while SpaceX is focusing on what it believes will be a major part of humanity’s future and expansion in space--Starship and Super Heavy. Combine these facts with a probable dearth of commercial customers AND NASA’s focus on supporting its SLS/Artemis programs, then the two companies’ offerings, while great, may prove to be relatively short-lived. Or NASA might wake up and expand on the capability it has in those two systems.
In the space tourism business, Blue Origin is using its New Shepard program to develop its larger, orbital-capable rockets. Its efforts are informing the manufacture of another rocket that has the potential to launch humans to space--it’s just not clear if that is a company goal. Virgin Galactic is making an honest effort in the marketplace for its suborbital fun-ride. If the company makes money from that, it will have helped establish a new market and may be in place to change an older one radically.