Section 3 is the Market Assessment/Market Analysis section, it contains the following sections:
3.1 Communications Market 3.2 Space Manufacturing 3.3 Remote Sensing 3.4 Government Missions 3.5 Transportation Missions
3.6 Entertainment 3.7 New Missions 3.8 Space Utilities 3.9 Extraterrestrial Resources 3.10 Advertising

Table of Contents for Section 3.6

3.6 Entertainment
3.6.1 Introduction
3.6.2 Digital Movie Satellites
3.6.3 Orbiting Movie Studio
3.6.4 Space Athletic Events
3.6.5 Artificial Space Phenomena
3.6.6 Space Theme Park
References
The Full Section Index is at the end of this Section

Commercial Space Transportation Study


3.6 Entertainment

Entertainment is an exciting and continually evolving industry. Film, theater, broadcasting, and theme parks represent a triumph of U.S. creativity and innovation recognized throughout the world. Technology and techniques used in the U.S. entertainment industry are recognized as the state of the art. The importance of the entertainment industry to the U.S. economy and its importance in international trade were recognized in the 1993 GATT talks. Commercial access to space for entertainment has been discussed as part of the generation of entertainment industries, and it can create new opportunities for industry pioneers. The current entertainment industry infrastructure is ready for a mechanism (transportation system) to move aggressively toward exploiting this new market area for viable economic return.

The U.S. entertainment industry represents a multibillion dollar market. U.S. movie box office receipts for 1993 are estimated to be $4.7 billion, with another $12.8 billion in home video sales, and $13.9 billion in cable services. Worldwide theme park revenues are greater than $4 billion annually. Over 150,000 persons are directly employed in film production, with hundreds of thousands of others involved in the retailing, servicing, and delivery infrastructure of this market. While the current economic climate has slowed the U.S. growth rate of these markets, they have grown from an aggregate of $21.7 billion in 1988 to an estimated sum of over $31.4 billion in 1993, for an average annual growth rate of about 7.5%. If this rate continues, these industries could comprise a U.S. industry of over $70 billion per year by 2005.

Furthermore, this is an industry that has been at the cutting edge of applying emerging technologies to consumer use. The new technologies of direct broadcast-to-home television, interactive cable, new electronic entertainment systems, increased infrastructure for entertainment distribution, and new methods for personal entertainment are opening up substantial new markets. Emerging technologies and worldwide expansion are expected to stimulate the industry.

These industries represent a major source of international trade, and the U.S. entertainment industry has been very successful abroad. The Motion Picture Association of America (MPAA) estimates foreign revenues from the U.S. motion picture industry at over $6.5 billion in 1990, with another $2.8 billion in revenues from video distribution. These markets are also growing rapidly, as worldwide consumers increase the purchases of home VCRs and other avenues for these entertainment products. For example, about 63% of U.S. households have access to cable TV, and about 77% own at least 1 VCR. In France, for example, only 40% own VCRs, and 5% have access to cable TV.

Technology improvement is a mechanism that supports continuing evolution of the entertainment industry. This industry often pushes the state-of-the-art capability in such areas as computer-generated special effects, animation, and interactive media (e.g., virtual reality). The addition of a space component will invigorate already-expanding markets and accelerate technology development/transfer. The benefit of this new form of entertainment will cascade to existing market segments such as feature productions and stimulate the growth of new entertainment forms.

3.6.1 Introduction

3.6.1.1 Results Summary

Using initial brainstorming, five entertainment market areas were identified for candidate development and feasibility assessment: digital movie satellites, orbiting movie studio, artificial space phenomena, space athletic events, and space theme parks. Market analysis has shown the entertainment market segment is very diverse. Investigation into current entertainment markets identified several additional potential opportunities involving space-based movie distribution and production for use on Earth. Further investigation of human interactive and participatory entertainment has invited discussions on such topics as space theme parks, both ground- and space-based.

Discussions with key members in the entertainment industry and detailed market assessments indicate none of these individual commercial ventures would be viable as a standalone venture (which would have to fund all the development and installation of a complex in-space facility). However, very promising results were found when a central entertainment location is coupled with an in-space general-purpose facility that provides additional infrastructure necessary to support several of the market areas. Status of the five market areas originally investigated is as follows. A transportation impact summary is presented in Figure 3.6.1.1-1.


Annual Klb @ $5,000/lbAnnual Klb @ $500/lbAnnual Klb @ $100/lb
Digital movie satellite000
Orbiting movie studio 12633
Space athletic event020520
Artificial space phenomena000
Space theme park Earth-based1560180
Space theme park Space-based04403,600
Entertainment demand (lb (K) per year)16 5224,933
Entertainment revenues ($M)80261493

Figure 3.6.1.1-1. Nominal Annual Transportation System Demand Grows With Reduced Price to LEO.

Digital Movie Satellite. This concept entails digitally downlinking movies directly from an orbital satellite to individual residences with on-demand capability. The idea was dropped from further consideration, because technical problems in delivering the potentially large number of downlinked compressed signals were assessed, and because there are ground-based fiber-optic cable solutions being demonstrated that could offer a simpler, lower cost solution.

Orbiting Movie Studio. This concept-production of scenes for movies or other media using an on-orbit facility-is continuing to be defined and analyzed in conjunction with a total entertainment venue. It requires low transportation cost, based upon current industry production costs, but generates a potential 650K lb/year transportation market at $100/lb LEO transportation price.

Artificial Space Phenomena. For this market area, the presentation of large-scale public entertainment spectacles such as "light shows" or fireworks from space-based systems, no separable, identifiable market could be determined different from that for large outdoor displays. The concept was defocused as a separate entity, with the concept to be folded into the space advertising market segment.

Space Athletic Event. This concept is for athletic events performed in an on-orbit facility, and broadcasts (beamed) to terrestrial audiences. The analysis and contacts on this market area indicated positive results, if it was included in a multiuse facility-with revenue-generating options identified for single and multiple events with launch costs reduced at least an order of magnitude from today's price.

Space Theme Parks. The concept of using the space environment as a unique platform for space theme attractions continues as an area of interest within a multiuse commercial facility associated with space tourism. Moreover, contacts within the industry have indicated there is the potential for near-term demand for high-quality real-time data for interactive "space rides" using virtual reality systems. A 15 Klb/year transportation market was identified at current launch costs, including piggyback and smallsat systems. The larger space-based theme park/resort market requires substantially lower launch costs, under $400/lb.

3.6.1.2 Associated Market Segments

A breakdown of the five areas and the initial ideas related to each are presented in Figure 3.6.1.2-1. The market areas described within the entertainment segment are closely related to the communications market segment (broadcasting), space tourism (within the transportation segment), and space business park (being developed in the new missions segment).

Figure 3.6.1.2-1. Entertainment Segment and Identified Market Areas

3.6.1.3 Assessment Approach

The assessment approach followed two tracks. The first track was to contact players in the pertinent sectors of the entertainment industry. Potential contacts for the CSTS market survey were identified after extensive literature search of the entertainment industry, which included newspapers, entertainment publications, corporate financial statements, and the like. The market survey approach used was to:
a. Identify industry/corporate leaders in various entertainment markets.
b. Make initial contact for introduction as well as to identify the appropriate executives within each organization.
c. Follow up through printed materials for familiarity.
d. Schedule a meeting or telephone conference, with the appropriate individuals.
1. An attempt was made to meet with decision-makers (e.g., Vice President, Corporate Development).
2. The meeting format included brainstorming sessions to identify a company's possible use and need for space, based on their existing business as well as new ventures.
3. We never focused on $/lbs, but on existing infrastructure cost of doing business in this industry.
e. Generate a rough order of magnitude market assessment, based on the current cost of doing business (terrestrial equivalent).
f. Define the generic outlook and vision for the industry and the particular organization.
g. Review and compare individual interview results with information gathered from peers in the market area.
h. Followup on any referrals and recommendations.

Parallel to the direct market contacts, a business analysis effort tried to formulate a top-level ROM business model for the opportunities identified, so that the data from the market surveys could be validated, and assumptions for new markets tested. Interview findings were used to validate assumptions and market data about the general business area; identify potential commercial space transportation markets; quantify the commercial market area revenues; identify key decision factors from an "insider's" perspective; determine market capture opportunities; and identify commercial space transportation system attributes necessary to meet user needs. Products from the market survey task, identified in Figure 3.6.1.3-1, augment additional CSTS tasks being performed by the alliance with discretionary resources (shaded boxes).



Figure 3.6.1.3-1. CSTS Market Survey Product Flow

3.6.2 Digital Movie Satellites

3.6.2.1 Introduction

Worldwide growth in the home entertainment industry prompted CSTS investigation into satellite downlink possibilities, and the expansion of proposed broadcast satellite markets. As developed in initial brainstorming sessions, a concept was proposed of a satellite constellation infrastructure established to downlink movies directly to residences, at users' convenience, by bringing the video store to the home.

3.6.2.2 Study Approach

The digital movie satellite survey investigated the relative market share of existing competing home video- related industries and qualitatively assessed the amount of change in the current market conditions. This information was used to assess the likelihood of a new competing option surviving. The following steps were taken to assess the market area:

a. We defined total market revenues and growth rate.
b. We established limits on prices to consumers, defined by current cost of home entertainment equipment (VCRs, laser disc players, cable services).
c. We identified market enables and potential showstoppers.
d. We analyzed transportation market potential.

3.6.2.3 Market Description

3.6.2.3.1 Space Application Description

Digital movie satellites are envisioned to fill an entertainment niche not unlike that of current pay-per-view satellite systems for home viewing. The big difference is that the digital movie satellite would downlink an entire movie to the viewer's set at one time. This would enable the viewer to specify any of a large number of films to be screened on demand. In effect, it would combine the attributes of video rental and pay-per-view.

Replacement or augmentation of current movie distribution systems could take advantage of lower satellite transportation costs while providing for on-demand access to a large digitally stored movie database. This would allow for increased worldwide distribution without the need to make and distribute actual prints of films, and also avoid the added costs from the wired infrastructure needed for competing services such as cable systems.

3.6.2.3.2 Market Evaluation

Most of the attributes needed to make digital movie satellites profitable have very little to do with the cost or availability of space transportation services. What really is needed is for the cost of digital data transmission and storage to decrease drastically, as well as the ability to downlink substantially more data from space assets.

The current state of the art in satellite digital data transmission allows the compression and transmission of approximately five to ten real-time television signals over a typical satellite transponder. VHS quality movies require 1 to 2 Mbps (millions of bits per data per second), whereas entertainment/sports events require 3 to 8 Mpbs. Thus a single satellite transponder is capable of sending around 20 to 30 real-time movie signals with advanced compression techniques. A single satellite is capable of sending perhaps several hundred simultaneous digital movie signals, again using compression techniques. If time-compression techniques are used in addition to the digital compression of the real-time signal (compressing a 2-hour recorded movie into a 12-minute "blip") to be received and played back by a home receiver, each transponder might be able to handle perhaps a hundred users per hour, on an individualized basis. To be competitive in the marketplace, the system would have to be price competitive with home video rentals ($1 to $3/movie), and pay-per-view television services ($2 to $5/movie).

For a major metropolitan region, such as the Los Angeles area, with several million households, a small market penetration of 1% would require the system to provide several hundred to several thousand transponder beams during peak usage periods. This requires a very wide bandwidth available to the system-with a potential need for over 100,000 MHz to serve this one metropolitan area. If equivalent services were provided to other major metropolitan areas around the United States, it is possible the downlink bandwidth could be reused with spot beams. But to provide the digital data for downlink, the system must have either a very large on-orbit digital data store, or extremely capable uplink from a central storage site. In the first case, a very large storage system on-orbit is required (which subsequent greatly increases the satellite cost), or a huge uplink bandwidth to upload the digital movies on demand for rebroadcast. Furthermore, since the satellite is assumed to be distributing these movies geographically, there would be little reuse of the uplink compressed bandwidth.

There is approximately 6,000 MHz available for satellite communications in the Ka-band (the least used). The requirement for one metropolitan market area alone exceeds this total available bandwidth by an order of magnitude. Considering the other uses for this bandwidth, allocation of this bandwidth will be difficult.

The problem of available bandwidth will increase as the next generation of high-definition and interactive television systems comes into the market. For full HDTV, from 15 to 25 Mpbs of data are required, which will increase the bandwidth required by about an order of magnitude compared to VHS quality pictures.

At VHS quality, each transponder, using the most advanced digital data transmission capabilities, could provide a maximum revenue stream of about $1,000/hour in peak periods. Since much of this demand is bunched into the prime viewing hours of 6 to 10 PM, the average revenue stream will be substantially less, probably in the vicinity of $200 to $300/hr. The home entertainment system designed to receive the transmissions will require an added cost to the user (or investment by the operator). Current costs for a real-time satellite receiver, including decyprion system for compressed real-time video, run about $700 retail (Hughes DirecTV system). To this cost must be added costs for the digital storage and payback of the compressed signal, for an estimated per home cost of $1,000 to $1,500 dollars.

These problems are not technically unsolvable -- going to higher frequencies (such as laser/optical data links) would resolve the technical issue of bandwidth availability, and very large-scale mass production of the digital storage and payback systems will reduce their cost as well.

On the other hand, competing terrestrial technologies are currently being developed to address this market. Ground-based fiber-optic data networks, such as those being installed by cable TV and telephone companies, are just one way of solving the transmission bandwidth problem. Installation of an additional cable subscriber is estimated in the trade press at $1000 to 1500 per new subscriber, with substantially lower cost if the system is replacing existing copper cabling. Experimental on-demand data and pay-per-view cable systems are being tested in several cities around the United States. Terrestrial solutions are viewed by industry to be less expensive and to offer more capability than space-based systems while taking advantage of an existing infrastructure. The timeliness and responsiveness of the terrestrial solution are important. By the time a digital movie satellite is operational (designed, developed, tested, launched, and activated), the bandwidth for operations allocated and approved, and the user ground equipment produced, marketed, sold and installed, the target user population will have had access to much more enhanced terrestrial capability for several years (e.g., interactive TV).

3.6.2.3.3 Market Assessment

About 18 million households have access to current pay-per-view television services, and this number is expected to rise by 2 to 3 million per year over the next several years.

In 1994, satellite direct broadcast to home systems will move into the market, with the institution of the initial 75 channels of the Hughes DirecTV broadcast system expected in April 1994. Fifty of DirecTV's 150 channels are expected to be set aside for pay-per-view offerings. DirecTV is targeting capturing a market of 10 million subscribing households by 2000. There are several other DBS satellite systems also in preparation.

Since the market addressed by the digital movie satellites is the on-demand pay-per-view market segment, its primary competitor is the video rental market. In 1992, the movie industry grossed $12.2 billion through home video rentals and sales. This represents a market share for video rental that did not exist 15 years ago, when home videotape equipment costs were in the thousands of dollars.

During that same time period, the average time between the release of a first-run picture from one of the major studios and the release of the same film on video decreased to 4 to 6 months. Some low-budget features are even directly targeting the video market. This suggests that home videotape rental is here to stay.

This market is also addressed by the cable pay-per-view system and the satellite DBS market discussed previously. This change has been brought about by a wholesale shift in home electronics, which includes the presence of at least one VCR in 77% of US. households (January 1992). This can be directly traced to the availability of progressively less expensive home VCRs.

The market advantage of pay-per-view is the greater convenience afforded viewers, who have only to phone in their program request rather than travel to a video store. On-demand viewing capability removes any barriers from a time lag until the movie is scheduled on a pay-per-view system.

However, it is unlikely that on-demand movie pay-per-view will displace home video's popularity as an entertainment vehicle. Live events, such as superstar rock concerts and high-visibility boxing matches have been the most profitable pay-per-view events to date. Movie purchases on a pay-per-view basis are highly cost sensitive, unless the film offered is on an "exclusive" basis.

This market is very cost sensitive. Significant increase in the market for on-demand movies will require a drastic decrease in the cost to deliver the movie. This appears unlikely, even with a greatly decreased space transportation cost (which allows a greatly decreased satellite cost), since significant user costs will also have to be amortized for this system. There are also potential technical issues in allocating the bandwidth available, and lower cost (although not on-demand) competing services that will soon be available.

3.6.2.3.4 Market Infrastructure

Since the digital movie satellite concept was not viewed as commercially viable, no transition to buy into the market area was established. At a minimum the market infrastructure needed would mirror that for the DBS systems-a distributed set of home receivers and playback systems, a satellite to store or relay the digital movies, and a ground station to uplink the transmission data and control the system. The most expensive part of this infrastructure is the user equipment, needed for each customer.

3.6.2.4 Prospective Users

The prospective users for this service include those persons not served by on-demand pay-per-view movies. This market is broad, since it extends past current television cable pay-per-view users, and encompasses those not covered by cable (about 30% of the U.S. households). However, there is no easily separable market between the digital movie satellite customer and those using a cable on-demand pay-per-view system. Additionally, the distinction between DBS and digital movie satellites in the non-cable-covered market places a premium upon price sensitivity of the consumer.

3.6.2.5 CSTS Needs and Attributes

The digital movie satellite market analysis indicated that the concept was not commercially independent of space transportation system cost due to satellite transmission technology limitations (bandwidth and data transfer rates), and due to market price pressures. Therefore, CSTS needs and attributes were not defined.

3.6.2.6 Business Opportunities

No business opportunities were defined at this point.

3.6.2.7 Conclusions and Recommendations

The digital movie satellite market area has been defocused at this time because it is not competitive when compared to ground-based systems.

3.6.3 Orbiting Movie Studio

3.6.3.1 Introduction

The space environment offers unique characteristics, such as microgravity, that can be exploited by the film industry. These conditions, difficult to simulate through digital and optical effects in terrestrial special-effects studios, offer some unique artistic and dramatic potentials. This market evaluation explored the concept of using an in-space facility for production of scenes for feature films or other venues. A transition of initial commercial methods of producing in-space footage (of space, Moon, or Earth) into more speculative options for actual space-based movie studios was examined. Actual space footage can be used in movies and television shows as background scenery or as a platform for generating special effects.

3.6.3.2 Study Approach

The market survey targeted several different segments of the film industry. A movie set and location company was contacted to determine its rate of usage and desirable characteristics for a location. Discussions with executives at major production houses provided insight into the potential industry interest in an orbiting facility. Statistical data on the film industry and costs of production from the California State Film Commission were used to establish comparative terrestrial and in-space business models, and these models were used to determine price thresholds where the in-space option for location shooting could be economically considered. Market analysis was conducted on both immediate need and future options.

3.6.3.3 Market Description

3.6.3.3.1 Space Application Description

The primary driver for the film production industry is the nature of the script, and the story presented in it. Consequently, having an orbiting production studio is useful only when a studio or a network has a project that could require this type of environment.

The current approach for any major production that requires a space environment scene (such as weightlessness) is to use very specialized digital and optical effects to simulate the visual image that could be obtained in a space environment. While this approach is expensive and time consuming, since a 3D definition in any computer package requires significant modeling and rendering effort, the quality and content of the image produced by these effects is exactly what the director wants to see in a particular scene in the script.

On the other hand, the fidelity of these images is not seamless, and there are significant unknowns in how to effectively model effects called for in the scripts. Furthermore, the thought of being physically able to send a crew to an orbiting facility sparked discussion of the possibility for special effects and artistic treatments not possible with current state-of-the-art methodologies or envisioned by current technicians and directors.

The majority of the filming and television activities in the U.S. entertainment industry consist of work performed by approximately 15 companies. They are the major film studios (e.g., Columbia, Warner, Disney), and major networks and cable companies (e.g., ABC, CBS, NBC, PBS, HBO). For any one of these organizations, there are roughly 30 to 40 projects in the production cycle and as many as 150 projects in the concept development phases. Besides these major companies, there are numerous independent production houses operating on a lesser scale, and additional companies that address the advertising, television, and feature film production segments of this market.

Internationally, there are a larger number of production houses and companies involved in this field. Three of the major U.S. production studios are foreign owned, and it is not unusual for foreign capital to be used to back a U.S. film project. India, for example, produces a larger number of feature films than the U.S., but with a much lower budget per picture. Other major production centers can be found in Europe and East Asia.

The orbiting studio, by itself, can capture the following needs of these projects:

a. Microgravity-based special effects.
b. Actual outer space footage.
c. Remote host station.
d. Remote location-studio hookup.

The best analogy for the orbiting studio is that of the terrestrial sound stage. These stages are equipped with standard utilities and interfaces, and used for many different types of productions over a year's time. Movies, artistic performances, commercials, or news broadcasts and interviews can be performed in the studio.

3.6.3.3.2 Market Evaluation

Two drivers were expressed for use of the space environment for production activities. The first was uniqueness, the ability to offer a product that would be distinguished by others in the market. The use of an in-space facility was seen as a potential selling point for a production. But this market advantage is transitory, as the goal of this overall project was to make space a regular part of business activity, and the "uniqueness" advantage can only be used on a few initial productions. Nevertheless, the image of "space activities" and its very cutting-edge impact prompted comments from industry contacts emphasizing the need to launch a public awareness program focusing on education, research, and entertainment to bolster space interest and enthusiasm.

The primary market need for in-space production is a function of a particular script and its scene requirements. For any given scene in a story, there are usually three or four different options that are given to the director (dependent upon the overall theme of the story and budgetary constraints). Based on our interviews, and on industry statistical data, the primary cost driver for any production is the labor cost (not just union-which there are over 130 separate unions-but the time involved to build and film scenes). To assess the market, we compared the cost for producing a movie scene in a remote location to producing it in an in-space facility.

3.6.3.3.3 Market Assessment

Since the scripts drive the market need, the cost of production is also a function of script scenes. The typical method is to use the bottoms-up approach to costing, based on scenes required to complete any project. Hence, the shooting location and set selections are directly related to scene requirements. On one hand this makes the cost drivers somewhat easy to identify, but on the other hand it is very inconsistent from project to project to attain any meaningful trends. For example, a people-oriented drama that relies on dialogue to tell its story and a special-effects filled science fiction theme may require the same number of scenes for both movies, but the cost of each scene may be drastically different.

The typical large production, however, spends a significant portion of its production costs on special effects or sets that exemplify the theme of the project. To date, the best estimate based on interviews have been that for a large production, anywhere from 20% to 35% of the total budget is spent on location-set and/or special-effects cost. For smaller budget productions we could not determine a meaningful trend for similar cost breakdowns. Within each major production house, as expected, some productions are given the lion's share of publicity and resources, as they are anticipated to earn a higher market return. As one might expect, for any given year, each studio has one or two (but most typically only one) "flagship" major project.

Based upon industry statistical data prepared for the California State Film Commission1 in 1987 a typical on-location production shooting costs about $32,500 per day in the Los Angeles area (but outside of a studio lot). In 1987, the last year for which there are good statistical data, an average of 40.3 companies were filming on the streets of the Los Angeles area during any day; about $1.3 million per day was spent. Note that this number does not include personnel transportation, or lodging costs, since these costs are not incurred by workers within a few miles of their home operating site.

Outside the Los Angeles area costs increase. Based upon the available statistical data and from industry contacts, we estimated that transportation costs for these remote locations can add up to over $15,000 per day to support remote location filming, or over $105,000/week. This is, of course, a statistical average number. Some films will have a higher budget, and some films will have a lower budget.

To account for the differences in budget in the market evaluation, a ROM market utility demand curve was generated, based upon the data points from available statistical data and on information from contacts within the film industry. The utility demand function models the market such that at $/day production costs equivalent to local location shots, the demand is 40 users per day. As the $/day production cost increases, the demand decreases, still matching the California Film Board data for outside of Los Angeles but within the state of California. This model also accounts for the few productions that are willing to pay a high price for shooting in a unique location.

The costs of film production also seem to be increasing with time. While the numbers are highly variable, it appears that costs per production are increasing at about a 4% annual rate (in constant dollars). The trend appears to be that budgets for the few "flagship" productions from each major production house are being allowed to draw increasing amounts of production cost, in the expectation that they will return significantly higher sales. Since no space-based production facility is expected until the mid-2000s (if then), the available budget for unique location production shooting has been increased to account for this.

Besides feature films, television and commercial work are also performed on location. Estimates of the size of this market vary, with most estimates around twice that of the feature film market. Statistical data on these markets are more difficult to find, but common characteristics seem to be that television productions are more numerous, but have a much lower budget for location shooting, whereas commercial production typically has a higher percentage budget for location shooting, and is willing to spend a higher amount of money per day, but spends a shorter period of time on location. In this market evaluation television and commercial production is treated identically to feature film production, except that the total market population is increased threefold.

The key variable is the number of scripts are available that could use such a facility. Even if the facility was very inexpensive to use, if no scripts required use of such an extraordinary environment, the facility would not be used. To allow for this, industry contacts were asked to estimate the number of productions in house that could use such a facility. The answers ranged from 2% to 10%, with the caveat that the number of scripts that could use such a "space-related" facility was highly dependent upon what the current wave of interest in type of production.

For example, in the early 1980s there was a wave of science-fiction-related movies that drove the 10% estimate. Current estimates ranged from 2% to 5%, with scripts on hand or projects currently in production. One contact stated, "If you get this expanded use of space, this will probably drive up public interest and awareness of space activities. Then we might expect a higher percentage." Other contacts suggested an increased focus on space and science education may potentially drive up this percentage. For this estimate, however, we used 2% as the low estimate of script suitability, 5% as the nominal, and 10% as the highest (lowest probability) estimate.

It must be noted that initial production of in-space footage is already under way. Shuttle missions often carry IMAX cameras to capture footage of shuttle operations and the space environment to be used in revenue-generating venues. Several persons contacted in the entertainment industry identified expansion of this existing market as a viable market option in the near term (considering timeframe and current launch costs), and recommended options that would permit studios to acquire actual footage of space, the solar system, Earth, the Moon, the Sun, and so forth. Cameras could be placed onto such locations as the shuttle manipulator arm and commercial or government satellites and space probes, and the taped or live transmissions sold. Several firms already sell such space-related films and videos, although this business has not been highly profitable. Broadcasting could be done from the space shuttle or a space station and transmitted to the studio for editing. Later, as the infrastructure is established, movie footage could be downlinked to the studio for near-real-time use. Real-time satellite connections present another option if the transmission resolution can be improved (e.g., high-definition TV).

3.6.3.3.4 Market Infrastructure

In the near term, this market can be entered to capture and expand the small market of in-space production that exists today. To capture the immediate need opportunities, a policy must be established to permit small (camera size, (50 lb) payloads to piggyback on primary space shuttle and satellite missions. Several comments were made that flying payloads on current manned systems, even as an experiment, was very expensive and difficult due to the strong requirements to "manned space rate" hardware. The requirements to space-qualify hardware must be relaxed enough so that the cost to manufacture and qualify filming equipment is not excessive while still ensuring the integrity of the primary payload. For example, the space station program might consider the addition of an external camera mounting to be controlled on a for-fee basis, or the resale of footage to commercial production houses.

Small experiments should be examined for the shuttle and other vehicles, during which the production companies could "experiment" to determine what optical effects or artistic effects would be feasible and desirable for future productions. These could be as simple as filming free-floating objects in the shuttle mid-deck with crew interactions, or having the astronauts perform gymnastic maneuvers in front of a blue-screen cloth for later editing into a different background. For the orbiting movie studio to develop into a space-based location, the key is that the business environment must be developed to permit civilian access to space with minimal to no training requirements, and to develop the interest and expertise to use the space environment in new ways on a routine basis.

In the longer term, if an on-orbit move facility is to be accomplished, there must be a supporting infrastructure to provide key location services. This market evaluation indicates there is not sufficient market revenue to justify a standalone facility, due to the added costs of supporting the facility as a free-flying entity. The required infrastructure is essentially identical to the space business park, which provides users of the space facility living quarters, and provides utility support services to the production facility itself.

It should be noted that high-quality digital data links between the orbital production facility and the ground were assumed. Rather than shooting film and editing it on the ground, or sending "rushes" of scenes shot during the previous day back to the studio on a daily basis, it is assumed that by the time this facility is operational (2005+), high-definition digital equipment will be available. This does place a requirement for two-way transmission of a large quantity of digital data, potentially up to several hundred million bits/second (depending on the cameras used and the number of scenes to be shot).

3.6.3.4 Prospective Users

The primary users of an orbiting movie studio were identified as (1) feature film production companies/studios, (2) television show production companies and major networks interested in "on-location" series (multiple shows), educational programming, or special shows, and (3) commercial producers. CSTS contacts included:

a. California State Film Commission, Patti S. Archuletta, Director.
b. CBS Television, John Kruer, Director - Advanced Technologies.
c. Columbia Pictures, John Butkovitch, Director - Marketing.
d. Real to Reel Incorporated (Location services brokerage), Scott Osberg, Chief Operation Officer.
e. Walt Disney Imagineering, Inc., Bran Ferren, Senior Vice President - Creative Technologies.
f. Warner Brothers, Ben Cowitt, Director - Future Productions.

3.6.3.5 CSTS Needs and Attributes

3.6.3.5.1 Transportation Characteristics

The primary transportation system function, after the market is established and an operational facility in place, is to accommodate the weekly traffic of passengers and production supplies. This annual traffic flow estimate assumes that the orbiting movie studio is occupied 52 weeks per year, yielding an estimate of about 650 Klb per year, in weekly flights. The transportation system must provide regular flights on a weekly basis, although some production crews may stay longer on orbit if the shooting schedules require it.

For customer acceptability, prospective customers must be able to reserve transportation services similar to a common or charter carrier. Reservation leadtime is estimated to be less than 3 months (driven by the need to produce footage in a typical production schedule). Schedule reliability of the transportation system must provide service within scheduled launches (and returns) within 1 day of the scheduled date. Production schedules, particularly with scheduled release or broadcast time, will not allow major slippage in the scheduled availability of the transportation system. Similarly, the system must be accessible by persons with little or no training (preferably none - they are "passengers," not "crew"). The system must be capable of carrying a mixed load of passengers and cargo (since the crew and cast must have their production equipment to be productive), and must be capable of rendezvousing, docking, and transferring these supplies to the orbital destination. Return payloads will also consist of a mixed load of passengers and cargo.

The initial launch of the studio may also impose a unique requirement on the launch infrastructure. The required facility is a large empty volume. If this is desired to be launched as a single unit, it may be a unique requirement on the transportation system. Further analysis should be done to establish the specific minimal requirements for this facility. For the purposes of this initial survey, it was assumed the 80,000 lb initial launch mass would accommodate such a facility, either assembled on orbit from modular sections, or as an inflatable system. The use of a surplus shuttle external fuel tank has also been suggested as this facility, although this would require some on-orbit construction to adapt and outfit the volume.

3.6.3.5.2 Transportation System Capabilities

Capabilities needed are for mixed cargoes of passengers and hardware in chunks of approximately 12,500 lb, launched at weekly intervals. Launch price to the user must be ($400 /lb to LEO. Transportation system must be capable of supporting weekly launches, with high schedule reliability. System safety must approach commercial air transportation reliability. System must be capable of delivering these mixed cargoes to an orbital destination in LEO, and transfer the passengers and their hardware to the orbital facility.

3.6.3.5.3 Ground Handling

The users of the space transportation system will not require special ground handling provisions. The space system will be booked and boarded in a manner as close to a commercial aircraft as possible. Standard cargo containers for pressurized cargo will be used for props, production equipment, and luggage.

3.6.3.5.4 User/Space Transportation Interfaces

The users of the space transportation system are passengers only. The space system will be chartered and boarded just as if it were a commercial aircraft.

3.6.3.5.5 Improvements Over Current

Significant improvements over current space transportation systems are required to support the future goal of an orbiting movie studio:
a. Launch costs at $400/lb or lower.
b. Launch on schedule (or on demand for charter flights), with high schedule reliability to ensure launch within the scheduled day.
c. Routine scheduled service, on at least a weekly basis for scheduled assess to the orbital facility.
d. Airline-like cargo and passenger handling.

3.6.3.6 Business Opportunities

3.6.3.6.1 Cost Sensitivities

To evaluate this market's potential, a ROM business venture model was created for a simple on-orbit "production studio." By analogy to terrestrial sound stages, the facility would be an empty volume, equipped with common utilities (power, ECLSS, communications), and capable of accepting "sets" to be outfitted for differing production needs. Such a common-usage facility could be used for movie production, from-space broadcast, artistic performances, or small-scale broadcast sporting events. This facility was assumed attached to an existing space facility, which would provide common housekeeping functions, such as power generation, thermal control, and attitude control, in exchange for a housekeeping fee. This would include living quarters and accommodations for those persons working in the orbital movie production facility. These infrastructure needs will be discussed in a later section.

To examine the feasibility of this concept it was necessary to construct a ROM business model. While this model is preliminary, it indicates some of the sensitivities involved in such a venture. For initial ROM estimates, it was assumed this facility could be economically viable at a 20% IRR, after 15 years from start of the program. A 3-year build cycle was assumed. For a conservative assumption, about 80,000 lb for initial launch mass was included (about that of a shuttle external fuel tank), and a variable cost of production was assumed. (Baseline was $150 million, based upon ROM parametric data for large simple on-orbit pressure vessels).

It was assumed the operator of the on-orbit facility would construct and launch the facility, selling off time at the facility in 1-week intervals. The operator would charge a flat $/week operating cost, which would be the cost to the user. Operating cost on orbit had three major components: transportation cost of the user to the facility (including people and cargo), support costs charged by the attached facility (assumed to be the "space business park" described elsewhere), and recurring maintenance costs of the facility (estimated as an annual percentage of the initial facility cost, per year).

It was assumed that a crew of eight persons (including performers) would use the facility. Each person was estimated at 250 lb each, with an additional allowance of 100 lb/person per day (for costumes, luggage, and other needs). Production equipment was estimated at 1000 lb, with another 4000 lb of props. This yields a ROM estimate of about 12,500 lb per usage of 1 week. Logistics support (food, water, ECLSS needs) are included in the support facility costs (the "space business park") and are included in its cost estimates. To account for these, a weekly support charge is assessed upon the production facility, as stated previously.

Financing costs were assumed at 8%, taxes at 35%, and a 7-year depreciation was assumed for the on-orbit facility. The facility was assumed 100% debt-financed. Initial launch was assumed at the start of year 4, with operations commencing very shortly thereafter.

Figure 3.6.3.6-1 indicates the threshold costs at which this venture reached 20% IRR, assuming a low-nominal-high annual percentage of movie scripts with space or futuristic themes, or special-effects requirements that could use such a facility.

Low Market EstimateNominal (Medium) Market EstimateHigh Market Estimate
2% script suitability5% script suitability10% script suitability
$1/lb transportation cost$ 36/lb transportation cost$ 60/lb transportation cost

Figure 3.6.3.6-1. Space Movie Production Facility Threshold Costs

Using the medium model as illustrated,
Figure 3.6.3.6-2 shows the sensitivity of these results to the initial facility cost. This assumed that a 20% IRR was maintained on the ventures, in the nominal (medium-probability) case.

Figure 3.6.3.6-2. Transportation Cost Sensitivity to Initial Facility Cost

Figure 3.6.3.6-3 below indicates the sensitivity of these results to the required support costs to the orbital facility (the "space business park") to which this facility is attached. Again, a 20% IRR was assumed maintained, in the nominal probability case.

Figure 3.6.3.6-3. Transportation Cost Sensitivity to Weekly Orbital Support Fee

Competing technologies for the area may challenge this business opportunity if transportation and production costs are not reduced to the lowest feasible level. The limitation of current digital and optical effects is primarily driven by the high costs for near-realistic special effects. While special-effect generation is labor intensive it is not impossible with today's computer rendering and animation technologies. At current space transportation prices, the market will continue unchanged (with IMAX-type productions from shuttle cameras). With price reduced to $600/lb, we do not anticipate major expansion but continued growth of the space filming from satellites, shuttle, or space stations.

Growth in the current markets will be driven by increased need for production footage in current type of productions. At the high-probability assessment (Fig. 3.6.3.6-4), this will not increase from the current level of about 1,000 lb per year at current costs. At low probability (highest market estimate), this demand will increase at least as the underlying industry production dollars increase for purchase of footage (4% per year). For a nominal growth rate, a 2% annual growth rate is assumed.


High ProbabilityMedium ProbabilityLow Probability
Klb/yr @ $5,000/lb11.21
Klb/yr @ $600/lb11.21.5
Klb/yr @ $400/lb1 650 650
Klb/yr @ $100/lb1 650 650

Figure 3.6.3.6-4. Orbiting Movie Studio Annual Klb/orbit Demand per Cost Option

3.6.3.6.2 Programmatics Annual revenue generation is possible based on two to four 250-lb payloads per year at current transportation prices. Growth in the market is limited until transportation prices drop to $400/lb and under, and the orbiting movie studio is operational within the multifunctional facility. That timeframe is assumed to be 2008 to 2010, at the earliest.
Figure 3.6.3.6-5 illustrated the revenue jump associated with this threshold transportation cost. Revenues will remain steady until the facility demand necessitates another studio.


Figure 3.6.3.6-5. Orbiting Movie Studio Market Area Time-Phased Revenue-Generation Assessment

3.6.3.7 Conclusions and Recommendations

Market demand for in-space production of movie and video footage is a very small market at current transportation costs. The market for a standalone facility is not feasible at current costs of equipment and transportation. However, if transportation costs can be reduced to well less than $400/lb, and probably into the $100/lb range, such a facility might be considered in conjunction with other orbital business activities. In that range of costs, it appears from ROM estimates that a facility could provide a sufficient return to be justified as an additional module as part of a commercial space facility. Such a facility however, is highly dependent upon the market demand from suitable scripts and production needs, which will be dependent upon specific future market conditions.

3.6.4 Space Athletic Events

3.6.4.1 Introduction

In initial brainstorming sessions, use of the space environment as the venues for a major broadcast sporting event was identified. Taking off on the big sporting event markets-Super Bowl, pay-for-view boxing, wrestling championships, and so forth-the space athletic event market area was conceived. This concept involves space-based sporting competitions with revenues generated primarily from selling advertising time for such an event.

3.6.4.2 Study Approach

This analysis is primarily driven by the costs and revenues associated with the broadcast of a major spectator sport market. A market capture (worldwide interest was determined to be the needed "target audience") and return on investment study was performed to establish a threshold price that would stimulate commercial interest and ensure competition for broadcast rights. Two different types of events were examined: a single annual "championship" event, and a periodic "series" event.

3.6.4.3 Market Description

3.6.4.3.1 Space Application Description

A space athletic event facility would support a wide variety of athletic events that incorporate the unique characteristics of microgravity. Sports and games could be devised and competitions would be held on a periodic basis. These events could become household words on Earth very quickly. This phenomenon has already been amply demonstrated by television shows such as American Gladiators and certain Japanese game shows. Athletic events can attract significant market interest, as represented by high corporate sponsorship of broadcast sporting events and by the ability of sporting events to maintain steady ratings in the broadcast markets.

It should be noted that the high ratings of these events are also driven by a large amount of nonevent advertising and consistent image development. For example, many athletic events have a strong local advertising presence (such as through local sports bars, store displays, and related promotional items). These support advertising campaigns would presumably be used in conjunction with an in-space event, but their costs (as with terrestrial events) are not included in the cost projections for the event producer.

For conservatism, revenues from corporate sponsorship fees, subsidiary rights, rebroadcast rights, and spinoff merchandise rights are not included in revenue projections. It should be noted that the sales of these rights may be substantial, and in the millions of dollars per year. For example, professional baseball, the most successful league in selling merchandise licenses, generated $1.5 billion in licensed merchandise sales in 1990, and the NHL achieved $800 million in 1993 in licensed merchandise sales (Source: Wall Street Journal, 14 January 1994).

In the single annual "championship event," the market area concept is similar to the game show format; participation in the space athletic event would be determined by a periodic nationwide (or even worldwide) competition.

Those aspiring to participate in microgravity games would have to prevail in their respective regional meets. The promotional aspects of this ongoing competition would represent significant value to event sponsors and advertisers.

High-visibility professional teams can be organized into regional leagues that participate in space-based competitions (alone or to augment ground-based competitions). The potential market share for such championship events can be quite large. In the recurring series event, a weekly or periodic set of in-space competitions is broadcast, building up to the annual championship. This has the advantage of increasing public awareness through exposure, but the revenues per show average out to a lower value.

3.6.4.3.2 Market Evaluation

As in any spectator sporting event, the promotional aspects of the "microgravity games" competition would probably eclipse the actual nature or relevancy of the competition. The implication of this is that the revenue derived from advertising and promotions would represent a reliable revenue stream, as long as public attention and interest could be maintained. This is what makes the ongoing televised competitions to determine the contestants so important.

On the other hand, by having the games on an infrequent basis, their mystique could be maintained indefinitely, similarly to the Olympic Games. This would also enable the space used to conduct the games to serve other purposes at other times. In this way the same facility could be used for athletic events, theme park uses, and short-term medical uses, such as rehabilitation and therapy (multifunctional venue).

For the purposes of market evaluation, the U.S. market only is examined, with potential expansion into international markets. For the single championship event as a ROM estimate, a market draw equivalent to the Super Bowl is assumed. The Super Bowl share of the U.S. television audience has ranged from 42.4% (1975) to 49.1% (1982), with the 1993 Super Bowl attaining a 45.1% market share. The advertising revenues for this large-draw spectator event are sold in 30-second units of advertising time, with a unit for the 1994 Super Bowl selling for $900,000 (Source: Wall Street Journal, 11 Jan 1994).

Past Super Bowls have sold equivalent units for $750,000 to $800,000. For this market evaluation a market share of 40% is assumed, with advertising revenues at $800,000 to $900,000 per unit. For a weekly series broadcast event, the rating and revenues are much less. The best 1993 periodic sporting event was NFL Monday Night Football, which achieved a 16.7% market share in 1993 (Source: Neilsen Media Research). Other weekly scheduled networks series events, such as prime-time series have typical market ratings of 10% to 20% of TV households. Syndicated shows are lower, typically in the 6% to 13% range.

The revenues for these shows varied, depending upon the market penetration addressed. National advertising rates can run $100,000 to $250,000 per 30-second advertising time unit. For this market evaluation, a market share of 6% to 8% is assumed achievable, with national advertising rates of $100,000 to $150,000 per unit.

3.6.4.3.3 Market Assessment

To evaluate this market's potential, a ROM business venture model was created . By analogy to terrestrial events, a facility is needed on orbit. The required in-space sporting facility would consist primarily of an empty volume, sized to allow movement of persons through it, and equipped with common utilities (power, ECLSS, communications). It is most likely that this "sporting arena" would be capable of accepting "sets" to be outfitted for differing sporting needs, such that the challenges could be varied over the course of a competition, or to allow the use for different event production needs. This facility has much similarity to production, from-space broadcast, artistic performances, or small-scale broadcast sporting events.

This facility was assumed attached to an existing space facility, which would provide common housekeeping functions, such as power generation, thermal control, and attitude control in exchange for a housekeeping fee. This would include living quarters and accommodations for those persons working in the orbital movie production facility. These infrastructure needs will be discussed in a later section.

To examine the feasibility of this concept, it was necessary to construct a ROM business model. While this model is preliminary, it indicates some of the sensitivities involved in such a venture.

For initial ROM estimates, it was assumed this facility could be economically viable at a 20% IRR, after 10 years of operations. A 3-year build cycle was assumed. For a conservative assumption, about 80,000 lb for initial launch mass was included (about that of a shuttle external fuel tank), and a variable cost of production was assumed. (Baseline was $ 150 million, based upon ROM parametric data for large simple on-orbit pressure vessels).

It was assumed the operator of the on-orbit facility would construct and launch the facility, selling off time at the facility in 1-week intervals. The operator would charge a flat $/week operating cost, which would be the cost to the user. Operating cost on orbit had three major components: transportation cost of the user to the facility (including people and cargo), support costs charged by the attached facility (assumed to be the "space business park" described elsewhere), and recurring maintenance costs of the facility (estimated as an annual percentage of the initial facility cost, per year).

It was assumed that a crew of 12 persons would be transported to the facility for this event (2 production crew-camera and audio), plus 10 competitors (two teams of 5, or two teams of 4 plus 2 referees/prop handlers). Tradeoffs between participants and crew can be performed, with 1 week on orbit. Each person was estimated at 250 lb with an additional allowance of 100 lb per person per day. Production equipment was estimated at 1,000 lb, with another 4,000 lb of props. This yields a ROM estimate of about 16,400 lb per usage of 1 week. Logistics support (food, water, ECLSS needs) is included in the support facility costs (the "space business park") and is included in its cost estimates. To account for these, a weekly support charge is assessed upon the production facility, as stated previously.

Financing costs were assumed at 8% and taxes at 35%, and a 7-year depreciation was assumed for the on-orbit facility. The facility was assumed 100% debt-financed. Initial launch was assumed at the start of year 4, with operations commencing very shortly thereafter.

Revenue estimates assumed 12 minutes of advertising time to be sold per hour, during a 2-hour broadcast. Additional advertising time could be sold as a pregame or postgame show, but these revenues were not included. Basic revenues were assumed to approximate Super Bowl market revenues, at the 1994 Super Bowl unit rates. This is a conservative assumption, since these unit rates have been rising more than 10% per year in real dollars. For a facility in the 2005+ time period, this would indicate a potential revenue rate of greater than $2,000,000 per unit.

To establish a range of probability on these market estimates, it was assumed that one event could be obtained per year in the highest probability/low market estimate. Two events (e.g., the United States and either Europe or the Far East) for the nominal market estimate, and four events in the low-probability/high-market estimate (e.g., the United States, Japan, Europe, and one other event). Since the total addressed populations are still significant market areas, the advertising unit revenues were kept constant, although the sensitivities of the results were tested to this assumption. Figure 3.6.4.3-1 indicates the threshold costs at which this venture reached 20% IRR.


Low Market EstimateNominal (Medium) Market EstimateHigh Market Estimate
1 event/year2 events/year4 events/year
$0/lb (it was not possible to obtain 20% IRR, with a maximum of 18% at $0/lb)$806/lb transportation cost$1536/lb transportation cost

Figure 3.6.4.3-1. Space Athletic Event Facility Threshold Costs for "Championship" Type Event

A similar estimate was made for a recurring series-type sporting event. For this venture, it was assumed that the same number of persons would be required, except that the produced event would only be 1 hour in length. The revenue rate for this show was assessed as substantially less, assumed at $125,000 per unit, for a 13-week series.

To establish a range of probability on these market estimates, it was assumed that one series could be established in the highest probability/low-market estimate. Two 13-week events were assessed in the medium-probability/nominal-market estimate, and four events in the low-probability/high-market estimate. (e.g., the US, Japan, Europe, and one other event). Since the total addressed populations are still significant market areas, the advertising unit revenues were kept constant, although the sensitivities of the results were tested to this assumption. Figure 3.6.4.3-2 indicates the threshold costs at which this venture reached 20% IRR.

Low Market EstimateNominal (Medium) Market EstimateHigh Market Estimate
1 series per year (13 weeks usage) 2 series per year (26 weeks usage) 4 series events per year (52 weeks usage)
$0/lb (it was not possible to obtain 20% IRR, with a maximum of 16% at $0/lb)$71/lb transportation cost$126/lb transportation cost

Figure 3.6.4.3-2. Space Athletic Event Facility Threshold Costs for "Series" Type Event

3.6.4.3.4 Market Infrastructure

This market requires routine access to space and the ability to cost effectively build and launch an in-space facility suitable for broadcast sporting events. Outside of these needs, the largest lack in the market infrastructure is a lack of the awareness and expertise of what type of in-space sporting events are possible or visually attractive to a broadcast audience. This includes the technical aspects of how to capture the event on camera, the types of props or equipment necessary, or even the types of moves or structure of the competition.

There are a few possible initial early experiments which can be taken in this area. On Skylab gymnastics demonstrations and some simple 0g tumbling demonstrations were made. Potentially, spacelab or space station could be used to demonstrate and develop some techniques for initial market penetration. However, it is likely a realistic venture is impossible until the advent of the commercially-oriented "space business park" described elsewhere in this report.

In the longer term, if an on-orbit sporting facility is to be accomplished, there must be a supporting infrastructure on the ground, including marketing, and merchandising to drive up market interest to obtain the favorable advertising rates needed for the market feasibility. And it should be noted that this ground-side of the marketing and promotion could provide substantial additional revenues through licensed merchandising and associated terrestrial promotions. It is possible that these terrestrial tie-in products may be sufficient to turn a marketing direct-advertising revenue product into a viable market venture.

As with the space move production facility, it should be noted that it is assumed that high-quality digital datalinks are provided between the orbital facility and the ground. The ability to transmit high-quality signals and produce an attractive and interesting competition will be a key driver in providing for the maximum audience. It is assumed that by the time this facility is operational (2005+), high-definition digital equipment will be available. This does place a requirement for two-way transmission of a large quantity of digital data, potentially of up to several hundred million bits/second (depending on the cameras used and the production of the event).

3.6.4.4 Prospective Users

The users of such an orbital facility will be found within the professional sports interest (existing and to be developed) community: promoters, advertisers, participants, and spectators, potentially in the gaming industry. CSTS contacts included:

a. CBS Television, John Kruer, Director - Advanced Technologies.
b. Walt Disney Imagineering, Inc., Bran Ferren, Senior Vice President - Creative Technologies.
c. Warner Brothers, Ben Cowitt, Director - Future Productions.
d. Space Marketing, Inc., Mike Lawson, CEO.

3.6.4.5 CSTS Needs and Attributes

3.6.4.5.1 Transportation Characteristics

There are two key characteristics required for space transportation systems to support the space athletic event market area: reduced space transportation prices, and routine, scheduled use of the transportation system. The system is required to transport mixed cargoes of people and hardware, to support the in-space activities.

Flight frequency can vary, depending upon the mix of high-visibility "championship" type events versus lower revenue "series" type competitions, but it may be necessary to offer scheduled services as often as every week. The schedule reliability needs to be high; for customer needs, the system must be able to offer highly schedule-reliable transport. Because the major revenues from any event are related to broadcasting rights (for promotional value), the reliability and availability of the transportation element cannot cause a delay or rescheduling of the event.

3.6.4.5.2 Transportation System Capabilities

The space transportation system must carry combination passenger/cargo payloads, totaling approximately 20 Klb, to and from LEO. The transportation system must rendezvous and dock with the space athletic event facility or with a generic docking module at the multifunctional facility. The space athletic event market has the potential to grow to necessitate routine access to space on a monthly or weekly basis.

3.6.4.5.3 Ground Handling

Small payload loading is required for equipment, props, and support logistics, presumably through standard cargo modules. Standard shipping containers will be used to eliminate special integration. Passenger boarding accommodations similar to commercial aircraft must be provided.

3.6.4.5.4 User/Space Transportation Interfaces

The users of the space transportation system need to interface with the space transportation system as close to use of a commercial aircraft as possible. The interfaces will require passenger use and the transport of simple pressurized hardware. The space transportation system must also provide the capability for pressurized payload transfer at an in-space facility, including docking and rendezvous to the facility.

3.6.4.5.5 Improvements Over Current

The space athletic event market is highly sensitive to total production net value. Commercial investment interest will be dependent upon broadcast-rights revenue-generation potential less production costs. The space transportation element represents a significant contributor to total production cost. To create a viable commercial space athletic event interest within market thresholds, the following improvements to the current space transportation systems are necessary:

a. Reduced transportation price (to the vicinity of $500/lb and preferably to $100/lb or less).
b. Improved system availability and reliability.
c. Near-airline-type cargo and passenger handling.

3.6.4.6 Business Opportunities

3.6.4.6.1 Cost Sensitivities

Using the medium model as an illustration,
Figures 3.6.4.6-1 and -2 show the sensitivity of these results to the initial facility cost. This assumed that a 20% IRR was maintained on the ventures, in the nominal (medium-probability) case.

Figure 3.6.4.6-1. Sensitivity of Initial Facility Cost to $/lb, 20% IRR


Figure 3.6.4.6-2. Sensitivity of Initial Facility Cost to $/lb, 20% IRR

Figures 3.6.4.6-3 and -4, below, indicate the sensitivity of these results to the advertising revenues per hour assumption in the two cases. Again, a 20% IRR was assumed maintained, in the nominal probability case.

Figure 3.6.4.6-3. Sensitivity to Hourly Advertising Revenues


Figure 3.6.4.6-4. Sensitivity to Hourly Advertising Revenues

The primary competition in this market is from terrestrial sporting markets, and the primary risk from a market standpoint, is that this market area requires the development of a new type of sporting activity, with sufficient public interest to capture the viewing audience needed for the market revenues. While the market risk from the former cannot be accounted for, the later market risk is accounted for in this case by assuming low market revenues consistent with low-end national sporting events, and by not including the sale of subsidiary rights and not including potential nonspace revenues such as licensed merchandise. At the high-probability assessment, growth in this addressed market is not assumed to occur.

For growth numbers in spectator sports, the driving factor is the growth in advertising dollars available to fund advertising revenues(Fig. 3.6.4.6-5). Advertising expenditures increased (after inflation) about 1.5% in the period from 1991-92-(Source: Advertising Age Magazine). This trend is expected to continue. The market for broadcast spectator sports, for major events, remained approximately constant (Nielsen rating of 16.7% in 1992-93 versus 16.6% in 1991-92-but a change in number of audience of 0.9%, or about 849,000 more viewer-for a total increase of about 1.5% in the viewing audience. This would indicate a reasonable estimate that the advertising dollars remain constant for the market addressed and would grow at least as fast as the U.S. population growth (1% per year average from 1980-90).


ModelGrowth Rate
LowConstant-0% per year
NominalAs population-1% per year
High (optimistic)As market -1.5% per year

Figure 3.6.4.6-5. Advertising Dollars Available (Grows as Population)

Development and growth of the space athletic event concept (Fig. 3.6.4.6-6) is highly sensitive to transportation price, as well as the ability to provide simple, routine access to space.
High ProbabilityMedium ProbabilityLow Probability
Klb/yr @ $5,000/lb000
Klb/yr @ $500/lb02080
Klb/yr @ $100/lb05201040

Figure 3.6.4.6-6. Space Athletic Events Annual Klb/Orbit Demand per Cost Option

3.6.4.6.2 Programmatics

This market area is programmatically dependent upon both a new space transportation system capable of providing the routine, low-cost space transportation required for recurring operations, and also upon the existence of an in-space facility capable of providing the routine housekeeping utilities to the "sporting arena." (For a concept of this in-space support facility, see the "space business park" material,
Sec. 3.7.7). It is anticipated that the market could begin to arise in the nominal market case, in the 2008-2010 time period when both the facility and transportation system might become available. Growth in this market is possible, when either the market demographics have driven up a sufficient level of demand at then-current revenues and prices, or when new-generation systems could provide additional cost savings, and improve the cost numbers involved in this potential activity.

3.6.4.7 Conclusions and Recommendations

There is a potential for some initial market experiments in this area, using shuttle and space station activities to gauge public interest and acceptability for such a venture. In particular, in-space experimentation is required to establish which events are feasible and attractive to broadcast, and to establish the key techniques of broadcasting the event. The space athletic event should continue to be included as part of a total entertainment venue, but the key market challenge will be to develop a game that captures public interest enough that the broadcast rights are worth a significant price. That will require some on-orbit experience.

3.6.5 Artificial Space Phenomena

3.6.5.1 Introduction

Humans have always been fascinated by shooting stars as objects of mystery and beauty. The Earth's upper atmosphere can provide a backdrop for spectacular shows reaching large, regional, and potentially global audiences. Just imagine a light show from space being watched by millions to celebrate a spectacle event, a presidential inauguration, or a national holiday.

3.6.5.2 Study Approach

The artificial space phenomena market area was approached from two parallel paths. Consideration was given to defining what an "artificial space phenomenaon" may be and how to create one while simultaneously determining which market areas may benefit from this available capability. The market assessment process involved:

a. Brainstorming possible technical space productions/phenomena.
b. Identifying technical challenges or environmental issues.
c. Determining potential customers and assessing how much they currently pay for similar products.
d. Performing rough order of magnitude market assessments based on comparable terrestrial displays and shows.

3.6.5.3 Market Description

3.6.5.3.1 Space Application Description

There are unique features associated with the upper atmosphere and space environment that could be used to create interesting visual effects. Human sensory stimulation phenomena are an important entertainment medium; witness the popularity of fireworks, laser light shows, and water fountains. Significant international and regional events have been highlighted by major outdoors displays, visible over a wide area. Dynamic and transient, these displays invoke positive emotions and pleasurable feelings. Artificial space phenomena would create new and wondrous visual stimuli to be viewed from the ground with the unaided eye. Many of the concepts explored in this study are imitations of natural events, such as a meteor shower, that humans have been observing, enjoying, and worshipping for thousands of years. Indirectly, these experiences would enhance the perception of space in the public's eye.

In the same manner that civic organizations and/or promoters sponsor or commission displays (e.g. Fourth of July fireworks, inaugurations, victory parades), the market vision would be that similar sponsors would opt to buy the services of a company specializing in artificial space phenomena.

Several types of phenomena are envisioned; many others are likely as creative minds look to space as their "canvas." They include:

a. Artificial meteor shower-These are events in which, at a precise time, a bright and colorful series of meteors streaks over the heads of the audience. Brainstorming sessions suggest that modern reentry technology can produce multiple colors and shapes for these objects.
b. Artificial space clouds-Analogous to skywriting, colored "clouds" of low-density gas and/or particles would be dispersed in a very low orbit. Similar clouds have been generated using barium and other materials released in the upper atmosphere for scientific study. NASA and the USAF have launched the CRRES satellite specifically to perform these releases, and numerous sounding rocket launches have provided shorter lived equivalent phenomena.
c. Synthetic auroras-These are the recreation of one of nature's most awesome spectacles, the aurora borealis and australis, created when energetic solar particles interact with the Earth's magnetic field.
e. Reflecting structures-The reflected light of an orbiting object has been watched by humans since the beginning of the space age. A simple display billboard concept was presented to the Atlanta Olympics Committee to be considered as a display for the opening or closing ceremonies for the Atlanta Olympics in 1996.
f. Luminous points-Similar in concept to the reflecting structure, only potentially brighter and more colorful, luminous points would be created by controlled combustion. Similar effects have been demonstrated with near-sunset launches of missiles and launch vehicles over the Pacific from VAFB on the California coast. The launch trails and separation products are widely reported when visible over a region ranging from Monterey in the north, to San Diego in the south, and as far east as Las Vegas.
The anticipated phenomena should be spectacular; like fireworks, they should continue to be interesting to people beyond their initial exposure. Phenomena producers must be creative with new innovative ideas to prevent the novelty from wearing off quickly. The production must be competitive with terrestrial displays in terms of price per event per person viewing it, and for duration of display.

It was also identified that concurrent terrestrial publicity and/or advertising of the event would probably also be required. This publicity would induce the potential viewing audience to set outside and look at the event-increasing the market size for the product. This type of concurrent supporting advertising is not uncommon for large regional fireworks or other outdoor displays, usually performed for a promotional tie-in by a firm interested in increased advertising exposure.

3.6.5.3.2 Market Evaluation

The desire for unique and grandiose attention getters will drive this market area. The existing market is not expected to grow substantially and may potentially decrease; the fireworks industry has shrunk since the personal use of fireworks has been restricted and even outlawed in many communities. An artificial space phenomena market would have to capture a large enough share of the existing market base to warrant its technical development.

Furthermore, the wide area affected by the viewing of the space phenomena occurring at relatively high altitudes (400,000 feet and above) compared to terrestrial shows, may also increase complaints and complicate the process of obtaining the necessary permits and easements to perform such space-based phenomena.

3.6.5.3.3 Market Assessment

One event per year is estimated to fall into a category that may be accompanied by a spectacular show, party, or celebration. The market competition in the "artificial space phenomena" arena will come from comparable terrestrial-based displays. The prices of terrestrial displays were analyzed to determine the threshold for a space-based display. Fireworks shows, for example, cost local communities between $20,000 and $100,000 per event. Larger communities (such as major cities) have spent much more money on major celebrations (such as the reopening of the refurbished Statue of Liberty, or the bicentennial of the French Revolution in Paris).

Some communities recover a significant portion of the cost through admission fees and sponsorships. Special effects during major concerts are estimated in the $100,000 to $200,000 price range based on a percent of gross revenues. The sponsors of such events typically do not recoup their investment directly, since the total audience cannot be contained, as any space/skyline display will be visible to a large number of people outside of the target audience. However, this cost of the major display must be substantially less than the gross revenues from one concert or public event.

Assuming a 500-lb system to provide the phenomena to a localized region and transportation at $100/lb, the minimum price is already at $50,000. Once the price of the system itself (satellite structure, chemicals, etc.) is added to the transportation element, a total phenomena price approximately that of a terrestrial system is highly unlikely.

Based upon the few similar events in recent history, there is the possibility of significant negative public perception of this type of display if done on a regular basis. In 1992, when a space-based advertising sign was proposed, several public interest groups began a campaign to prohibit them, based upon "the public's right to an empty sky." In specific the in-space display was claimed to "hamper Earth-based astronomy, add to the growing pollution of the night sky by light and even infringe on everyone's enjoyment of nature's sunsets" (American Astronomical Society policy statement, May 1993). This objection culminated in international protests over the effect of the proposed sign on astronomical observations and a proposed "Space Advertising Prohibition Act," brought forward to the U.S. Congress by Sen. James Jeffords (Republican, Vermont) and Rep. Ed Markey (Democrat, Massachusetts).

A major spectacle display, visible over a wide area, might also generate such protests. If such activities were scheduled on a frequent basis, this would probably happen.

3.6.5.3.4 Market Infrastructure

The artificial space phenomena market area will emerge only after extensive environmental studies are conducted that will determine the effect of space emissions, consequences of added space debris, and obstruction of astronomer views. Additionally, this market area will require development of a policy on space advertising and establishment of regulatory/monitoring procedures.

As most of the phenomena envisioned involve expenditure of matter and/or the sacrificial use of hardware, reliable, periodic launches are required to maintain the capability; low transportation prices are essential to the affordability of displays. Similarly, the orbits into which the display phenomena-generating hardware is placed (beam generators, reentry objects, or large reflectors) must be tailored to provide the specific display over the desired region and the desired time. First-pass analysis indicates the generation of such displays will not allow the reuse of significant hardware nor the placement of simple general-purpose support platforms into orbit. Most probably, a dedicated launch or "sortie" mission will be required for each display.

3.6.5.4 Prospective Users

Potential users of an artificial space phenomenon were identified as local municipalities and special-events producers for such activities as presidential inaugurations, coronations, and spectacle events. Artificial space phenomena could be used during Olympic opening ceremonies to tie the "world" together as the world games begin. Contacts were made with:

a. Space Marketing, Inc., Michael Lawson.
b. Atlanta Committee on Olympic Games, Neela Garcia, Public Relations.
c. City of Huntington Beach, California, Special Events Coordinator.
d. City of Placentia, California, Steve Pishel, Recreation Department.

3.6.5.5 CSTS Needs and Attributes

3.6.5.5.1 Transportation System Characteristics

This market segment requires a CSTS that is low in cost, reliable, and available. An orbital system with dormancy freatures and a reliable "wake-up" in space capability may be required. The market is directly tied to a scheduled special event or celebration. CSTS must be able to deliver the "phenomena" on schedule in order to capture or maintain any potential market.

The artificial space phenomena market area requires launch prices significantly lower than $100/lb.

3.6.5.6 Business Opportunities

The amounts spent on terrestrial displays such as Fourth of July fireworks are so low that an artificial space phenomena market could not easily be identified at any price. The most optimistic estimate at a price per pound to orbit of $100 or less was 5,000 lb/year market.

3.6.5.7 Conclusions and Recommendations

Defocus the artificial space phenomena market area, since no user base could be identified at any price.

3.6.6 Space Theme Park

3.6.6.1 Introduction

The space theme park market area was originally conceived as a mass market using an in-space facility to provide entertainment. As the market area was further examined, it evolved into integrated ground and space-based destinations, including attractions with a space theme for the purpose of education and entertainment. Part of this assessment identified a market opportunity to take advantage of immediate opportunities to establish ground-based capability with a transition into a space-based entertainment center. In the near term, a space adventure can be created on the ground in the form of a synthetic environment via telepresence and virtual reality techniques. This market opportunity can provide a near-term introduction into the future market for on-orbit theme parks with unique rides and attractions that provide entertainment and accommodations for space tourists.

3.6.6.2 Study Approach

The space theme park interviews investigated a spectrum of entertainment options. The following steps were taken to assess the market area:
a. Brainstormed to discover market opportunities and concepts.
b. Explored candidate immediate needs and future market opportunities.
c. Brainstormed with industry decision-makers to assess interest in the proposed market and to obtain comments and suggestions.
d. Gathered theme park attendance and hotel occupancy rates.
e. Obtained information on theme park and resort hotel investment costs for initial development and expansion options (new attractions, increased capacity).
f. Established the limits on prices to consumers, as defined by ground-based systems.
g. Identified market enablers and potential showstoppers.
h. Analyzed transportation market potential and growth rate.

3.6.6.3 Market Description

3.6.6.3.1 Space Application Description

As part of an integrated development strategy, a space theme park market area could be incrementally developed by starting with networked simulation activities at earthbound parks, in conjunction with small orbital assets. Initial capability can be provided with simple telepresence capability flown aboard the shuttle or on the space station, or with the use of a small satellite left on orbit to provide real-time video output. The opportunity to provide users with a visual experience associated with ascent or deorbit, or even a self-guided "look down from orbit," is intriguing enough that it has attracted market attention from developers of ground-based interactive attractions.

Through the use of this initial, near-term market, more and more functionality could be added. Brainstorming with potential users has identified the desire to include other data coming from the platform, to control the direction of viewing, or to allow simple interaction with surrounding objects in the space environment ("telepresence" or simple "teleoperation"). In the long term, this could lead to the development of dedicated small satellites that would maneuver or pursue each other under the control of earthbound users. Note that a substantial worldwide market can be developed up to this point, without requiring the costly and risky launch of tourists into space.

Based upon market evaluation and contacts with potential users, it is highly unlikely that an in-space theme park serving a market of space tourists can be justified within the next several decades. The ground-based option examined further in this analysis has the advantage of providing a nearer-term market, and generates near-term cash flows with near-term technology.

3.6.6.3.2 Market Evaluation

The ultimate driver for the space theme park market is people's desire to spend time in space. The attraction of being able to go to space (via telepresence or in person) appears to be sufficiently large to justify further refinement of this market. A recent public opinion poll conducted by Yankelovich Partners, during April and May 1993, indicates strong support for the current civillian space program (76% agreement) and for expanding human presence in space (57% agreement).2 As discussed in the space tourism section of this report, personal travel to space may attract a reasonable market demand, if costs of space transportation are sufficiently low and an in-space destination is provided. But this market is assessed as not large enough in the next several decades to justify a new in-space destination resort.

Meanwhile, terrestrial analogies for an in-space experience have appeared. Video arcades, including very sophisticated simulation systems, have increasing popularity and are introducing new technology simulators that allow personal interactions and high-fidelity simulations of travels through new environments. Virtual reality technologies are emerging from the entertainment industry. Entertainment centers that offer an interactive artificial experience are quickly opening up in the United States and Japan. One developer is projecting opening 50 locations over the next 5 years in Japan alone (ref. Daily Variety, "Disney's Virtual World puts new spin on VR," Matt Rothman, 15 July 1993). These attractions combine an amusement park ride with a video game, story line, and interactive computer-generated environments.

Two distinct examples of current theme park attractions are passive and interactive cases. Universal Studios Tours' "Back to the Future" ride is a passive experience. This ride takes the adventurer through the "future"; actual film footage and computer graphics provide the visual stimulation and a hydraulic platform provides the sensations of motion. The passenger does not interact with the surrounding simulated environment, but is driven through the ride. In contrast, Virtual World Entertainment, Inc., has embarked on emerging interactive gaming centers. Visitors can immerse themselves in an interactive computer-generated battle with fellow visitors or they can fly over the valleys and craters of another planet. This offers intensive interaction with the simulated environment and other players.

A recent market assessment by 4th Wave (VR consulting company) President John Latta, predicts that "the Virtual Reality industry will grow from $110 million in 1993 to $504 million worldwide by 1997." However, the exact level of public interest and the amount of premium prices that users will pay are still being debated within the industry. Based upon the success of the few "virtual theme parks" that have already been introduced, and the acceptance of the initial systems, it is expected that this market will grow substantially in number of locations, revenue potential, and technical capability. There are several non-transportation-system issues to be resolved in order to mature this market area.

The telepresence system resolution and image fidelity require improvements over current technologies. Active efforts are required to maintain and expand public interest to an increased general market (interactive video centers currently attract a predominantly male population with an average age of 24 to 25). Feedback from our interviews indicated a need to attract women and families to reach full revenue potential. A similar transition in the market offering can be seen in the ongoing transformation of Las Vegas resorts into increasingly family-oriented theme parks/resorts to attract a larger family-oriented market.

Several persons contacted during this assessment indicated that they felt that a science- and space-related theme of a ground-based facility would increase the attractiveness of such an offering, due to the public's interest in space-, technology-, and future-oriented offerings. The space-based space theme park will be developed as a total entertainment/tourism venue initially located at the multifunctional facility. Detailed analysis of the support infrastructure and personnel/staff requirements is required to assess the total investment and operating expenses.

3.6.6.3.3 Market Assessment

A cursory analysis of the in-space resort determined that such a facility could not sustain the revenues necessary for market viability. Given a minimum investment of at least several hundred million dollars to design, construct, and launch a facility, an annual revenue of several hundred million dollars is necessary to approach a market level of return. From the space tourism market assessments, it is unlikely that a market of more than several hundred persons is achievable in the next few decades with near-term launch technology. This implies that each user of the in-space theme park must pay in the vicinity of a million dollars for the use of the theme park.

While such costly options are not totally unreasonable, the market consisting of persons who could afford a ticket in the range of a few hundred thousand dollars for space transportation, and then also afford a million dollars for use of an in-space theme park, would reduce the available market even more. The demand for the in-space theme park under these conditions was assessed as too small to justify the facility in space. In-space attractions would have to be part of a larger space tourism infrastructure.

From a near-term business perspective, the "virtual" space theme park approach appears to be much more attractive. The use of space will provide the background for virtual travel to the space environment (such as the exteriors of the space station), or to differing areas on the surface of the Earth through near real-time observations. To provide this service, a high-fidelity video link from space is required, which is well within current technological capabilities. This market is very promising, based on our initial discussions with some of the world's leading theme park designers.

Ground-Based "Virtual" Space Theme Park Based on discussions with theme park companies, development costs for a virtual reality/human interactive attraction currently run $2 to $3 million, with annual revenue potential estimated at $2 to $4 million. The prices charged for such attractions range from $4 for a 4-minute motion ride adventure, to $9 for an interactive battle (price includes briefing, 10-minute interactive battle, and debriefing for a half-hour experience), and up to $30/hr in a flight simulator.

Market analysis of Earth-based space telepresence attractions indicates that the venture is viable. Annual revenue potential per space-telepresence entertainment center with 30 "seats" was estimated at $7 million, based on $12 per ticket (six tickets per hours) and 1900 revenue hours/week. The space theme park developers will initially purchase telepresence capability (services) from the commercial communications industry.

An initial investment ranging from $3 to $4 million per center will establish the ground-based segment based on similar facility and equipment requirements for current interactive entertainment centers. Annual satellite operating expenses have been estimated at $4 million per entertainment center based on the above number of "seats" and transmission hours needed. Current service fees of $400/hr per transponder (based on current transmission fees for spot usage of satellite transponders for video relay) were used to determine the annual operating expenses. This hourly transmission rate can be reduced if long-term service agreements are arranged or video compression techniques are used.

Two options for delivering satellite transmissions were considered. The first, described above to determine annual operating expenses, involves purchasing commercial communication services on an hourly basis. Such services could be purchased today, if the systems to provide them were available and the data distributed over the existing telecommunications infrastructure. If the video feeds are provided as an add-on to an existing or planned space facility, the incremental cost of operating an individual system is very close to the cost of transmitting the information through the existing telecommunications infrastructure.

In the second case, developers would purchase satellites up front and pay the DDT&E and launch costs, which greatly reduce their hourly costs in exchange for a higher upfront cost. Purchase and emplacement of the facility's satellite infrastructure is estimated in the $60 to $120 million range for three dedicated satellites (to support a 30 "seat" center). The cost driver here is the satellite cost resulting from the transponder requirement necessary to provide interactive channels for each "seat" in the entertainment center (with today's technology, systems are limited to 10 channels per transponder). This cost estimate is based upon a small LEO satellite capable of accommodating 10 visual channels over a single 36 Mhz equivalent transponder, based upon current LEO small Earth observation satellite costs.

This level of investment is comparable to new attraction costs at major theme parks. Development of the MGM/Disney Studio Tours Muppet Vision attraction is estimated at $90 million and the Back to The Future ride at Universal Studio Tours at $60 million ($17 million for film footage).

The aggregate space transportation demand, in mass to LEO, required to support this market does not drive a new transportation vehicle but it does define additional small satellite payload handling requirements. Figure 3.6.6.3-1 presents an estimated annual transportation demand and resultant revenues at current space transportation costs. Current market projection for the "virtual" theme parks indicate that the U.S. population demographics support a demand for 100 centers located in large metropolitan centers. 1990 census data show over 70 metropolitan communities with populations over 500,000, of which 40 are over 1 million. Within each community, an estimated 18% of the population is made up of males between the age of 25 and 343 (currently the primary customers for such services).

For global demand, a total market of three times that of the United States (based upon population and income levels) was assumed for a combined market of 300+ entertainment centers. It should be noted the acceptance of such virtual theme parks and artificial reality simulation attractions is very high in other countries, with significant market ventures underway in Japan and Europe, as well as in the United States. Based on current demand for interactive video attractions we anticipate that the first location(s) for the space telepresence center will likely be in Japan.


High ProbabilityMedium ProbabilityLow Probability
New centers per year31020
Pounds to LEO 4,500 15,000 30,000
Transportation revenues $23M $75M $150M

Figure 3.6.6.3.-1. Estimated Market Size-Available Immediately

Based upon estimates by the CSTS alliance, an order of magnitude reduction in launch costs will reduce the satellite cost by a factor of 5 and the associated transmission cost, if leased, to 20% of the current amount to achieve the same levels of financial return. The cost reduction will stimulate a growth in the market by making the initial and recurring investment cost substantially lower. More centers will open up in more communities.

While the satellite mass increases (projected at a two-fold increase with an order of magnitude cost reduction based upon preliminary satellite design analyses), the cumulative mass to LEO requirement is anticipated to grow from a low of 15,000 lb/year to a high of 85,000 lb/year at launch prices of $400/lb. If the increased market growth is seen, new and replacement satellite needs (due to satellite degradation and technology advances) will sustain a growing demand in mass to LEO.

In-Space Theme Park. The market for an in-space theme park is driven by the number of persons who can afford the ticket to space, as well as the price of such a facility and the ticket cost necessary to justify the facility's development, launch, and operation. As further described in the space tourism section of this report, a conservative approach was taken to estimating the number of people who could afford to and would be interested in visiting an orbiting space theme park/resort.

A household was assumed financially able to afford a vacation to the space facility if its income was three times larger than the price. From this statistical income group, the baseline assumption was that 1 person in 300 will visit each year (accounts for individuals taking such a trip once in their lifetime, and for a 10% capture of those capable of taking a trip as actually taking the trip). The baseline visitation rate was adjusted upward and downward to reflect increasing and decreasing affordability of income groups with more or less income.

Worldwide income distributions were estimated by aggregating the populations of countries with per capita incomes similar to that of the United States. These statistics include population adjustments to the year 2020. From this information, the number of households worldwide with income levels comparable to U.S. standards is four to five times greater than just U.S. statistics alone. The number of worldwide households with incomes above a specified level is shown in Figure 3.6.6.3-2. The distinction between households and people is that for each of the 94 million households in the United States in 1991 there was an average of 2.63 people.



Figure 3.6.6.3-2. Worldwide Household Income Distribution Summary

The consumer's total price to visit the space theme park involves space transportation, hotel/resort accommodations, and space attractions. Recognizing that transportation is only a portion of the cost to the traveler, we conducted an assessment of the total revenue split between transportation, infrastructure, and support services to determine the demand for an all-inclusive vacation (Club Med type).
Figure 3.6.6.3-3 depicts the high (bottom curve), medium, and low (top curve) probability market demand at various package prices in 1992 dollars.

Figure 3.6.6.3-3. Annual Passengers to Space Destination/Resort Versus Ticket Price

3.6.6.3.4 Market Infrastructure

To make the space theme park concept a reality, incentives must be offered now to involve interactive video center developers such as Virtual World Entertainment, Inc., and Iwerks into expanding their capability to include space telepresence attractions. Just as important, industry must initiate educational and general awareness campaigns to spark public interest.

Current communication technology (channels per transponder) and limited available bandwidth may restrict the number of elements forming the resultant LEO satellite constellation. Therefore, for the immediate need, the demand to have space telepresence capability may be greater than the available resources. Breakthroughs in communication and transmission technology as well as signal processing are needed to meet anticipated demand growth.

The space-based theme park will require drastic regulatory and policy changes to permit civilian access to space. Current training regimes for astronauts will have to be highly modified or eliminated to make the transportation similar to air travel. The multifunctional facility infrastructure must already exist to provide auxiliary support systems for space travelers.

3.6.6.4 Prospective Users

The theme park market area conceptually includes everything from Earth-based entertainment centers to orbiting resort hotel-studio tourism complexes. Our efforts have been spent in contacting major studios (e.g., Columbia, Warner, Disney,), theme park operators, resort hotel developers (Hyatt, Marriott, Hilton) and casino developers (Caesar's, Mirage, Circus Circus, MGM/Grand).

Potential users have expressed immediate interest in starting right away with the most basic controlled viewing from cameras on the shuttle manipulator arm or off of a communications satellite. CSTS contacts included:

a. Virtual World Entertainment, Inc., Tim Disney, Chairman.
b. Walt Disney Imagineering, Inc., Bran Ferren, Senior Vice President - Creative Technology.
c. 4th Wave Inc. (Theme Park Marketing/Financial Consultants), Dr. John N. Latta, President.
d. Warner Brothers, James House, Director - Theme Parks.
e. Hilton Hotels, James Philon, Vice President Corporate Development.
f. Hyatt Development Corporation, John Burlingame, Vice President.
g. Kloster Cruise Lines, Jon Rusten, New Build Department.
h. Interglobal Space Lines, Rand Simberg, President.

3.6.6.5 CSTS Needs and Attributes

3.6.6.5.1 Transportation Characteristics

Transportation system attributes differ for the ground- and space-based market segments. The immediate market for ground-based space-telepresence capability demands small payload ( less than 1000 lb each) delivery to low Earth orbit. The satellite systems will form a LEO constellation for interactive communication. No return payload capability is required. These payloads can be flown on multiple-payload manifests, assuming they can be delivered to the required orbit. Note that the particular LEO destination may reduce comanifesting ability and/or practicality.

The future space-based market requires a human-carrying transportation system. A pressurized volume is required to bring passengers to and from a LEO space theme park.

To support the early ground-based segment the transportation system must support delivery of multiple small-satellite-type payloads (less than 1000 lb each) annually to various LEO destinations. The LEO destinations may include polar orbits. The number of payloads (at 1000 lb) per year is anticipated to grow from 9 initially (3 satellites per center/3 centers opening per year) to 60 to 90 as the market expands and transportation costs are reduced. The peak demand is anticipated to be around 135 per year at $100/lb. As transportation costs are reduced, the size of these payloads is expected to double.

The space-based space theme park will be located in a low Earth orbit. The space-based segment will require initial facility infrastructure delivery and construction, which necessitates a vehicle with large payload delivery capability. Once the facility is operational, a commuter-type transportation system is required. Vehicle passenger capacity requirement will grow from 15 to 25 passengers initially to 75+ passengers later on. Early requirement is for transportation system to operate on a weekly basis, which supports 52 flights per year. As demand increases we anticipate the need for daily flights and multiple vehicles. Since the primary transportation system payloads are humans, the system safety must be comparable to commercial air transportation.

3.6.6.5.2 Ground Handling

Ground handling requirements will be minimal. Satellite systems will be designed and integrated into the vehicle as standard modules. The space-based segment will require passenger boarding accommodations similar to commercial aircraft handling requirements.

3.6.6.5.3 User/Space Transportation Interfaces

The early satellite payloads can be launched in groups or as secondary payloads. Launch services customers can manifest their payload into available slots or reserve the next open vehicle. As the space-based segment opens up, the routine users of the space transportation system are passengers only. The space system will be booked and boarded just as commercial aircraft.

3.6.6.5.4 Improvements Over Current

Significant improvements over current space transportation systems are required to support the future goal of a space-based space theme park. They include:

a. Launch costs at $100/lb or lower.
b. Launch on schedule-predictable.
c. Routine scheduled service.
d. Airline-like passenger handling and safety.

3.6.6.6 Business Opportunities

3.6.6.6.1 Cost Sensitivities

In the immediate timeframe, with current launch costs, the only market for space theme parks is interactive ground entertainment ("virtual" space theme park). Based on industry interest, this market is "ready when we are." It is small, but steady in demand. If transportation costs are reduced an order of magnitude, the ground entertainment segment will grow and a space-based market will emerge. The numbers at $600/lb in the figure below represent a 18%/82% split between ground- and space-based transportation requirements.

With further transportation cost reductions ($100/lb) the space-based space theme park takes off. At $100/lb there are overwhelming numbers of people who will be able to go to space and interested in doing so. Figure 3.6.6.6-1 shows the sensitivity to transportation price for the medium-probability space theme park market.



Figure 3.6.6.6.-1. Medium-Probability Annual Transportation Demand to Space Theme Park/Resort as a Function of Transportation Price

3.6.6.6.2 Programmatics

The ground-based space telepresence market has immediate revenue potential, which is driven timewise by the ability to put up the satellite (communication) infrastructure, and limited by the amount of available bandwidth. Annual transportation system revenues generated from the Earth-based segment are initially in the $25 to 75 million range. As transportation costs come down, the space-based theme park becomes commercially viable, which results in a significant increase in revenue potential.

The space-based activity quickly dwarfs the ground-based demand. Figure 3.6.6.6-2 shows the predicted annual transportation revenue profile (medium probability) for the individual elements (ground- and space-based entertainment). As illustrated in the figure, introduction of a new, transportation system with a lower price to users results in a decrease in the Earth-based space telepresence revenues while enabling the on-orbit space theme park/resort market to emerge, resulting in a substantial growth in transportation revenues.



Figure 3.6.6.6-2. Space Theme Park Market Area Revenue Generation Assessment

3.6.6.7 Conclusions and Recommendations

The space theme park market appears to be significant, and it has immediate needs as well as future applications. The study of this market must continue with greater indepth research, including international interest (especially Japan and Europe). Bookkeeping related to transportation demand (lb/year to LEO) will be accomplished in coordination with tourism and the on-orbit facility infrastructure included in the space business park analysis.

REFERENCES

1. "Economic Impact Study of the Film Industry in California," KPMG Peat Marwick for the California Chamber of Commerce and the California Film Commission, 1989.

2. Yankelovich Partners, Newport Beach CA. Survey commissioned by Rockwell International Corporation, based on interviews with 1002 U.S. registered voters. Poll margin of error + 3%.

3. World Almanac.


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3.6 Entertainment
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