Hopes are high in the private space sector that the rapidly falling costs of accessing space will yield a wide range of profitable activities. In the near term, Earth observation and telecommunications opportunities will capitalize on swarms of newly-launched small satellites. Farther out, space manufacturing at scale, resource mining, and even solar energy capture bring out the optimist in many (and the skeptic in many others). Each year, billions of dollars are being poured into space startups to pursue these visions.
The business model for space that best captures the public’s attention is tourism or, as many industry leaders would have it, space adventurism. As this preference implies, a trip to space is not a vertical cruise; it will require pre-training, substantial risk tolerance, and a strong stomach. But none other than Jeff Bezos is betting that enough Earthlings will sign up for the thrill—and transcendental experience, as astronauts describe it—of seeing Earth from the outside.
Private space adventurism is nearly two decades old, and it thus spans a remarkable era of change in the space sector. In 2001, the American entrepreneur Dennis Tito paid $20 million to the Russian space program for a ride to the International Space Station. It was a controversial arrangement that drew NASA’s opposition, but it happened to come at the start of a revolution. In 2004, Paul Allen’s private company launched and returned a spacecraft designed by Burt Rutan 100 km off Earth (the standard boundary of space) twice in two weeks, winning the Ansari X Prize. Their technology would be purchased by Richard Branson and become the basis for Virgin Galactic, the first company to promise routine space access for the public.
Around the same time, an era of public-private partnerships began when NASA inaugurated the Commercial Orbital Transportation System to spur the private development of alternative technologies for resupplying the International Space Station. That program would be crucial for the growth of SpaceX and Blue Origin, both of whom have also promised to take private citizens to space. Together, these three companies have become the leaders of the space adventurism sector.
Past promises of space tourism have generally been delayed, but it seems the tide has turned. Both Virgin Galactic and Blue Origin appear to be on the cusp of taking passengers above the line of space in the next couple of years. While the precise timing and scale are uncertain, it does seem that we are finally reaching the point at which space adventurism will become more than a promise.
Is space adventurism a viable business model? The tourism industry as a whole is enormous; estimates of global high-end tourism spending are in the hundreds of billions of dollars annually. And tourism—especially of the extreme variety, like space travel—is certainly a luxury good, so demand for it will only grow as the world gets richer. As important, the cost of space adventurism is falling rapidly as reusable rocket technology matures and leaner business models proliferate in the sector. While ticket prices aren’t public, a reasonable guess for Blue Origin or Virgin Galactic’s trips is $200,000—just one percent the price of Dennis Tito’s trip 20 years ago (not adjusting for inflation).
If another two decades brings a similar reduction, space adventurism will cost no more than a trip to Disneyworld—a major expense to be sure, but well within the range of the global upper-middle class. Of course, Dennis Tito spent eight days on board the space station, and these flights would be short-duration with no stopover. But for your typical traveler, the surrounding training and experience would likely make for just as exciting and rewarding experience. And in the long run, the insatiable demand we Earthlings seem to have for new experiences will likely lead to the development of space hotels and excursions, including flights around the moon such as that SpaceX has reportedly sold (for a 2023 flight date) to Yusaku Maezawa, an entrepreneur from Japan.
While space adventurism might generate substantial profits for space businesses, it has an even bigger payoff for society. By tapping into the wallets of millions of people on Earth, space adventurism will help fund the development of technologies and expertise that will make the broader economic development of space possible. Given the potential benefits for humankind that such development may bring, it’s a journey we can all enjoy together.
Matt is the Joseph and Jacqueline Elbling Professor of Business Administration in the business, government, and international economy unit at Harvard Business School.
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