In several key space markets, commercial spending is now outpacing government spending, including on missions where governments have traditionally been the major spenders.1 Recent data reveals this trend is ramping up: McKinsey estimates that commercial markets in the second half of the decade will outspend government by a factor of two to one (or more) in all end markets except Earth observation (exhibit).
Specific trends within each end market are attracting the lion’s share of commercial investments:
- Communications. Commercial growth is expected to be driven by enterprise, maritime, and direct-to-device customers with a need for lower latency and increased coverage, reliability, and resiliency. To increase coverage, commercial companies are deploying new constellations that extend the reach of satellite communications.2
- Launch. Revenues from commercial launch vehicles and launch sites are expected to grow to $32 billion by 2035 due to increasing volumes and masses of deployed satellites.3 Commercial companies are also investing in heavy-lift and reusable platforms that could reduce launch costs by 40 percent per kilo of payload between 2023 and 2035.4
- Positioning, navigation, and timing (PNT). High-precision PNT applications are attracting commercial attention; one such example is precise point positioning, which can be used for surveying, autonomous navigation, precision agriculture, offshore operations, resilient smartphone positioning, and more. Growth drivers in commercial PNT markets include receivers (with revenues projected to more than double by 2035 to $95 billion) and software tools (with revenues projected to almost quadruple by 2035 to $25 billion).5
- Earth observation. Commercial customers will continue to press for higher resolution, improved data quality, and real-time analytics for insurance underwriting, financial trading indicators, and oil and gas reserve identification. Data processing, data fusion, and tailored products could be areas of growth in earth observation end markets.6
Today’s commercial customers, with their outsize demand signal, will set the agenda for innovation in these markets, presenting opportunities (and risk) for government players seeking to onboard new capabilities. Commercial and government players alike will need to stay adaptable to meet these evolving demands.7
Christian Rodriguez is a partner in McKinsey’s Washington, DC, office; Dale Swartz is a partner in the Bay Area office, where Karl Hujsak is an associate partner and Katherine Ottenbreit is a consultant; and Ryan Brukardt is a senior partner in the Miami office.
1 For more, see “The case for space,” McKinsey, May 30, 2024.
2 Space: The $1.8 trillion opportunity for global economic growth, McKinsey, April 8, 2024.
3 Space: The $1.8 trillion opportunity for global economic growth, McKinsey, April 8, 2024.
4 Space: The $1.8 trillion opportunity for global economic growth, McKinsey, April 8, 2024.
5 Space: The $1.8 trillion opportunity for global economic growth, McKinsey, April 8, 2024.
6 Space: The $1.8 trillion opportunity for global economic growth, McKinsey, April 8, 2024.
7 “Future defense tech: Multidomain stacks to build affordable mass,” McKinsey, February 12, 2026.