In another win against MTN Satellite Communications, Carnival Cruise Line recently awarded their global communications contract to Harris-CapRock. Combined with Royal Caribbean, Harris-CapRock will soon provide the offshore communications to a majority of cruise passengers worldwide. But, what does this mean for the macro maritime market – Is this the beginning of the end of specialized communications providers and the rise of the diversified players? And, what does this mean to MTN?
For MTN, this latest win for Harris-CapRock is a hit to the bottom line; however, MTN still has the key ingredients to remain relevant within the maritime market. They still have a strong presence in the mega-yacht and ferry markets, a global footprint of satellite capacity and service coverage, and they continue to diversify their mobility offerings into adjacent verticals like aeronautical connectivity. Perhaps most important, are the value-added services MTN has built-up over the years tailor-made to the maritime market such as their cellular backhaul services, and their TV distribution service. And, they continue to renew contracts with the other players within the cruise market.
Overall, according to NSR’s latest study on the maritime market, Maritime Satellite Markets, the passenger vessel market (including cruise ships, ferries, and leisure vessels) will generate over $3.5 Billion in Retail Revenues over the next ten years, from 2012 – 2022. Bandwidth heavy customers such as Carnival or Royal Caribbean will definitely be large single players within that market. With over 10,000 VSAT-based In-service maritime units projected by 2022 spread throughout various sub-segments of the passenger market, there still remain a large number of other players within the segment. And, with only a couple hundred large cruise ships around the world, diversification within the passenger segment still remains possible.
Looking towards the greater macro maritime market, specifically at higher-end customers, few markets resemble the composition of the cruise market (the government market is perhaps the nearest neighbor to the cruise market, but has its own unique challenges.) The Cruise Market is unique in that market-share (in terms of total passengers carried) is highly concentrated with 2 companies that serve almost 60% of the market. Not even the offshore rig market has such concentration.
Within the cruise market alone, there are still 30 plus cruise ship companies – all of which either have adopted or are likely to adopt an offshore communication solution, and most do not have the same resources as Carnival or Royal Caribbean. Ferry customers additionally have unique demands for offshore connectivity (mostly cellular-centric services and integration.) And, within the mega-yacht or leisure market, they do not have in-house IT departments. Overall, the market will still have a need for service providers to develop unique value-propositions that match these needs best.
However, what is not unique is that for larger end-user fleets, size does matter – and service providers should expect stiff competition as contracts for large fleets come up for renewal. These end-users expect a “good deal” due to their relative buying power, while still expecting service providers to enable their unique requirements. Within those circles, this latest deal might be a sign that specialist service providers are in for tougher competition ahead. Instead, they most not only compete with a unique value-proposition, but on price as well.
In the maritime market, there is always a bigger fish willing to do more at a better price – and for larger end-users, specialization does not necessarily beat price. Overall, if you cannot be the biggest fish in the pond, then you’ll need to catch a lot of smaller fish to survive.
Information for this article was extracted from NSR’s report: Maritime Satellite Markets.
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