A Google Lunar X PRIZE Competition Update

This Google Lunar X PRIZE update originally ran on SpaceRef.com.  We've reposted it here to allow for discussion in the comments section.

The past few weeks have been a flurry of activity for the Google Lunar X PRIZE. After helping our colleagues celebrate the awarding of the $10 million Progressive Insurance Automotive X PRIZE, we hit the road to attend the 61st International Astronautical Congress in Prague, and then to host the 4th annual Google Lunar X PRIZE Team Summit on the Isle of Man. With all of the recent activity, and with the competition just having celebrated its third “birthday,” now seems like a good time for an update.

First, a summary of the competition. The Google Lunar X PRIZE offers a total of $30 million in prize money to the first privately funded teams to land robots on the Moon that explore the lunar surface by moving at least 500 meters and by sending back two packages of high definition video and photos we call Mooncasts. Unlike our first competition, the $10 million Ansari X PRIZE, the Google Lunar X PRIZE isn’t a ‘winner take all’ proposition: instead, we have a $20 million Grand Prize, a Second Place Prize that will award $5 million to the second team to meet all of the requirements, a series of technical bonus missions that can allow teams to earn as much as an additional $4 million, and a $1 million award that will go to teams that make the greatest contribution to stimulating diversity in space exploration and, more generally, in science, technology, engineering, and mathematics.

The competition operates on a “payment on delivery” model: the prize money is only given to teams after they complete a successful mission, meaning that each team needs to raise all the capital needed to design, develop and conduct their missions on their own. We’re now three years into a fairly long effort: the prize is available until all of the prize purses are claimed or until the end of the year 2015. Just yesterday, we accepted our 24th team into the competition (although the identities of our two most recent teams have not yet been revealed). It’s our most international competition to date; teams are headquartered in 12 different nations, but so many of them are multinational that we have team members living and working in around 70 nations. We’re fairly confident that one of these teams will be responsible for returning the first photos and videos from the lunar surface since the final Soviet robotic surface mission in 1976. In fact, we offer a premium if that’s the case: the value of the Grand Prize decreases by $5 million if it is claimed after a government-led mission has successfully landed on and moved around the lunar surface.

The window for new teams to register in the competition closes at the end of this year, but our current roster of teams is already larger, more talented, and more varied than we expected. When we first announced the prize in late 2007, we told the media we hoped to get a dozen teams—something we thought was quite ambitious given that our external advisors had estimated we’d get only five or six teams. The teams we got are good ones, too, and the approaches they are taking are quite varied.

Walking through the halls and listening in on the sessions at the International Astronautical Congress, it was clear to me that the Google Lunar X PRIZE has gained a good amount of recognition and credibility within the global space exploration community. In addition to the seven teams who gave presentations about their efforts there, I heard numerous others reference the competition in their speeches. Regardless of the background and nationality, they seemed united in thinking the prize was significant, and in hoping that it would be claimed. It was also clear to me that most people had the same two questions: what is the business case for competing teams and how are things progressing so far (especially given the economy)?

The question about the business case for commercial lunar exploration was usually prefaced by something along the lines of “the business case for Ansari X PRIZE teams was obvious, but I just don’t see the business case for the Google Lunar X PRIZE teams.” I must admit, this never fails to make me smile. I remember clearly just how far from obvious the Ansari X PRIZE business case was at this point in that prize’s history, as I was part of the vast majority of space professionals who were highly skeptical. It wasn’t until the Futron / Zogby survey of 2002 (PDF), the successful flights of SpaceShipOne in 2004, and the entry of well-known players like Sir Richard Branson that the business case for commercial suborbital spacecraft became anything approaching obvious, and indeed there are still many skeptics, especially outside of the USA.

Of course, the fact that the business case associated with a previous prize was only fully clear in hindsight doesn’t mean we can avoid the topic with future prizes. One reason incentive prizes work is that teams are willing to spend more than the prize purse in their effort to win. That won’t happen unless both they and their financiers are convinced that there is a market large and accessible enough to make winning a prize not the end of the program, but rather, a springboard along the way to larger profits. The X PRIZE Foundation believes there is such a market, as do Google and 24 competing teams. But why?

As I describe in a chapter of the new textbook Space Commerce, we are entering a new era of lunar exploration—-Moon 2.0, we call it-—that differs from the era of Apollo in a few important factors. For all the glories and triumphs of Apollo and the Soviet lunar problems, the first era of lunar exploration had one inescapable problem: it wasn’t financially sustainable. In part, this is due to the high costs of those lunar missions. Equally importantly, that era was essentially what economists refer to as a duopsony—a market choked by having only two single customers; in this case, two superpowers looking to demonstrate their technological superiority over a rival. The combination of these two factors likely created an unsustainable environment. The costs of the lunar missions were so high they prohibited other new customers from entering the market place, while the existing customers were relatively insensitive to those prices in the near term, removing critical incentives for those prices to drop.

The private companies, non-profits, and university consortia competing for the Google Lunar X PRIZE, on the other hand, have every motivation in the world to develop lunar missions at dramatically lower price points. Each Google Lunar X PRIZE team has a slightly different budget in mind, ranging from roughly $15 million to just shy of $100 million, but even the most expensive of these will be radically cheaper than any lunar surface mission ever conducted in the past. With that new cost paradigm comes the prospect of new customers.

Last year, the Futron Corporation-—the same consultancy that conducted the seminal space tourism survey that helped legitimize that industry—-performed an independent rough estimation of the size of the commercial lunar exploration market over the next decade. They found that Google Lunar X PRIZE teams were entering a market worth as much as $1.5 billion over the next decade. To summarize very briefly, they identified several major lines of business:
  • selling data or services to space agencies that are planning their own missions, allowing those space agencies to improve the results of their own missions by providing additional data about the lunar environment, by scouting out potential landing sites, et cetera;
  • selling payload delivery, data, or entire missions to space agencies and sovereign states that cannot afford to conduct their own missions otherwise, much as firms like Surrey Satellite have already successfully done with LEO and GEO satellites;
  • selling payload delivery or data to private firms or university labs;
  • acquiring lunar-environment space heritage for new equipment;
  • accessing a variety of markets broadly categorized as ‘entertainment’; and
  • selling corporate sponsorships.
Google Lunar X PRIZE teams have already begun to generate revenue in several of these exact areas, with the recently announced NASA Innovative Lunar Demonstrations Data program being a critical example of the first point. With that program, NASA demonstrated that it is willing to become a customer of commercial lunar firms if they can provide interesting data at competitive prices, something that might have been obvious to some, but which merited proof positive given the strength of the recent debate regarding the future of NASA’s exploration mission. We’ve been incredibly encouraged by the Futron study. Our spirits were buoyed even more when the Google Lunar X PRIZE teams met in a private session with an objective group of venture capitalists and serial entrepreneurs in Silicon Valley. Running their investment pitches past this group—which was not the standard crew of VCs who have already demonstrated a personal passion for space—our Google Lunar X PRIZE teams made converts of them. Those VCs and serial entrepreneurs noted that the strategies, capabilities, and business plans of our various teams were distinct enough that the success of one did not preclude the success of the others; instead, they felt that the market could tolerate five or six different commercial lunar firms in the near term. Of course, we are most encouraged by the actual contracts our teams have already signed with eager customers. That doesn’t change the fact that we announced the prize just three months before the start of the worst global recession in generations. The recession has impacted almost every type of business, so people justifiably ask how the Google Lunar X PRIZE teams have been impacted and how the competition is progressing. There is no way we could truthfully claim that the recession has had no effect at all. It’s had an impact on essentially every other business and there’s no reason why commercial lunar services should be completely immune. Fundraising was always going to be one of the most difficult aspects of the Google Lunar X PRIZE, and the financial climate of the past few years has only amplified that. However, as the steady influx of new teams probably indicates, the recession has not stopped anything. Almost without exception, our teams are growing, adding employees, volunteers, partners, sponsors, investors, and customers.
Team ARCA's Helen 2 (photo courtesy of ARCA)
Many of our teams are already building hardware; some of them have already gone through multiple generations of hardware. Three weeks ago, team ARCA from Romania conducted a test launch that marked the first time a Google Lunar X PRIZE-related payload had been carried into space. That feat is likely to be followed over the course of the coming year with orbital flights of a variety of Cubesats intended to prove out subsystems and operational strategies and with low altitude tests of landing vehicles. It is inevitable that we’ll see eventually some attrition and consolidation among our teams, but for now, they are enjoying near universal growth.

At our most recent Team Summit, held during World Space Week on the Isle of Man, we gave our teams the opportunity to present not only to our staff but members of the media and senior representatives of the other teams. Those presentations were filmed and excerpts will be posted online in the near future. All of them underscored the fact that, although we’re all having a lot of fun along the way, this is a very serious competition. Our teams range from small non-profits started by students to well established companies with billions of dollars in revenue, and each of them brings something unique to the table. They compete with sportsmanship and they share an admirable amount of data with each other, but make no mistake: these teams are in it to win it and they are making real progress in that direction.

No one can say for sure who will win the Google Lunar X PRIZE, or when, or how, but the best way to predict the future is to create it oneself. We’re very enthusiastic about the future of this new era of lunar exploration that’s already being created by space agencies, private companies, universities, and non-profits all around the world.

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