Frost & Sullivan recently published three market analyses on the Training and Simulation (T&S) market. According to the consulting firm, the overall T&S market will “offer slightly decreasing but stable revenue between 2013 and 2022,” going from $6.841 bn to $6.358 bn as virtual training becomes more widely used.
However, the market will be “saturated soon”. The company ranked the price sensitivity with a 7 in a scale going from 1 (low) to 10 (high). Concerning global revenues, the US market accounts for 68.4% in the total T&S market and was hit by the sequestration impact on the US DoD since early 2013. This is why Frost & Sullivan forecasts an overall negative compound annual growth rate (CAGR) of 0.6% between 2013 and 2022 at a global level.
In Europe, budget cuts also triggered negative growth in the short and medium terms. Both markets are said to stabilize “from 2018 and onwards”. Middle East, Central Asia, and Asia-Pacific will register the best growth with a cumulative market size of $15.86 bn for 2013-2022. Latin America and Africa will offer limited revenue during the period.
The ratio between live and virtual training is different by regions but also by domain with “with 70:30 (live:virtual training) across the Air segment, 60:40 across the Land segment, and 15:85 for Navy.” The air segment will remain the most attractive one compared to the others with 52% of the market at $3.51 bn in 2013 and $3.30 bn in 2022.
Frost & Sullivan forecast that end users will rely more and more on enhanced support and services against training equipment acquisition. This segment will represent a cumulative market size of $19.57 bn for 2013-2022. Augmented training solutions will increase over the next 10 years reaching $13.63 bn, analysts add.
According to the authors, those trends can be explained by the fact that “virtual training is not better but it is definitely cheaper”. The end-users are more and more interested in using T&S. It is more and more accepted that virtual training enables the development of skills and improved familiarity at low cost.
Newcomers in the T&S market will face disadvantages because of intellectual property rights owned by prime contractors. That is why Frost & Sullivan advises to “target fresh opportunities” such as “cost-efficient solution leveraging Big Data to make training more effective, efficient, measurable and manageable”.
Consequently, Frost & Sullivan recommends companies considering to invest in T&S market to balance between complexity, realism and cost. Besides, embedded training capabilities have more potential than simulators. The first one should include interoperability and modularity. Simulators may gain further attractiveness if products are interlinked. Finally, Frost & Sullivan counsels potential investors to diversify portfolios with para-public and foreign markets but also though partnership with commercial vendors.
Republished with permission from ADIT – The Bulletin.