Executive Summary Training & Simulation Market- April 2013
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Transcript of Executive Summary Training & Simulation Market- April 2013
Global Military Training and Simulation Market Assessment
LVC is Key to Overcoming Tactical Challenges, Albeit in the Distant
Future
M8FB- 16
April 2013
2 M8FB-16
Research Team
Aman Pannu
Consultant—Europe, Aerospace, Defence &
Security
Alix Leboulanger
Research Analyst, Aerospace, Defence &
Security
Lead Analyst Contributing Analyst
Research Director
Steven Webb
Vice President, Aerospace, Defence & Security
Special Thanks
Lindsay Wooten
Associate Editor
Michael Blades
Senior Industry Analyst
Sabbir Ahmed
Consultant
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Contents
Section
Executive Summary
Market Overview
Total Market
• External Challenges: Drivers and Restraints
• Forecasts and Trends
• Competitive Analysis
• Macro Trends
Regional Analysis
North America
Latin America
Europe
Africa
Middle East
Central Asia
Asia-Pacific
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List Of Figures
Figures
Forecast and Trends: Total Market
• Total Training and Simulation: Market Global Revenue Forecast
•Total Training and Simulation: Market Global Revenue Forecast by End-Users
•Total Training and Simulation: Market Global Revenue Forecast by Capabilities
•Total Training and Simulation: Market Global Revenue Forecast by Training Types
Regional Analysis
• Total Training and Simulation Market: Global Revenue Forecast by Regions
• Regional Market Attractiveness Map
Regional Breakdowns (for each region)
•Total Training and Simulation Market: Regional Revenue Forecast
•Total Training and Simulation Market: Regional Revenue Forecast by End-Users
•Total Training and Simulation Market: Regional Revenue Forecast by Capabilities
•Total Training and Simulation Market: Regional Revenue Forecast by Training Types
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List Of Figures (Continued)
Figures
Conclusion
•Global Market Attractiveness Map – Live Training
• Global Market Attractiveness Map – Virtual Training
• Global Market Attractiveness Map – Constructive Training
• Global Market Attractiveness Map – LVC Training
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Executive Summary
• Global economic downturns, global armed forces reorganisations, and troop withdrawals from Afghanistan
and Iraq could draw dark prospects over the training and simulation (T&S) market. However, several factors
are triggering strong dynamics across this market:
o Under-pressure defense budgets must choose cost-efficient training types, thus accenting innovative
training-type blends, such as synthetic and embedded training systems.
o New armed forces structures will need to enable each soldier to perform multiple tasks from procedural
to operational levels.
o Experience from Iraqi and Afghani theatres have highlighted the importance of new, reactive two-way
training simulators, especially comprising haptics technology, to better prepare and reinforce soldiers’
terrain expertise and how to deal with higher levels of stress, and to prepare muscle memory for platform
and systems reactions.
• Therefore, the global demand for training and simulation is expected to steadily grow at a compound annual
growth rate (CAGR) of 2.5 per cent between 2012 and 2021 and will represent up to $411.05 billion of
spending.
• The Asia-Pacific and Middle Eastern training markets are expected to increase at a CAGR of 4.3 per cent and
3.9 per cent, respectively, while other developing markets such as Central Asia and Latin America will grow at
slower pace, but will be driven by strong demands for immersive and system-based training. Despite a low
CAGR of 1.0 per cent, North America will still offer the largest market size for training opportunities, closely
followed by Asia-Pacific and Europe.
Source: Frost & Sullivan analysis.
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Executive Summary (continued)
• Globally, air forces will be the biggest users of training and simulation, representing a total market share of
50.5 per cent in 2021, driven by significant, complex combat platforms and new procurements in Asia-
Pacific, the Middle East, and Central Asia.
• Meanwhile, the land forces segment will represent the smallest market share, however, with a dynamic
demand for systems-based training, representing a total market size of at least $60.67 billion between 2012
and 2021.
• Live training will remain the most used training type, which is particularly significant across the naval
segment, with the projected market size reaching $84.83 billion over the forecast period, before shifting to
comprehensive and more realistic training-type blends, such as synthetic and Live, Virtual, and Constructive
(LVC) training.
• Virtual and constructive training will progressively gain end users’ preference as they allow complete,
immersive training in a shorter timeframe to enhance situational awareness and to improve joint decision-
making processes, at the right time and place, with reduced armed forces personnel having more
responsibilities. As a result, the use of virtual and constructive training are expected to raise at a CAGR of
2.1 per cent and 2.2 per cent respectively.
• Training is not only about simulators but also how to train efficiently in a simulated world and how to get the
most realistic, real-world conditions. Consequently, the training market is also impacted by end users’
growing interest for embedded training systems, which enables soldiers to train as they fight, for better
mission rehearsals and tactical awareness.
Source: Frost & Sullivan analysis.
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Executive Summary—Market Engineering Measurements
Market Stage
Growth
Market
Expenditures
$36.88 B
(2012)
Market Size for
Last Year of Study
Period
$46.09 B
(2021)
Compound
Annual Growth
Rate
2.5%
(2012–2021)
Customer Price
Sensitivity
8
(scale:1 [low] to 10 [High])
Total Military Training and Simulation Market: Global, 2012
Market Overview
For a tabular version click here. Stable Increasing Decreasing Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
Base Year
Market Growth
Rate
(2012-2021)
1.8%
(2012)
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Executive Summary—CEO’s Perspective
2
Platform-based training will have the most
demanded training capability; however,
systems-based training will grow at a CAGR
of 2.0 per cent due to C4ISR capabilities.
3
While virtual training is preferred by Western
end users to optimise budget cuts, live
training remains the most popular training
type globally.
4
End users require cost-efficient training
solutions, enabling training in immersive,
seamless, and realistic environments,
enhanced by Augmented Reality technology.
1 The military T&S market is expected to grow
at a CAGR of 2.5 per cent to gain $9.21
billion, mainly driven by air segment demand.
5
Current distribution channels must adapt to
meet budget constraints, requirements for
customisation, and cost visibility in after-
market support for LVC training capabilities. Source: Frost & Sullivan analysis.
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Market Overview—Scope
Source: Frost & Sullivan analysis.
Air
Military Training and Simulation Market
End Users
Training
Types
Live
Capability
Types:
Training
Application
Support
Platforms
Land Naval
Live, Virtual,
Constructive (LVC)
Maintenance
Systems
Constructive
Virtual
Platforms
Maintenance
Systems
Platforms
Maintenance
Systems
Live
Live, Virtual,
Constructive (LVC)
Constructive
Virtual
Live
Live, Virtual,
Constructive (LVC)
Constructive
Virtual
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Market Overview—Definitions
Air, Land, and Naval Armed forces operating across each of these military fields
Military End Users
Military Training Application Support
Platforms Platform based training for ab initio (or initial), conversion, and mission training intended for
pilots, crew, drivers, etc.
Systems
Systems-based training includes training for Strategic Training, involving Command Control,
Communications, and Computers, Information, Surveillance and Reconnaissance (C4ISR)
missions, and Tactical Training, involving Weapon Systems, Dismounted Soldier Training
Systems (including Small Arms), Counter Improvised Explosive Devices (IEDs) training, etc.
Maintenance
Maintenance training is intended for military technicians to be trained to maintain and repair
platform and related sub-systems, such as avionics, either for routine and/or unexpected
maintenance activities, such as damage control.
Source: Frost & Sullivan analysis.
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Market Overview—Definitions (continued)
Training & Simulations Types
Live
Training accomplished by real people, on real equipment and actual devices, in real
environments or mock landscapes, such training exercises performed with aircraft produced
specifically for training pilot ( i.e. T-38, L39) practice munitions, aerial target drones, etc.
Virtual
Training accomplished by real operators on simulators or in a simulated environment , such
as training performed with Flight simulators, driver land vehicle simulators, submarine control
simulators, laser simulators, dome trainers, engagement skill trainers, part tasks trainers
including flight deck, bridge, platform procedures, etc.
Constructive
Training based on computer generated forces, mostly desktop based in order to practice on
decision making under different scenarios; examples include : real time radar software,
computer 2D/3D virtual reality war gaming, etc.
LVC
Training combining live, virtual, and constructive procedures into an Integrated Architecture,
with linking different simulators and software, with real time new inputs and which required
system interoperability and integratablity, such as enabling networked Joint Forces training
exercises or advanced Multiple Integrated Laser Engagement System-MILES (i.e. Cubic IWS
or Lockheed Martin MXXI CVS)
Source: Frost & Sullivan analysis.
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Please kindly note this study does not include:
These following capabilities:
• Homeland Security and Police training
• Space-based C4ISR systems training
• Unmanned, Underwater, and Ground Vehicles (UUVs and UGVs) training
• Chemical, Biological, Radiological, and Nuclear (CBRN) training
The following aspects:
• Educational training, such as accessions, basic training, military academies, advanced degrees,
teaching certifications and other commissioning sources
• Private military companies providing training services
• Operational costs (such as fuel, training ammunitions, etc.)
Market Overview—Definitions (continued)
Source: Frost & Sullivan analysis.
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Forecast Assumptions
• Market Size: The market size is the representation of total forecast military spending across platforms,
systems, and platform maintenance capabilities for training purposes.
• Forecast Methodology: Quantifying the total market size first involves evaluating for each country’s different
parameters at the macro level: country tiers, defence budget assessments, national strategic intents, threat
assessments, combat status, and local industry evaluations. From there, depending on capabilities, other
parameters are assessed to determine training market spending for each segment, such as the level of
training customization, mission readiness requirements, local facilities and MoDs’ outsourcing trends.
o Platforms-based training forecasts include: active units, their lifespan assessment depending on end-
user segments, scheduled retirements, new platforms being procured, and platform-pricing factors
depending on end-users types.
o Systems-based training forecasts include: end users’ spending intensity evaluation, commitment to
interoperability, evidence or intent of C4ISR investment over the study period, and MoD's capability to
adopt hi-tech systems, project value, and life cycle.
o Maintenance training forecasts are only based on platforms, lifespan assessment, their level of
complexity, evaluation of local industry, and country outsourcing trends.
Note: For a detailed outlook on forecast modelling tools, please click here. Source: Frost & Sullivan analysis.
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• Market Size Segmentation: The total market size is provided at the global level and regional levels, by
end users, by capabilities, and by training-type levels, in order to present a full analysis on the dynamics
and challenges across this market.
o Education is included in the market size and it is understood as training accomplished in a
classroom setting or online courses received from specific Universities (i.e. Defense Acquisition
University), Service War Colleges and courseware developed to support training, is included in the
market size. However, Education exists across all training segments (live, Virtual and Constructive),
and for the purpose of this report not sub-segmented in the market size.
o Program Assessment: any specific programs, such as for operator training, have been segmented
for the purposes of the market size across Live, Virtual and Constructive training types. For example
the Warfighter FOCUS Program in the US comprises each type of training depending on end-users
fighting requirements.
• Country Scope: This forecast assesses training and simulation spending across 105 countries until
2021.
Forecast Assumptions (continued)
Source: Frost & Sullivan analysis.
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• Time Frame: The time frames for the forecast period are indicated in the table below.
• Training Customisation Level: Based on the country’s strategic intent, combat status, and planned
procurements, this parameter assesses the degree of customisation required by end users, from very
low, such as in training products available commercially off-the-shelve (COTS), up to very high, such as
tailored and personalised software.
• Training Types Assessment: Platform, system, and maintenance training calculations depend on end-
user types, a capability’s age and respective lifespan (based on their operating sectors), existing training
programmes, and a country’s budget forecast, combat status, and threat assessment.
Short Term Year 1–2 2013–2014
Medium Term Year 3–4 2015–2016
Long Term Year 5–9 2017–2021
Forecast Assumptions (continued)
Source: Frost & Sullivan analysis.
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Market Overview—Covered Regions and Countries
North America
Latin America
Europe
Africa
Middle East
Central Asia
Asia-Pacific
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Market Overview—Key Questions This Study Will Answer
What is the market potential for military training and simulation despite global budget
constraints?
Which segments and sub-segments hold the most prospect for growth and why?
Which countries and regions are showing the most promising rates of growth and what
is the future for these markets over the forecast period?
How will new technologies available to the industry revolutionize the military training
and simulation market?
Is there a real shift from Live training towards total Virtual training ?
Are the available distribution channels appropriate enough to meet end users’ needs?
Source: Frost & Sullivan analysis.
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Market Overview—Military Training and Simulation
Distribution Channels
Total Military Training and Simulation Market: Distribution Channel Analysis, Global, 2012
*Key: COTS- commercially off-the-shelf .
Source: Frost & Sullivan analysis.
Key Takeaway: There are many available distribution channels, but these are not
adequate to meet end users’ training requirements.
Joint
Ventures
and Public or
Private
Partnerships
Government
to
Government
(G2G) and
Foreign
Military Sales
Training
Centre
leases and
Direct Sales,
like COTS*
Government
to Business
(G2B) and
Private
Finance
Initiatives
End Users
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Market Drivers and Restraints M
ark
et
Dri
vers
M
ark
et
Re
str
ain
ts
1–3 years 4–7 years 8–10 years Current renewal and upgrade cycles of
platforms and systems
Source: Frost & Sullivan analysis. High Medium-
High Medium Low
Military Training and Simulation Market: Key Market Drivers and Restraints, Global, 2013–2021
Warfare digitalisation trends and
innovative communications equipment
Diminishing defence budgets creates
security budget spending advantages
High complexity Levels of Training and
Simulation supply chain
Low-
Medium
More constructive training
solutions required
Lack of interoperability of training
devices and systems
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Military Training Demand
(Market Size)
Market
Growth
(CAGR)
Low
0-3% Low
<10 $Billion
High
>150 $Billion
Latin
America
Europe
Middle
East High
Attractiveness
Low
Attractiveness
High
3-5% Asia-
Pacific
North
America
Africa
Regional Market Attractiveness Map
Source: Frost & Sullivan analysis.
Region CAGR
Africa 0.03%
Asia-Pacific 4.36%
Central Asia 3.58%
Europe 1.86%
Latin America 3.07%
Middle East 3.92%
North America 1.05%
The table represents regional consolidated expenditures and compound annual growth rates across the
period 2012–2021.
Central
Asia
Military Training and Simulation: Market Attractiveness Map
Global, 2012–2021
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Source: Frost & Sullivan analysis
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Market Engineering Methodology
One of Frost & Sullivan’s core deliverables is
its Market Engineering studies. They are
based on our proprietary Market Engineering
Methodology. This approach, developed
across the 50 years of experience assessing
global markets, applies engineering rigor to
the often nebulous art of market forecasting
and interpretation.
A detailed description of the methodology can
be found here.
Source: Frost & Sullivan research.
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F&S Quantitative Modelling
•Scenario-based Market simulation, deploying market-tested assumptions to translate qualitative data (key factors impacting defence segments, for example) into quantitative data.
• Price matrix • Weightening metrics • Market share statistics • Time-based probabilities
F&S Database
•Use of extensive, bottom-up databases (in-house and outsourced) listing the raw data necessary in the first step of a market forecast exercise:
• Existing Military capabilities • Planned programmes •Anticipated programmes
•Engage industry experts, end users, and industry in constructive discussions to ensure that data is up to market standards and has been thoroughly updated
F&S Analysis (Key Factors and Parameters) •Analyse key factors to filter and select the core factors relevant for each Defence market segment, Product Line, service and/or technology, based on F&S expertise from ongoing secondary and primary research. •Create an industry matrix to ascertain the supply and demand trend within specific markets.
Military Customer: Strategic Intent, Budgets, Replacement, Operations, Infrastructure Technology: R&D, New Products & Technologies, Lifecycle, Substitutes, Obsolescence
Economic Factors: Global & National Economy, Customer Spending
Global Military Trends: Markets, Cultural Factors, In-Country Industrialisation, Skills Competitive Environment: Competition, New Entrants, New Markets, First Mover Advantage
F&S Database
(platforms, systems)
F&S Analysis
(Key Factors and Parameters)
F&S Quantitative
Modelling
F&S Interactive
Forecast Model
Forecast Modelling Tools for our Defence Programmes
Frost & Sullivan’s Approach to Quantitative Analysis
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Market Analysis
Frost & Sullivan Intelligence Centre
Secondary Research
Industry and Technical Journals, Articles, World Wide Web
Primary Research
Industry Forums Phone Discussions Face to Face
Qualitative Analysis is derived from validated Primary and Secondary research
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Learn More—Next Steps
• Talk to an analyst
• Take our DNA Survey
• Arrange a Growth Workshop
• Explore the Growth Excellence Matrix 2.0
• Attend a relevant live or virtual event
31 M8FB-16
Table of Acronyms Used
C4ISR Command Control Communications and Computers, Information, Surveillance, and
Reconnaissance
C4ISTAR Command, Control, Communications, Computers, Intelligence, Surveillance, Target Acquisition,
and Reconnaissance
C5ISTAR Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance,
Target Acquisition, and Reconnaissance
CAGR Compound Annual Growth Rate
CfA Contracting for Availability
CPAF Cost plus award fee
CPFF Cost plus fixed fee
G2B Government to Business
G2G Government to Government
IDIQ Indefinite Delivery and Indefinite Quantity
IEDs Improvised Explosive Devices
JV Joint Venture
LVC Live Virtual Constructive
OEM Original Equipment Manufacturer
MILES Multiple Integrated Laser System
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Table of Acronyms Used- (continued)
MoD Ministry of Defence
MOOTW Military Operations Other Than Wars
MRO Maintenance, Repair, and Overhaul
PPP Public Private Partnership
PBL Performance-Based Logistics
PFI Private Funding Initiative
SIS Support in Service
TCO Total Cost of Ownership
TLM Through-Life Management
TSS Total Service Solution
TSP Training Service Provider
UAV Unmanned Aerial Vehicle
UGV Unmanned Ground Vehicle
UUV Unmanned Underwater Vehicle
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