IHS Analysis - Opportunities in the Defense Simulation & Training Market


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New analysis from IHS Jane’s DS Forecast reveals that as militaries realize and exploit efficiencies gained through new Simulation and Training technologies, new current and future market opportunities have emerged.

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IHS Analysis - Opportunities in the Defense Simulation & Training Market

  1. 1. IHS Jane’sAnalysis: Opportunities in theDefense Simulation & Training MarketNovember 2012 ihs.com/jdsfIntroduction KEY POINTSThe backdrop for the global defense industry today is that As militaries realize and exploit efficiencies gained through newof changing and uncertain threat scenarios combined with Simulation and Training technologies, new market opportunitiestightening budgetary conditions. Responding to these have emerged, particularly in the medium term.conditions and maintaining a force that is both effectiveand prepared presents a major challenge for military Advancements like these offer powerful solutions to manyleaders. It is critical that resources be used in the most of the complex readiness and training issues that faceeffective way possible to achieve the optimal end result. militaries around the world.At the same time, Simulation and Training technology New analysis from IHS Jane’s DS Forecast reveals that ascontinues to advance. For example, increasing fidelity in militaries realize and exploit efficiencies gained throughthe visual display area enables virtual training to be more new Simulation and Training technologies, new currentimmersive and realistic. and future market opportunities have emerged.Meanwhile, progress in synthetic environments opens upgreater possibilities to network simulators of different Market Analysis – Key Themestypes in various locations, involving participants from The global Simulation and Training market is projected tomultiple services for distributed mission operations (DMO) grow from approximately $22 billion in 2013 to a peak fortraining. the current forecast period of about $23.5 billion in 2016,© 2012 IHS 1 ihs.com/jdsf
  2. 2. IHS Jane’s Analysis: Opportunities in the Defense Simulation & Training Marketbefore declining over the out years with a 10-year percentage increases to an average of 56%, totaling overcompound annual growth rate (CAGR) of -3.2%. $50 billion.Looking at the Simulation and Training market in terms of The Simulation and Training market covers a wide rangesales opportunities, however, shows a far more positive of technologies. The largest segment, Military Aircraft, ispicture. While 2016 represents the peak market value in related to specialized training aircraft, representing aboutthe current forecast window, the percentage of the market 35% of the total value of the blended market over therepresented by Stated and Derived Opportunities1 forecast period.continues to increase beyond this. Simulation follows a close second, comprising an averageIn 2017, for example, approximately 45% of the Simulation of 33% of the blended market between 2012 and 2021.and Training market value is comprised of opportunities; When considering the Simulation market segment, thebut during the last half of the forecast period, that growth projections are significantly more positive than the market as a whole, with a 10-year CAGR of around 2%.1 Stated Opportunities are those in which the contracting authority has Like the Simulation and Training blended market, thestated that a program will be run; Derived Opportunities are those in which Simulation segment itself shows a great deal of salesIHS analysts have identified a need based on analysis of current andemerging threats, capability gaps, budgets and other related factors.© 2012 IHS 2 ihs.com/jdsf
  3. 3. IHS Jane’s Analysis: Opportunities in the Defense Simulation & Training Marketopportunities (an average of 80% of the market valuebetween 2017 and 2021). Multirole simulation – comprised of programs covering more than one functional segmentation category (such as the FOCUS program discussed above) – is projected toSome of these opportunities are in the form of large, multi- experience a CAGR of over 7% through the forecastaward contracts. A good example of this is the U.S. period.Army’s Warfighter FOCUS contract, which involves manysuppliers and covers life cycle contract support services Likewise, the area of simulator support is projected to seefor training devices in addition to related operations, a CAGR of around 4% for the same timeframe.maintenance and instructional support. ConclusionWhile these types of contracts lend themselves well to The use of simulators and simulations in a traininglarge businesses, opportunities exist across the spectrum regimen enables trainers to provide instruction for skillsof size and type of defense suppliers. that are costly to teach through live training alone; as aThe two areas within the Simulation market alone that general rule, the cost to practice a skill in a simulator ismost heavily impact the positive CAGR are multirole about 10% of the cost of operating the actual equipment insimulation and training programs and simulator support a live training situation.services.© 2012 IHS 3 ihs.com/jdsf
  4. 4. IHS Jane’s Analysis: Opportunities in the Defense Simulation & Training MarketFurthermore, in the safe and forgiving virtual environment,trainers can present scenarios that would be either toodangerous or impossible to replicate in live training, andadvanced simulation technology effectively facilitates the“suspension of disbelief”, increasing the realism of thetraining.All of these factors make simulation a logical growth areafor global militaries, and IHS analysis of the marketstrongly suggests that over the coming years this sectorwill provide significant increased sales opportunities fordefense contractors.This analysis draws on market forecasts in the newSimulation & Training blended market developed for IHSJane’s DS Forecast.© 2012 IHS 4 ihs.com/jdsf
  5. 5. IHS Jane’s Analysis: Opportunities in the Defense Simulation & Training MarketAbout IHS About IHS Jane’s DS ForecastIHS (NYSE: IHS) is a leading source of information and With over 100 years of history as Jane’s, IHS is the mostinsight in pivotal areas that shape today’s business trusted and respected public source of defense andlandscape: energy, economics, geopolitical risk, security information in the world.sustainability and supply chain management. IHS Jane’s DS Forecast sets the standard in defenseBusinesses and governments around the globe rely on the market forecasting, with expert analysts providing reliablecomprehensive content, expert independent analysis and ten-year views of over 20 key global defense markets thatflexible delivery methods of IHS to make high-impact enable business professionals to understand the shape ofdecisions and develop strategies with speed and the defense sector and identify opportunities for low-risk,confidence. profitable growth.IHS has been in business since 1959 and became a IHS Jane’s DS Forecast represents an invaluablepublicly traded company on the New York Stock business intelligence asset for commercial A&DExchange in 2005. Headquartered in Englewood, organizations of all sizes.Colorado, USA, IHS employs more than 6,000 people inmore than 30 countries around the world. ihs.com/jdsfihs.com© 2012 IHS 5 ihs.com/jdsf