The State of Virtual Training and Simulation in 2025

A nation’s strength lies in its skilled workforce. The pilots and drivers who safely transport millions of shipments. The technicians who build critical infrastructure. The military professionals who defend our freedoms. These essential workers form the backbone of a strongly functioning economy.

But they need extensive practice before they ever:

1. Take control of a vehicle
2. Repair a vital piece of machinery
3. Engage in complex military operations. 

Virtual training and simulation allow professionals (and soon, autonomous systems,) to learn, practice, and master complex skills in safe, realistic environments…before the stakes are real.

Schemata uses AI to create virtual training and simulation modules in days rather than months. This reduces costs by an order of magnitude, opening the door to thousands of new use cases. 

The Current Virtual Training and Simulation Market

Virtual training has evolved far beyond simple video tutorials or basic computer programs. Today’s virtual training platforms create immersive, interactive experiences. They replicate real-world scenarios with unprecedented fidelity. 

It could be a fully simulated vehicle interior for training drivers. Or maybe a virtual manufacturing floor for teaching maintenance procedures. Whatever the case, these assets and environments allow learners to develop:

• Muscle memory
• Decision-making skills
• Technical expertise. 

And this all comes without the risks and costs associated with live training. 

Virtual training and simulation has become a cornerstone of global workforce development. Currently valued at $432.35 billion (2023), the market is projected to reach nearly $1 trillion by 2030. And experts predict it will surpass $1.3 trillion by 2033.

Virtual Reality and Simulation: Key Sectors

The market’s growth is being driven by the following three sectors.

1. Defense and Military 

The defense sector represents the most established and sophisticated segment of virtual training. The U.S. military alone invests $14+ billion annually in simulation-based training solutions. 

This investment is driven by the need to:

• Reduce equipment wear
• Minimize training risks
• Provide cost-effective solutions in an era of scrutiny toward military budgets. 

Military adoption spans from training individual personnel to simulating complex multi-unit operations. There’s a strong emphasis on high-stakes scenarios that would be too dangerous or costly to replicate in real life. 

Programs like the Training Systems Acquisition (TSA) IV contract exemplify the sector’s commitment to virtual training. Valued at $32.5 billion over ten years, the TSA IV contract has 37 vendors on the award. Its use cases span dozens of planned and existing Air Force vehicles and equipment programs.

2. Commercial Aviation 

With 37% of the simulation market, aviation is the largest commercial sector in virtual training. 

This dominance is driven by a perfect storm of factors: 

• A global pilot shortage
• Increasingly complex aircraft systems
• Prohibitive costs of training on actual aircraft. 

Airlines and training organizations are investing heavily in flight simulation technology. They recognize that virtual training offers the only practical way to expose pilots to emergency scenarios and unusual situations. 

The sector has demonstrated some of the strongest ROI metrics. Modern flight simulators replaced 75% of pilot training times while improving safety outcomes.

3. Industrial and Manufacturing 

The industrial sector represents the fastest-growing segment of virtual training. This is driven by the urgent need to:

• Transfer knowledge from an aging workforce to new employees.
• Reduce costly equipment downtime. 

Manufacturing organizations are increasingly turning to virtual training for maintenance procedures, operation protocols, and safety training. 

This sector has shown particular innovation in adopting mixed-reality solutions. They blend virtual training with physical equipment. This allows workers to practice complex procedures without risking damage to actual machinery. 

Early adopters report up to 80% reduction in training equipment damage and a 50% decrease in training times.

Market Segmentation: Where the Opportunities Lie

We can break the market down into three distinct segments. Each one represents different levels of technological sophistication and investment requirements.

1. Complex High-End Simulators 

The most sophisticated segment is dominated by CAE, L3Harris, and Lockheed Martin. These companies provide comprehensive training systems with full physical mockups and motion platforms. 

Primarily used in aviation and military applications, these systems represent investments ranging from $5 million to over $50 million per unit. 

This segment shows the highest profit margins. But it’s also the most concentrated. Just a dozen major providers control most of the global market.

2. Extended Reality Training 

The rapidly growing extended reality segment encompasses both augmented and virtual reality training. Emerging solutions include pure virtual environments and hybrid physical-digital experiences. 

This dynamic market segment has seen exceptional growth, with XR solutions growing at a CAGR of 32.9%. Companies like Thales Group and BAE Systems compete with innovative startups to provide solutions ranging from $150,000 to $1 million. They target industries like manufacturing, maintenance, and healthcare. 

The segment is particularly attractive as it offers various entry points and scalability options. Organizations can start with basic VR training. Then, they can gradually incorporate AR overlays for more sophisticated applications. With over 100 providers in the space, it’s seeing significant innovation in:

• Remote training
• Collaborative learning environments
• Integration with physical equipment.

3. Cloud-Based Training 

The newest and fastest-evolving segment focuses on cloud-delivered training platforms that can be accessed through standard devices.

Initial setup costs are still at $100,000+. So these solutions are especially attractive to mid-sized businesses and educational institutions. 

The segment is highly fragmented, with a high number of providers competing for market share. But it’s showing signs of consolidation as larger players begin to acquire successful startups.

What Does the Future Hold for Virtual Training and Simulation?

As virtual training and simulation evolve, one question remains. Which groundbreaking technologies will organizations adopt next to train their workforce? 

From AI-driven 3D modeling to adaptive learning systems, we’ll explore the next wave of innovation in our follow-up article. Stay tuned!