Posted: By Ted Pollak 09.19.19
|Source: Gerd Altmann from Pixabay|
The global video game industry has many game types, genres, platforms, business, and use models. There are so many permeations and combinations that people often disagree about what is what. There is even debate about the definition of what constitutes a video game. I have always viewed simulation and interactive training/education as part of the video game industry and call the category “training and educational games.”
Training and educational games have many sub-genres. For example, there are “control and systems simulations” like a flight sim or heavy equipment simulator. There are “interface simulations” as an employee might train for the use of a point of sale system. Some people categorize them as “continuous dynamic simulations” or “operator training.” There are music training games, historical setting simulations, STEM subject matter games, and content creation games, to name a few.
Before we get into specific examples of training and educational games, let’s talk about money. The amount of money spent in these categories is more significant than people think, and it will grow to tremendous levels over the coming decades. Estimates from research analysts have wide variation and usually don’t cover all the bases. Much of the underlying primary data is not public and can even be top secret in the case of the military. So, we are going to do some cocktail napkin analysis based on “professional estimation”: military training and simulation $12 billion + commercial/civil aerospace simulation $4 billion + other operator training (heavy equipment, auto and medical) $2 billion + STEAM educational games $2 billion = $20 billion.
|Training and educational game market 2019–2025. (Source: Ted Pollak)|
The high end of the analyst’s speculations found online is that the market could grow to $329 billion by 2022 (Allied Market Research). Grand View Research thinks that the “smart education and leaning market” could be $423 billion by 2025. These forecasts might be a little optimistic, but perhaps only about the rate the market reaches that level. I have no doubt the markets eventually reach that level. The value of all the target markets for these products, including human teachers/trainers/books and other materials/resources, I believe, is in the $7–$10 trillion range. Will developers and publishers digitize a gaming or simulation/training version? My estimation of the market sizing and growth is in the chart above, and the following is a brief overview of each category.
According to several airline pilots I have spoken with, every time you get on one of these flying behemoths, it is controlled by people at least partially trained in simulators. Because of the complexity of these aircraft and the constant release of new variants, simulation builders must replicate the entire cockpit. Buttons, switches, yokes, levers, screens. With accurately reproduced controls, the whole platform is often hydraulically actuated to simulate yaw pitch and roll.
|Commercial flight simulators cost tens of millions of dollars each. (Source: Pilot Career News)|
In addition to commercial airline aircraft, private jet pilots use multi-million dollar sims, and sometimes PCs. Also, hardcore enthusiasts build home sims that cost in the hundreds of thousands of dollars.
|Matthew Sheil’s $300,000 Guinness Book of World Record’s most expensive home sim. (Source: WSJ)|
As flight technology progresses, the mastery of complex flight systems becomes as important than traditional piloting skills opening up an important segment for training applications.
Other operator training
Training is a blanket category that covers hundreds of applications. Almost all heavy construction (an expensive) machinery training uses simulators. From backhoes to large construction cranes that can trainers can reproduce the experience including, for instance haptic effects of wind blowing on the load. Racing teams use sims to test car settings, keep drivers sharp, and learn the peculiarities of tracks better. Businesses use sims of software interfaces to reduce training costs. Doctors, nurses, and surgeons have access to training sims.
|Caterpillar backhoe simulator. (Source: Caterpillar)|
|Terex construction crane simulator. (Source: Terex)|
|Mario Andretti in Red Bull Racing Formula One simulator. (Source: CNN)|
More and more control training systems use simulators. The cost of these training systems is high but tiny in comparison to the cost of inefficient or incorrect operation of the real thing. Simulations help avoid situations that can cost a great deal of money at best or lead to disastrous real-world safety consequences at worst.
|Simulated POS systems can save businesses tens of millions in training costs globally. (Source: PR Inside)|
|Virtual reality medical & healthcare training. (source: Arch Virtual)|
By far, the most significant current investment and deployment of simulation and training games is in the military sector. While “boots and the ground” or “hand on the yoke,” real-world training cannot wholly replace with computer training, scenarios of chaotic combat are not so easy to recreate in real-world settings. Fuel, weapons, targets, and ammunition are expensive practice tools. Even a small degree of ability gained through simulation training gives a very high return on investment.
|Australian Airforce F-18 full simulation. (Source: L3)|
|T-72 main battle tank full simulations. (Source: UA)|
|Forward air controller training simulation. (Source: Gizmodo)|
|Humvee driving sim and vehicle gunner full simulation. (Source: Breaking Defense)|
STEAM education games
STEAM (Science, Technology, Engineering, Arts, Math) educational games got their start back in the 1970s with products that were far ahead of their time. As an interesting point of trivia, my business colleague Jon Peddie helped develop a mathematics training game in the ’80s and used his daughter as a beta tester!
Because computers were not ubiquitous in the ’70s and ‘80s, the games had limited reach. Almost everyone has a computer now at home, and in their pocket, so the stage is set.
Compared to the others, this category is not huge financially; however, it touches most of us and has the potential to grow to be the largest segment. Within a decade, the STEAM education segment could exceed $100 billion. “Other Educational Games” mostly apply to STEM subject matter, content creation with educational elements, or historical visualization.
By far the most successful example is Minecraft Education Edition, which Microsoft says is used by thousands of teachers in a hundred countries. The game has sandbox elements that allow teachers to use the game to educate on various subject matters. From biology to physics to coding.
|Minecraft Education Edition in the classroom. (Source: Microsoft)|
Assassin's Creed is another example of a game that has educational elements. Set in historical locations. Ubisoft Discovery Tour removes the Hollywood elements and puts the player in an interactive historical visualization simulation.
|Assassins Creed tour mode. (Source: UbiSoft)|
Music training games are available for game consoles, personal computer, mobile device, and embedded in some instrument like electronic keyboards. Probably the most recognizable brand in this space is the UbiSoft product called Rocksmith, which teaches guitar and bass.
|Rocksmith guitar and bass training. (Source: UbiSoft)|
The traditional global music education industry is not covered by analysts very well and as a result wide-ranging estimates. We will throw a dart at $10 billion globally. (One consulting firm we came across thinks $10 billion is the market size in China alone.)
What do we think?
If one takes a look at all the potential growth in the video games industry, there is a lot to get excited about. Growth can be measured by CAGR (compound annual growth rate), with some smaller categories like eSports putting up some impressive numbers of late. However, when one takes into account absolute growth, these smaller trends almost fade into insignificance when compared to categories that involve paradigm shifts in human behavior. Educational gaming is one of these massive transitions. When we take into account absolute growth and CAGR over the coming decade, I believe that this segment will be a big winner.