Simulation, gaming sector plagued by fiscal challenges.

• Author: Insinna, Valerie

* Restrictions on the travel of government officials gutted the Defense GameTech Users Conference held during April in Orlando, Fla. Total attendance at the conference, which aims to increase the use of serious games by the Defense Department, dropped to a third of the previous year's show.

The few military attendees, who had taken personal time off work, wore pink ribbons on their badges that stated, "I'm not really here."

The state of the GameTech conference illustrates how simulation companies are facing many of the same challenges as other defense contractors. Even as military officials assert that the need for simulation tools has only increased, the industry is contending with funding delays, consolidation and increased competition over fewer contracts.

With the fiscal climate looking "pretty bleak," the simulation industry should not depend on the U.S. military as its sole source of business, said Frank C. DiGiovanni, Defense Department director of training, readiness and strategy, during a keynote speech at the conference.

"You've got to look for surrogates in other sectors. So what are the sectors that could use your capabilities?" he asked a crowd of industry officials. "I really encourage you to think about the business model you are using."

Not all of the discourse was so negative. At the Interservice/Industry Training, Simulation and Education Conference in December 2013, military officials said simulations would be vital to training troops during the budget crunch because they are cheaper than live training.

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"We have a moral obligation as leaders to make sure that those soldiers, sailors, airmen and Marines that we send forward are ready," said Marine Corps Maj. Gen. Glenn Walters, then the commanding general of the 2nd Marine Aircraft Wing. Simulation "is the one key to get us there at the best bang for the buck, no doubt in my mind."

But just because military officials see the value of simulators and serious games doesn't mean that money is available to buy them. Budget cuts have delayed work on contracts for the Army's Program Executive Office for Simulation, Training and Instrumentation, for example, and likely will be a problem for some time.

"We have a large list of gaming requirements that have been awaiting funding. Given our current level of funding, many will be on the waiting list for a while," said Kristen McCullough, spokeswoman for PEO-STRI. This includes both new games as well as contract...