- The global military simulation and virtual training market is set to hit $19.4B in 2026, with VR and mixed reality as the fastest-growing segment.
- The US Army's flagship soldier-borne XR program — IVAS — is now being run by Anduril after Microsoft handed over hardware in 2025, and the next-gen Soldier Borne Mission Command competition is awarding prototype contracts to Anduril and Rivet.
- VR cuts training time by up to 4x versus classroom learning and lifts learner confidence by 275% (PwC) — and those benefits scale across pilots, combat medics, vehicle crews and infantry.
- The pattern from energy and utilities is now repeating in defense: enterprise-grade VR training platforms are becoming standard infrastructure, not pilot projects.
Some jobs are hard to train for. If you want to be a professional golfer, you can hack your way around a course until your swing comes together. If you want to be a lion tamer, you'd better be confident before the gate opens.
Military training sits firmly in the second category. Live exercises can approximate combat, but they can't safely reproduce the moment a soldier has to make a life-or-death call in seconds — under fire, in degraded visibility, with a partner depending on the answer. That gap is exactly what virtual reality has been quietly closing for the better part of a decade. And in 2026, the gap is essentially closed.
What started as experimental headsets in Army research labs has matured into a multi-billion-dollar segment of the defense industrial base, with contracts measured in years and billions instead of months and millions. The global military simulation and virtual training market is forecast to grow past $19 billion by 2026, and VR is now the largest single technology segment inside it.
Below is where the technology actually sits today — what it's being used for, who's building it, and what's next.
From Concept to Combat-Grade Infrastructure
Back in 2018, VR military training was still mostly a story about Microsoft HoloLens prototypes and 360-degree video boot camps. The hardware was bulky, the resolution was rough, and the use cases were largely demonstrations of what might become possible.
That's not where things stand now. In February 2025, Microsoft and Anduril announced that Anduril would take over hardware production and future development of the Army's Integrated Visual Augmentation System (IVAS), the soldier-worn mixed reality headset originally built on HoloLens. Microsoft Azure remains the cloud backbone — a fitting handoff that mirrors what's happened across the defense XR market: the dedicated defense-tech specialists are now in the driver's seat, with cloud and AI partners feeding the pipeline behind them.
Then in 2025, the Army formalized the next round: a competition called Soldier Borne Mission Command (SBMC), sometimes still referred to as "IVAS Next." Per the Congressional Research Service, the service has already awarded prototype contracts to Anduril ($159M) and startup Rivet ($195M) — an 18-month rapid prototyping sprint that points to a fundamentally more agile defense procurement model than the original IVAS program ever achieved.
Why this matters for enterprise VR
The lessons the Army learned the hard way — comfort, latency, sensor fusion, MDM, secure deployment — are exactly the same lessons enterprise VR training programs need to apply. Defense is now a forcing function for the entire immersive training industry.
Where VR is Actually Being Used in 2026
Military VR training in 2026 isn't a single use case. It's a stack of overlapping applications, each with its own buyers, vendors and proof points. Five categories dominate.
Soldier-Borne Mixed Reality
Heads-up displays for situational awareness, night vision, drone feeds and live mission data — IVAS, SBMC, and allied programs across NATO.
Pilot & Flight Crew Training
VR/XR cockpits for fixed-wing, rotary and unmanned aircraft. The US Air Force has reported VR-trained student pilots reaching solo flight roughly 10 sorties earlier than legacy programs.
Combat Medic / TCCC
Tactical Combat Casualty Care simulations — applying tourniquets, chest seals, hemorrhage control — used at Fort Bragg's Womack Army Medical Center and across the Defense Health Agency.
Vehicle & Crew Simulation
Mixed reality cockpit inserts let one physical rig replicate dozens of vehicle types. Rheinmetall and Varjo are deploying this approach across NATO.
Synthetic Training Environment
The Army's Synthetic Training Environment (STE) is a single converged platform spanning live, virtual and constructive training — from individual soldier up to brigade command.
Drone & Remote Operator
UAV pilots and remote weapon system operators — a category that barely existed in 2018 — are now one of the fastest-growing VR training segments globally.
The Numbers That Convinced Procurement Officers
Defense buyers don't move on novelty. They move when the training data is solid enough to defend in a budget hearing. The reason VR is now an accepted line item is that the efficacy research has matured.
The benchmark study — PwC's enterprise VR training study — found that VR learners completed training up to 4x faster than classroom and 1.5x faster than e-learning, while reporting a 275% increase in confidence to apply what they learned. For defense applications, "confidence to apply" isn't a soft metric — it's the difference between a soldier hesitating and a soldier reacting.
"By the time a soldier faces a real casualty, they've 'been there, done that' multiple times in VR. They're familiar with the procedures, they can control their stress response, and they're more likely to provide effective care quickly."
— Don-Emeil Watson, Medical Simulator Operations Specialist, Womack Army Medical Center
That observation isn't an isolated quote. It maps onto a fundamental learning science finding: stress-inoculated practice transfers. When the body has rehearsed a procedure under cognitive load enough times, performance under real pressure becomes a recall task rather than a problem-solving task. VR is the only training modality that delivers stress inoculation at the scale and frequency a modern military requires.
Mixed Reality is Eating the Simulator Market
One of the biggest shifts since this article was first written in 2018: the line between VR and the physical simulator has blurred almost completely. The industry's new center of gravity is mixed reality (XR) — real cockpit hardware, real weapons, real radios, combined with fully virtual terrain, weather, opposing forces and mission data.
Varjo's 2026 State of XR in Simulation Training Report, launched at I/ITSEC 2025, found that over 56% of defense respondents are now using mixed reality — not pure VR — as their primary immersive modality. The reason is practical: trainees can hold and operate real equipment while the rest of the world is virtual. The cognitive load matches the real mission.
The same report shows that defense XR adoption has moved past the experimentation phase. NATO members are integrating XR as a core part of their training ecosystem, not a side project.
The Rheinmetall × Varjo example
In late 2025, defense giant Rheinmetall and Varjo announced a strategic partnership to integrate XR-4 mixed reality headsets into Rheinmetall's deployable land training systems. The pitch: one transportable simulator with swappable cockpit inserts can train crews on multiple vehicle types — from a forward operating base, in days, not months. That's the operational reality of XR in defense right now.
What This Means for the Defense Industrial Base
The defense XR market has consolidated around a few patterns worth naming:
- Modular Open Systems Architecture (MOSA). The Army's STE program is explicitly built on "plug and play" integration — terrain, vehicle simulations, training scenarios and analytics all need to interoperate.
- Persistent multiplayer at scale. Joint training across units, locations and even allied forces is now table stakes. Synthetic environments need to support dozens of trainees simultaneously, with after-action review baked in.
- AI-driven scenario generation. Adversary behavior, terrain, weather and mission parameters can now be procedurally varied. Trainees never get the same scenario twice — which is exactly the point.
- Biometric and eye-tracking analytics. The new generation of platforms (like VRAI's HEAT system on Varjo headsets) doesn't just record what a soldier did — it captures heart rate, gaze direction, communication patterns and cognitive load. Instructors can see why a decision went sideways, not just that it did.
- Air-gapped and TAA-compliant deployments. The same headsets that ship to commercial enterprises now have secure variants — manufactured in NATO countries, no wireless components, ready for classified environments.
What's Next: AI, Drones, and the Generational Shift
Two trends are about to compound on top of everything above.
The first is AI-native simulation. Today's training scenarios are still largely scripted. The next generation — already in prototype across DARPA, Army Futures Command and several allied research labs — uses generative AI to produce adversary behavior, civilian crowd dynamics and mission narratives on the fly. The same headset will deliver an unbounded number of unique training scenarios, each calibrated to the trainee's current skill gaps.
The second is the drone operator generation. A growing share of modern warfare is mediated through a screen and a control surface. For UAV pilots, counter-UAS operators, and remote weapon system operators, VR isn't a substitute for the real thing — VR is the real thing, in a training context. As autonomous and semi-autonomous platforms scale, this category will increasingly dominate the military training budget.
What hasn't changed since 2018 is the underlying argument: VR lets soldiers practice the moments that matter most, in the conditions that matter most, at a fraction of the cost and risk of live exercises. What has changed is the maturity, the scale, and the willingness of defense buyers to bet on it. The technology has stopped being interesting because it's new. It's interesting because it works.
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