And that's not only brilliant, but the way most of the innovations we enjoy today in our daily life actually came to be. Computers took a huge step forward during WW2's immense logistic efforts that needed coordination beyond human capability. Going to the moon helped us get small-sized computers, but yet has to prove ANY sensible return on investment... there are some things private capital will just not do, and public capital needs to encourage. Once you take the development costs out of the equation, I think the consumer market becomes as lucrative as it can be.
I'm glad TFC/ED is capitalizing on those mechanics. I figure the main stopper the guys must be facing right now on getting juicier military contracts is that the competition there is though, not on a per-contract basis, but for the scope of projects, i.e. there surely are some contractors pitching multi-billion dollar hypercomplex simulators that generate more "returns" to the military costomers, than the cheaper (and thus less "returning") PC based products ED can offer.
I also think, though, that TFC/ED should put more emphasis (when money permits) in developing the gaming part of their product. I do believe your series would be much more attractive to a broader audience if they featured an excellent immersive tutorial, in the form of a "pilot career" that took you through various very well designed trainings and rewarded you in the process (I understand Matt's Producer's notes intended that... but try to get my point, that is FAR from what I'm trying to convey). Come to think of it, that could come in the form of a MMO. I keep thinking it shouldn't be that hard to find another company as a partner that could provide that expertise and share the gains. ED has already done the hard part, and all is needed is some guys with excellent storytelling talent and the ability to program good UIs, which are much more cheaper than a simulator engine and aircraft. Your "Arcade" variant could get quite a boost from this model as well.