Headphones, Keep Up

By Alex Lau & Andrew Van Hasselt

A new niche is opening up in the audio tech industry.

The growing popularity of audio-focused entertainment, such as live streaming, podcasts, and audio books, has pushed the audio industry from humble beginnings to an incredible space brimming with potential.

If we pause for a moment to consider, we realize that interacting with audio on a daily basis is far more prevalent than we think. For example, as you travel to work in the car, you might be listening to a podcast, followed by making a string of conference calls at work, before settling down at home to watch the latest series of your favorite show. Our ears are constantly at work. However, innovations in the audio space pale in comparison to other industries, such as mobile technology or wearables.

This large, untapped market provides the perfect storm of opportunities for innovative startups willing to take advantage of the gap. This can be seen in transactions in the M&A space, such as Apple’s acquisition of Beats Electronics for US$3 billion in 2014.

The growth of the headphone market has also been guided by hardware standards, as more and more manufacturers design phones without headphone jacks, strategically guiding consumers to purchase wireless headphones. In the first half of 2019 alone, global audio device sales grew 15% compared to H1 2018, to a sales volume of around US$9.6 billion (GfK). According to Statista, 445 million headphones were sold in 2019, and this number is expected to grow to an astonishing 1.3 billion by 2027.

For startups ready to pounce on this opportunity, the important question is: where is the audio market going next? Although wireless technologies are prevalent right now, the growing focus on health and wellness will soon sweep the audio market by storm.

If we consider the ubiquity of headphones and the rise in podcasts, audio books, and video conferencing, paired with the complexity and fragility of the ear system, there exists a gap between the growing use of headphones and hearing protection.

The ear system is rather complex and delicate, making it vulnerable and subject to degradation. According to WHO, unaddressed hearing losses cost the economy US$750 billion annually, and not only from the costs of hearing aids, but also in terms of opportunities for educational support, losses in productivity, and other societal costs.

There is likely to soon be a demand for headphone manufacturers that are able to use technology to provide clear sounds in a manner that protects the ear system. These technologies can use personalized special algorithms for each individual’s ear system.

Another avenue being explored is the application of hearing aid technology to earphones. This technology can be applied not only to the hearing-impaired, who struggle with finding headphones equipped with hearing aids, but also to the general public looking to protect their hearing while still enjoying an unparalleled audio experience.

The rise of the wellness and health niche within the audio market is imminent. For startups ready for the opportunity, the prospects are vast.

About the Author

Alex Lau is an entrepreneur and founder of AiiO Limited, an audio company and PicFetch, a picture App. Alex has also been in private wealth management for 8 years, specialising in serving high net worth clients and family offices.

[email protected]

Professor Andrew Van Hasselt is involved in the entire spectrum of hearing restoration during his 30+ year career at CUHK. Pioneering surgical techniques and alleviating deafness in new-borns through to the elderly has gifted Andrew with a deep understanding of human hearing and communication.

[email protected]

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