From The White House To Walmart: Hearables Are Heating Up

The move toward the deregulation of hearing devices that could help 48 million Americans suffering from mild-to-moderate hearing loss is now in its third presidency. In 2015 President Barack Obama’s Council of Advisors on Science and Technology issued a report with the intention to drastically reduce the cost of hearing aids, drive innovation in technology, and increase competition and affordable consumer options for health and wellness. The council’s recommendations were echoed by a 2016 report from the National Academies of Science, Engineering and Medicine. In August 2017, President Trump signed the Over-the-Counter (OTC) Hearing Aid Act into law, giving the FDA a statutory deadline of three years to publish their guidelines.

That publication was originally scheduled by the agency for November 2019. Advocates of the bill, as well as companies positioning to capitalize on the new markets it would help create, eagerly awaited the announcement of the official guidelines. The November date, and even the August statutory deadline that followed, came and went. The FDA never delivered. According to phone conversations between our office and FDA representatives, as recent as May of this year, the agency still didn’t have a new release date on the calendar. 

While the lack of formal guidelines hasn’t stopped industry players from positioning to own their share of the projected $80 billion Hearables market, the agency’s radio silence has been a bit of a mystery to Hearables and health advocates alike.

Back to the White House

In response to the stall, and sparked by a November 2020 article in the New England Journal of Medicine, congress jumped back in the ring. Senators Chuck Degrassley (R-Iowa) and Elizabeth Warren (D-Mass) wrote a memo urging the FDA to initiate the ruling process without further delay. 

Last week, another eight months later, president number three took a stance for the future of Hearables, urging for increased competition and more affordable and democratized health options for Americans. President Joe Biden gave the FDA 120 days to publish the outstanding guidelines. Following the president’s announcement, stocks of the dominating hearing aid companies fighting to keep profits high and ward off Hearables competition fell by 5-9%. 

So why the delay? 

Some have blamed the COVID-19 priorities, although the FDA told my staff last summer that the division handling the OTC guidelines had no responsibilities related to COVID-19. Others have pointed to lobbying efforts by existing hearing aid companies, claiming they were working to stall the pending increase in competition. But anyone who would attribute increased lobbying spends by hearing aid veterans like Starkey as an effort to keep competition at bay could just as easily point to Bose’s lobbying initiatives as an effort to move the OTC bill forward. Based on the FDA standard protocols, experts say the actual publication date could still be as late as spring 2022.

Whatever the reason for the delay, plans for the Hearables Revolution are already heating up behind closed doors in both Washington and Silicon Valley. And, while the publication of clear OTC guidelines will be another leap forward in narrowing the divide between pricy prescription hearing aids and the soon-to-explode affordable and feature-rich Hearables market.

Hearing is not only big business; it is a real concern. Hearing loss is the third most common physical condition after arthritis and heart disease. Untreated hearing loss has been linked to anxiety, depression, social isolation, reduced mobility, falls, dementia, and lower quality of life and relationships. It is also an issue facing more than elderly populations. Hearing loss affects millions of people under the age of 35, as well as kids who go untested and consequently struggle with learning. Greater competition and incentives will provide a wider range of innovative and democratized solutions for optimal hearing. The results will unquestionably contribute to the future health and wellbeing of the consumer. 

Why Do Hearing Aid Laws Matter in the Larger Hearables Marketplace?

From a traditional healthcare perspective, the hearing aid industry sets the current medical standards that influence broader consumer concerns about hearing loss, hearing enhancement, and the implications of hearing health on an individual’s wellbeing. They also represent a growing high-ticket reimbursable market that’s already worth $1.6B in the US, and slightly more in China. 

The Big 5 hearing aid companies, however, only serve 14% of the estimated 48 million people currently suffering from hearing loss in the US. They also do little to address the social stigma, help younger and uninsured populations, or keep costs down. They have proven themselves unwilling to serve the majority of consumers in need: people dealing with mild to moderate hearing loss but don’t require medical grade hearing aids or cochlear implants. According to the World Health Organization (WHO), the number of people impacted by hearing loss is expected to reach 2.5 billion worldwide by 2050. 

Hearables have an opportunity to fill a large part of that market gap, while providing products that deliver infinitely more capabilities than traditional hearing aids at a fraction of the cost. Smart audio and wearable product manufacturers are already positioning to serve that population and share in the Hearables market pie, which is expected to reach $80B by 2025. 

Crossing the Line from Audio to Wellness Products 

In an effort to build their health and wellness division, consumer audio giant Bose has been making moves in both the medical hearing aid market and wellness-based Hearables products. They introduced SoundControl Hearing Aids (the first FDA-cleared direct to consumer self-fitting hearing aid for adults with mild to moderate hearing loss) for $850, less than 1/3 of the price of traditional hearing aids. The product offers added features via Bose Hear app, including Custom Tune personalized EQ and multiple preset modes for different environments. It still looks like an old-school hearing aid, however, and lacks many of the integrated audio features one might expect to find in the next generation of high-end earbuds, or any future-ready product from Bose (like voice assist, hands-free calling, high-fidelity music, sensor capture, spatial audio, and noise cancelation). 

For internal strategic reasons, Bose dropped one of its early entries into the hearables market - Hearphones - in favor of focusing on the more easily disruptible, less competitive, and higher profit FDA-approved hearing aid market. The move gives them an opportunity to not only create a solid revenue stream for their new healthcare division, but also to establish them as a credible and trusted wellness brand in the eyes of the consumer. Both of these positions will prove helpful when they do release their next generation of wellness-based Hearables into the highly competitive audio products market, in which they are already well established. It looks like they will, however, continue development of their in-ear sleep aide tech - Sleepbuds - to capitalize on another significant opportunity in the Hearables and wellness markets.

In another marriage of consumer audio tech and hearing health, renown audio specialist and headphone and microphone manufacturer Sennheiser recently sold its consumer product division to Swiss hearing aid company Sonova for $240 million. The deal included an in-perpetuity license for use of the legendary Sennheiser brand. In addition to giving Sennheiser immediate credibility and positioning in healthcare, the move will allow Sonova to move closer to the consumer audio product future of Hearables. 

When it comes to the ever-increasing number of startups entering the space, there seems to be no sign of slowing, especially if you measure future growth by current investments. Global VC funding for Q1 of this year marked a record-setting quarter for investments into Digital Health companies, hitting $7.2 billion - twice that invested during the same quarter in 2020. Granted, digital health investments are diversified across different sectors, with telehealth being one of the main attractions. Even indirect investments in digital health and wellness can bolster the creation of a robust ecosystem for Hearables and the future of sound health.

Global Tech Giants Gearing Up

Other companies looking at hearables as a way to expand their audio product expertise into the $1.5 trillion global wellness market include the mega brands Apple, Google, Samsung, and Amazon. 

Apple may still be the industry goliath best positioned to capitalize on the future of Hearables in the audio product and content markets, both for health and entertainment. They have all the pieces of the puzzle. They can also afford to take their time as the market ripens. 

One example of how they are beginning to amplify their position at the intersection of music, health and fitness is through AppleFit. Fitness is a sizable slice of the wellness-market pie, as well as a good testing ground for brand credibility and potential crossover into other health and wellness areas. This is especially true when we add the next level of sensors, real-time biometric tracking, and responsive content features that can support both fitness enthusiasts and personalize health. 

Apple has already included some sensor capabilities in their latest set of industry-dominating AirPods and have been patenting and buying technology to include in future generations. They are leading the wearables market with their Apple Watch, which now includes an ECG feature. In addition, Apple has hired dozens of doctors and health professionals to build up their health-tech division. In a 2019 interview, Apple CEO Tim Cook referred to healthcare as an area that will be one of Apple’s most important contributions to mankind. AC Wellness, a subsidiary of Apple, has already been providing health services to its own employees in the Bay Area. 

Amazon, a highly strategic company that sets their sites on ten-figure market opportunities as much as 5-7 years out, has one eye focused on the future of digital health. That course will not likely change as their new CEO Andy Jassy takes the helm. During his 24-year tenure under Jeff Bezos, Jassy helped launch and run Amazon Web Services (AWS), establishing AWS as the tech giant’s #1 money-maker. 

Amazon has already taken lead as the biggest industry vendor of cloud services, with 30% of the global market and healthcare giants Pfizer and Johnson and Johnson among their clients. 

Beyond the cloud, Amazon has has been purchasing digital health startups, including Health Navigator - a provider of online symptom checkers, health bots, and telehealth systems. Amazon Care - Amazon’s virtual medical clinics intended to service over 1M Amazon employees - is currently running a pilot program for workers at their Seattle headquarters. 

On the consumer product side, there is no denying that Alexa will serve Amazon well as they build their digital health ecosystem. Alexa is already offered on several third party products including Fitbit and Amazfit - a creator of earbuds designed to help with biometric tracking and sleep. Other smartaudio wearables from Amazon include the Halo fitness tracking watch and the Alexa-enabled Echo Buds. While not yet part of their health and fitness offerings, Amazon Music has been aggressively building and promoting high-end audio - a content feature that will become standard in an integrated digital health future.

Combine the right acquisitions with the largest and most robust customer behavior database; then add their leading positions in Cloud and Voice (see Why Voice Will Lead Biometrics In Hearables); and Amazon is poised to go head-to-head with Apple when it comes to powering smart devices and biometric data processing for an amplified Hearables future. 

Back to White House, Hearing Aids, And A Happy Hearables Future

From behind the silicon curtains, the tech giants might look like the only ones who can win in the Hearables Revolution. There is ample opportunity, however, for new players to disrupte the status quo and capitalize on the market opportunities that will be created by Hearables in an Amplified Future. 

Let’s take a trip back to the White House and another listen to the message that includes the FDA nudge to unlock the OTC Hearing Aid Act. By giving a clear warning to Seattle and Silicon Valley tech goliaths and breaking up the gridlock by the Big 5 hearing aid companies, Washington is taking a stance for further democratization of the marketplace. The core purpose of President Biden’s broad-reaching initiative is to increase competitive opportunities for entrepreneurs and come down harder on antitrust and monopolization by those same tech giants. 

The new pending FDA guidelines and disruption from the Hearables Revolution are already catalyzing innovation and opportunities for forward-facing hearing aid startups.

One such startup, Olive Union, is working to change the hearing aid stigma that

is keeping millions of consumers from addressing their hearing needs. They recently released their dual-purpose AI hearing aid and wireless smart earbuds Olive Pros. Olive has already raised $20M in funding. The manufacturer claims that their new Olive Pro is the first FDA-registered smart hearing aids that optimize hearing and deliver high-fidelity sound. One difference between Olive Pros and the previously mentioned Bose product, is that they look and feel more like contemporary earbuds, than traditional hearing aids.

Eargo, another next-gen hearing aid company, raised $71M last July before going public in October. The company offers direct-to-consumer hearing devices and software, an online hearing test, and options for telehealth consultations and support. While still fairly high-priced, they do address some of the hearing aid stigma and design issues by providing tiny medical hearing aids that are nearly imperceivable once inserted. 

Why The FDA Guidelines (and Hearing Aid Companies) Matter

With the potential scale of the consumer Hearables market and its inevitable impact on health and wellness, you may be asking: “Why should companies interested in the future of Hearables pay attention to the hearing aid sector and the pending FDA guidelines?”

Here’s few points to help answer the question:

1. Developers of Hearables have much to learn from the hearing aid industry’s decades of research and experience related to the workings of the human ear and customer behavior.
2. As wearables move into the ears, hearing health concerns and audio quality awareness will increase, requiring expertise from both sides of the fence.
3. As personalized hearing profile options and features addressing mild to moderate hearing loss become more ubiquitous with high-end multi-purpose hearables, the market for more fashionable, intelligent and affordable medical-grade hearing aids will also grow. 
4. Vendors of Hearables products and service providers addressing mild to moderate cases of hearing loss will need relationships with medical professionals who are trained to address more severe cases.
5. Any hearing aid company hoping to attain, or retain, a significant market share will need to invest into Hearables.

In the ideal scenario, the Hearables Revolution will leave consumers with a win-win solution in which both sides of the aisle meet in the middle. Combining resources and expertise could amplify innovation for the industry as a whole and inspire levels of collaboration needed for ensuring the consumer’s optimal sound health experience.