Sony and WSA Partner to Create an OTC Hearing Aid: A Rush for Consumer Electronic Giants into Hearing Aids?
The news on Tuesday that Japanese consumer electronics giant Sony and Danish hearing aid manufacturer WSAudiology are teaming up to deliver over-the-counter (OTC) hearing aids was a surprise, but hardly a shock. Sony may be joining well-known brand names like Jabra, Philips, and Sennheiser in being leveraged by traditional hearing aid manufacturers to attract new, younger customers. Aside from raising awareness of consumer electronic branding partnerships, the news also puts a spotlight on how OTC is beginning to disrupt traditional hearing healthcare.
Consumer electronics giant Sony has thrown in with Denmark-based WS Audiology to battle for dominance in the OTC hearing aid market.
A match made in heaven?
Sony’s broad product line and consumer earbud appeal (e.g., Sony WF-1000XM4) will be paired with WSA’s hearing aid manufacturing, which is exemplified in its professionally-dispensed Widex, Signia, and Rexton brands, and regulatory know-how. WSA has already been granted premarket clearance for one self-fitting OTC hearing aid prior to the Sony branding announcement.
Gold in them-thar OTC hills? Sony joins a competitive and difficult market
The rush may be on for consumer electronics companies to enter what appears to be a mostly untapped and lucrative market. Although the statistics are somewhat deceptive, there are about 29 million Americans who could benefit from hearing aids, and yet only 1 in 5 actively use them. Numerous companies—including Bose, Nuheara, Alango, Olive Union, and more—have already been angling at this confluence where consumer electronics meets self-fitting amplification to try to get a piece of the untapped market. Market expert Nick Hunn has estimated that “hearables”, including products intended for mild-to-moderate hearing loss, will be worth $80 billion in 2025.
Seen from the perspective of people inside the hearing industry, Sony is just one more consumer electronic brand joining the competitive fight for the ears of people with hearing loss. While the FDA’s new OTC hearing aid category promises to open up a huge market opportunity by making hearing aids more accessible and affordable, there are other factors like stigma that might continue to hold people back.
People with milder forms of hearing loss are often younger and they’re not always a good fit for the traditional medical model. The stigma of admitting you have a problem and stepping foot into a medical practice that typically serves the needs of the elderly can be enough to keep many people on the sidelines. Convenience also looms large, as prescription hearing aids usually require time for hearing assessment and 2-4 repeat visits for an accurate and proper fit. But, it’s yet to be seen if the increased privacy and convenience of self-fitting and home delivery will motivate consumers to take the next step.
Perhaps a bigger obstacle for the burgeoning OTC industry is the fact that most people with hearing loss don’t feel they have a problem that warrants taking action. One study found that three-quarters of people with hearing loss “demonstrated a tendency either to minimize their hearing loss or to report a lack of need due to their life circumstances.” This was especially true for those with milder forms of hearing loss, and these are the individuals targeted by the new OTC regulations.
And, the hearing aid market is more complicated than most assume. Hearing aids are small and have to contend with the wax and moisture inside our ear canals. Those who need hearing aids are often less tech savvy and often come with dexterity and/or cognitive challenges. A recent survey of audiologists revealed that most expect consumers to struggle when self-managing their own devices. Any company selling hearing aids should expect to invest heavily in customer support and to incur a greater-than-average product return rate.
Does the new OTC rule really change anything—or is it just one more component in a dynamic market?
The new OTC rule is not going to create a new type of product. Direct-to-consumer (DTC) hearing aids have been around for decades, and many existing DTC manufacturers, like Eargo, will merely re-register their products with the FDA to reclassify them as OTC hearing aids. So why then are so many industry pundits expecting the new OTC rule to change anything for consumers, or create any new opportunities for manufacturers?
OTC may usher in a new era of investment and research and development in the hearing industry. If hearing aids can be made cooler, cheaper, more effective, and easier to setup and use, maybe they will gain broad market acceptance. Aside from that, the new regulations have raised awareness about the health implications of untreated hearing loss, and the availability of at-home do-it-yourself products. If companies like Sony, Jabra, and Sennheiser ramp up OTC device marketing, this could further increase awareness and drive hearing aid acceptance even beyond the current prescriptive (clinical), mass merchandiser retail (eg, Costco), and OTC markets, and into the emerging “healthables” market of personal healthcare monitoring devices.
“The major hearing aid manufacturers are preparing themselves for a future of a more diversified and complex hearing industry—both in terms of technology and in terms of distribution channels.” says Niels Granholm-Leth, a veteran hearing healthcare market analyst and Head of Equity Research at Carnegie Investment Bank in Denmark. “New technologies will expand the reach of conventional hearing aids to become the connecting link to personal health monitoring and opens the door to a digital world of apps and streaming. However, much of the same technology will be used by the consumer electronics industry to expand the reach of music earbuds and headsets in the area of hearing healthcare. In this complicated matrix of medical devices and consumer electronics, the hearing aid manufacturers will need different brands to maximize their outcome within each of the distribution channels.”
A Historical Look at Branding Partnerships
Sony is ranked as the fifth-largest consumer electronics company in the world, but third (after Apple and Samsung) when counting only those that make earbuds. WSA is the third-largest global hearing aid manufacturer among competitors known as the “Big-5” that includes Sonova, Demant, GN, and Starkey. All Big-5 companies—except US-based and privately owned Starkey—now either owns a prominent headset company and/or has embarked on branding strategies that further differentiate their professional product lines from big box retail or the nascent OTC market. Here’s a quick timeline of consumer electronics brands in hearing aid marketing:
Sony and WSA enter into a partnership agreement and various ancillary agreements with the aim of jointly developing and supplying new products and services in the OTC self-fitting hearing aid market, beginning with the United States.
Sonova completes the purchase of Sennheiser’s Consumer Division after announcing the $243 million deal in May 2021. Many people expect Sonova to launch a Sennheiser-brand OTC hearing aid.
Nuheara secured a 3-year global supply agreement with Sonova which owns Phonak and Unitron, as well as distributors AudioNova, Geers, Boots Hearing Care, Lapperre, and Connect Hearing. (Note: This isn’t a branding partnership but warrants mention because Nuheara has applied to the FDA for its device to become an OTC hearing aid.)
Demant announced the launch of a new headset company, EPOS, and the products were initially branded as EPOS/Sennheiser until Demant and Sennheiser officially ended their joint venture in January 2020 (see below).
Demant—the parent company of Oticon, Bernafon and Sonic—announced a partnership to bring Philips-branded hearing aids to hearing healthcare, which today are offered at Costco Hearing Centers. It’s possible Demant could also leverage the Philips name for an OTC hearing aid, use its EPOS brand, or partner with yet another highly recognizable name for that purpose.
Amid a period of intense merger and acquisition (M&A) activity (including buying ReSound and Beltone), GN Danavox purchased Jabra for $40 million, with Jabra going onward to become the top brand for GN Audio. Currently, the Jabra brand is being used in Costco and for GN’s Jabra Enhance Plus, which should become an OTC hearing aid.
Starkey goes it alone, for now
Starkey is now the only major hearing aid manufacturer without a headset division and/or a large consumer electronics branding partner. However, at least for the present, the company doesn’t see the need.
“Starkey’s focus is on patient satisfaction and serving our customers—the hearing healthcare professional,” company CEO and President Brandon Sawalich told HearingTracker. “Since Starkey is the largest U.S.-owned hearing aid manufacturer, we have been approached by many popular consumer brands over the last 5 years, and we passed…The patient is always the priority, and with public companies there may be a ‘space race’ to who gets the best consumer brand, but regardless of the channel, people don’t buy hearing aids because of the consumer brand; they buy better hearing and service from hearing healthcare professionals.”
Sawalich has written editorials noting that hearing loss is a medical problem best treated with professionally dispensed medical devices, and points to the long list of failed hearing aid products from the likes of Zenith, 3M, Sony (in the 1980s), Panasonic, Philips, Bausch and Lomb, Johnson and Johnson, and more recently Bose. “Our industry is at a crossroads and one of opportunity if it’s done correctly,” he notes. “…We have been offered shelf space, consumer big-box electronic opportunities, and [the other ideas] you’re seeing now. I am focused on Starkey’s mission and will watch how all the recent announcements play out. It was only a year ago Bose was about to take over our industry.”
Can Branding Partnerships Pave the Road to Success for OTC Hearing Aids?
As Sawalich points out, the most recent cautionary tale for the importance of branding was the Bose SoundControl self-fit hearing aid. Although SoundControl carried the Bose name, was launched at $850 per pair, and fitted a wide range of hearing losses, the product was discontinued after less than 9 months. This demonstrates that, while there may be “gold in them-thar OTC hearing aid hills,” it could take considerable time and effort to find widespread acceptance for the devices.
In this short video, HearingTracker Audiologist Matthew Allsop poses the question, what does the demise of the Bose SoundControl mean for the OTC hearing aid market? Closed captions are available on this video. If you are using a mobile phone, please enable captions clicking on the gear icon.
Granholm-Leth agrees Starkey doesn’t need to rush to find a branding partner because of its staunch position on professionally dispensed hearing aids and possibly the company’s U.S. market presence. “In any case, Starkey is probably not in a hurry, as the OTC market will take time to ramp-up,” he says.
Success for a hearing aid product relies on more than just cost, accessibility, and brand presence. It’s difficult to produce an inexpensive discretionary hearing device people want to buy and wear that features high-quality sound, comfort and hearing in noise, rechargeability with 12+ hours of battery life, all wrapped up in a cosmetically pleasing earpiece. As Tarik Zukic recently pointed out, this means “Weirdly, the fate of the OTC category depends on the [same hearing aid] companies that persistently lobbied against its introduction.”
Is branding important for wider acceptance of hearing aids?
Branding can help generate more consumer interest and trust in an OTC or retail product, but it only goes so far. If we really want to get serious about addressing hearing loss, we may need to see mandated Medicare and insurance coverage for hearing aids. And, there’s some hope that this will happen—Dr Frank Lin, a key advocate for the OTC hearing aid regulations, stated that his new mission is to update “Medicare regs to complement the availability of innovative OTC hearing aids”.
We were able to help get this across the finish line through the extraordinary bipartisan efforts of @SenWarren, @ChuckGrassley and @POTUS. Updating Medicare regs to complement the availability of innovative OTC hearing aids is next on the list! https://t.co/svA1WlZ8Oa— Frank R. Lin, MD PhD (@DrFrankRLin) September 6, 2022
Unfortunately, neither the power of branding nor the new OTC hearing aid regulations do anything to address the most urgent hearing healthcare needs in the United States: they do nothing for people with more severe hearing loss who are most in need of prescriptive hearing aids and must pay large out-of-pocket costs for them. They also do nothing to help children with hearing loss. So there is a lot more to accomplish in terms of improving access to hearing healthcare and hearing aids.
“The OTC hearing aid category appears to be a political compromise between different hearing aid systems,” says Granholm-Leth. “However, I’m not sure the OTC solution will lead to the anticipated higher adoption rate among the hearing impaired in the United States. That requires people who think they may have a hearing disability walking into Best Buy and putting $500-800 on the table for a product they don’t know for sure will help them. That’s not going to work.
“If politicians want to help the hearing disabled population, they should have looked towards Germany and France,” continues Granholm-Leth. “They have recently made hearing aids fully covered up to $700-1000 for people with certain hearing disabilities. By that, the hearing aid adoption rate in Germany and France has risen from around 30% to around 50%, and has made proper hearing healthcare accessible for people who need it.”