Headphones Market on Track for 27% Value Growth, Despite COVID-19

Headphones Market Analysis and Commentary

Despite the impact of COVID-19, the worldwide headphones aftermarket will enjoy another year of strong growth in 2020. According to new figures released by Futuresource Consulting, the category is on track to end the year with a 10% year-on-year increase in volume and 27% in value.

“Self-isolation and social distancing measures are generating demand for products that complement and improve the stay-at-home lifestyle,” says Luke Pearce, Research Analyst at Futuresource Consulting. “The seismic cultural shift is proving to be of real benefit to the headphones market, and we’re seeing particular activity around features like active noise cancellation (ANC), microphone performance, TV connectivity and kids’ headphones.”

The State of Headphones, Now and Beyond COVID-19

Although the spread of Coronavirus and its long-term effects are difficult to gauge, Futuresource has modelled a range of scenarios to explore the potential impact on the headphones market. The most likely, middle-ground scenario suggests that the Chinese manufacturing shortages experienced in Q1 will be resolved, on the whole, by Q2 2020, and Chinese domestic demand will recover earlier than most. Western Europe and North America will be impacted mostly in Q2 and Q3, but will recover strongly, with delayed new product launches and latent demand from earlier in the year combining for a heavily loaded Q4.

Short-term Supply Chain Challenges

“Our research shows that Q1 shipments outside China weren’t as affected, due to many major brands maintaining inventory from 2019,” says Pearce. “However, we expect Q2 to be significantly impacted. This is due to a combination of a lack of manufacturing in the previous quarter, the depletion of inventories and the spread of the pandemic into an increasing number of countries. Despite the uncertainty, some brands will continue to build inventory throughout the year, while others are being a little more cautious.”

Futuresource expects prices to rise gently due to supply shortages being passed on down to consumers. In addition, a scarcity of cheaper alternatives will redirect consumers to more premium brands with higher ASPs. The adoption of true wireless, particularly in developing regions, will also experience some inertia due to the reduced supply of products in cheaper price segments. As unemployment levels rise and the global economy is likely to move into a recession, this may impact headphones demand, particularly premium over-ear and true wireless products, which are considered discretionary purchases.

Headphones will Prove to be Robust

“Despite the challenges, we expect the headphones market to hold up well,” says Pearce. “Futuresource carried out a consumer research study earlier this year, across France, Germany, Spain, the UK, USA and China, focusing on buyer behaviour habits across a range of CE categories. Even then, online purchases dominated the audio sector, with 67% of headphone purchases made online. It’s a good sign for the continued stability of the headphones market.”

Premium Features Move into the Foreground

In the true wireless category, Apple continues to lead the pack. Yet even when Apple’s figures are excluded, the market still saw huge growth last year, to 52 million units from less than five million in 2018. True wireless will continue to grow exponentially out to 2024, accounting for more than 75% of overall volumes by the end of the forecast period.

ANC will continue to gain traction, with Futuresource forecasting the technology will be embedded into 42 million units this year, up from 11 million in 2019. Biometrics will also begin to play a larger part in the category later in 2020 and throughout 2021. Watch out for monitoring of heart rate, sleep tracking, ECG, SpO2, body temperature and even blood sugar measurements. Futuresource research also points to products with assistive hearing capabilities emerging into mainstream consumer electronic products towards the end of 2020 and early 2021.

Futuresource Consulting’s worldwide headphones market report provides an updated outlook for the worldwide headphones market, with all figures and forecasts representing Futuresource’s latest assumptions on the impact of COVID-19 as of the time of April 2020. For further information on this report, please contact Jack Tammaro via jack.tammaro@futuresource-hq.com

About the author

Luke Pearce

Luke Pearce is a Market Analyst in the Consumer Audio team at Futuresource Consulting. His focus is tracking and forecasting the latest market trends and technology developments in headphones and true wireless (TWS) markets worldwide.

His work has also led him into additional areas including extensive research for gaming headsets, luxury audio, hearing augmentation and audio-technology consumer survey reports. Luke joined Futuresource in 2018 and holds a BSc in Industrial Economics from the University of Nottingham.