What the Rise of Active Noise Cancelling Means for the Headphones Industry

Active noise cancelling (ANC) headphones has been moving into the foreground over the last few years, advancing from 7% of volumes in 2018 to 9% last year. It is expected to capture as much as 20% of the market in 2020. Luke Pearce, Headphones Analyst at Futuresource Consulting, explores the rise of ANC and what it means for the future of the headphones industry.

ANC was initially introduced in over-ear headphones, targeted at regular travellers. The feature commanded a price premium and brands such as Bose, Beats and Sony led in this space. Over the years, ANC has become more accessible and targeted to a wider audience, due to a rise in use cases and improvements in the technology. The feature which originally required more space to be incorporated into headphones (hence over-ears was the preferred form-factor) can now be integrated into much smaller true wireless headphones. The surge in demand was accelerated with its inclusion in Apple’s Airpods Pro. As a result, true wireless headphones accounted for 27% of total ANC headphones units in 2019 and we expect this trend to grow rapidly, as more brands start to introduce the feature. By the end of 2020, Apple will have gained more share as a direct result of its success with Airpods Pro.

North America is the biggest market for ANC, accounting for more than one third of shipments last year. However, with an influx of ANC headphones from Chinese brands, we can expect the Asia Pacific region to make a strong impact on global demand, as availability cascades down into the lower price points.

No Sign of Slowdown for ANC Headphones

Although ANC’s 18% share of the headphones market this year seems impressive, it is only just stepping onto the launchpad. By 2024, our forecasts show that ANC will command approximately 60% of the market. This is coming into play due to a combination of consumer appeal and technological advancements.

Falling Headphones Costs and Shrinking Sizes

Miniaturisation of technology is a key contributor. As the components needed have become very small, they can now fit within the tiny real estate of earbuds. Plus, the cost to implement ANC in true wireless has dropped dramatically in a relatively short amount of time. Our research shows that costs have fallen almost three-fold when compared with just two years ago. As a result, we will begin to see ANC debut in more affordable products, with a growing presence in the sub-$100 segment as early as next year.

With all the demand and technological advancement, competition for ANC implementation has also intensified. Many system-on-chip (SoC) vendors such as Qualcomm are incorporating this feature into their products for an easy all-in-one solution. Qualcomm’s latest SoCs include an integrated hybrid ANC, as well as a leak-through facility, which allows for entry of environmental noise.

New Use Cases for Active Noise Cancelling Emerge

The COVID-19 pandemic has created a unique situation globally, with more consumers required to stay indoors and work or study from home. This ‘new normal’ has made ANC a desirable feature within headphones, enabling consumers to control environmental distraction noise from children, pets and neighbours during work calls or for online education.

There is no doubt that consumer demand is at an all-time-high, with ANC now recognised as a mark of quality which adds value to audio experiences. Our recent Futuresource Audio Tech Lifestyles consumer survey shows that more than half of respondents consider it an important or extremely important feature when looking to purchase headphones.

The Future of ANC in the Headphones Market

It’s likely that ANC inclusion will soon become a tick-box feature within headphones so for the brands, getting ANC right is the big challenge. We’ll see battle lines begin to emerge around the quality and execution of ANC instead, with the best products providing a perfect unison of product design, chip performance and software. Larger brands will also be able to differentiate their offerings by improving customer experience through app-based personalisation and transparency modes, which enable consumers to control ambient noise. We have already begun to see some exciting developments here, such as these ‘Transparency’ modes being adapted to enable external sound amplification to correct mild hearing loss, such as with the ‘Headphone Accommodation’ feature on the AirPods Pro, released as part of iOS 14.

For further information about the latest trends in the global headphones market, please contact Jack Tammaro via jack.tammaro@futuresource-hq.com

Our virtual Audio Collaborative event this November will also be covering a range of exciting panel sessions discussing the future of audio, with topics including the battle for ‘Share of Ear’ and growth of hearables. Find out more and save your seat today. Click Here >>

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.