In India, branded headphones form an over Rs 1,000 crore industry growing at 8-10% CAGR.
With rapid growth in smartphones and content consumption on the go, headphones as a category has emerged as a big constituent in the accessories segment. In India, branded headphones form an over Rs 1,000 crore industry growing at 8-10% CAGR, as per industry experts. Major players include Apple, Harman Kardon, Bose, Sony and Sennheiser, with offerings ranging from entry level to premium products.
“India is one of the only regions globally where headphones are equal to or more than the revenue of related categories like connected homes — the soundbars or smart audio including Bluetooth speakers,” says Sumit Chauhan, VP, lifestyle audio division at Harman India. The average selling price of Harman’s Bluetooth speakers and connected home devices (like soundbars) is higher than headphones. “Yet, in terms of volumes, the revenue split between headphones and other categories is actually 50:50,” Chauhan shares, while indicating this may be true for other players as well.
Tuning in to the opportunity
While headphones is a growing industry, the penetration is still very low in India which Kapil Gulati, director, consumer segment, Sennheiser India, views as an opportunity. “Globally, there are low double digit growth numbers but in India, there is a 40% y-o-y growth in the headphones business,” he says. Furthermore, wireless technology could be the next big thing. “Globally, about 60% of headphones sold last year were wireless; in India it was 20%. In the next three years, this figure will go up to 50-60% for India,” he adds.
Apple had announced the removal of 3.5 mm headphone jacks in 2016; later, Google did something similar for its Pixel series. Other smartphone manufacturers are set to follow suit. This will boost the wireless headphones market across the globe, believe industry experts.
However, India is a price sensitive market and many consumers use bundled headphones that come along with handsets. So it is quite a task to upgrade customers to premium price point models. “We have set up sound rooms and kept sample headphones in Croma and Reliance Digital for people to enjoy the feel. We believe once they experience the sound quality of a premium product, they will not go back to the bundled ones,” says Gulati. In fact, the need for branded headphones goes beyond urban pockets. “Data from Reliance Digital, Croma and e-commerce analytics points towards significant demand in tier II and tier III cities,” Gulati mentions. As a case in point, Sennheiser’s first headphone amplifier which costs around `1.8 lakh was sold in Coimbatore.
The wireless category has its own challenges, with the audio quality yet to match the performance of wired devices. “Audiophiles who have an ear for music genuinely believe a good shielding and wired headphone brings in an experience which cannot be replicated by wireless,” says Chauhan. Battery life is another issue where charging a phone as well as a headphone is a hassle.
Going forward, headphones will be a part of modern lifestyle across age groups, estimate players. “Today, there is a separate headphone for music, a sporty one for running while another one for travelling. One consumer is buying multiple headphones,” notes Chauhan. Furthermore, customisation will emerge as a trend. Just like clothes, phones and sunglasses, headphones too could become an accessory. “The younger generation will always want a headphone that looks cool on them. That is why we have a wide range of colours,” Chauhan says.
Harman India is also toying with the idea of personalising headphones — one can change the colour of the headbands or even possibly, have their names printed on the headphone.