Sony OTC Hearing Aid Partnership with WS Audiology: Interview with Maarten Barmentlo

Yes, and thank you very much for giving us the opportunity to give you our perspective on this exciting partnership. My name is as you said, Maarten Barmentlo. I work for WS Audiology, oversee all marketing activities for the group worldwide, and also have the honor to lead the efforts in OTC. I have been in the industry now for about 10 years. Before that, I have a background in various consumer healthcare industries where we sold consumer products through healthcare professionals, like the hearing care professionals who are of course extremely important in our industry.

You may know our purpose is to bring wonderful sound for all. If you look at the worldwide population, as a total industry together with our hearing care professional partners, we are not addressing all consumers. In fact, only about 15% worldwide approximately. And in the US, where audiology is of course very well developed, there's still about two out of three consumers that would benefit from a hearing aid but do not get one today. So there is a big opportunity for all of us to bring the miracle of hearing back to more consumers in the US. This opportunity to now augment the distribution of hearing health solutions to consumers via more channels, enabled by this new law, is something that is good for consumers. I can also explain why we believe it is also a good opportunity for hearing care professionals, and it is a good opportunity for us to deliver on our purpose.

Yes, I think it's good that in a partnership there's two parties that come together. When we discussed this with Sony, they looked at the opportunity and first asked: can we do this ourselves, or are there essential elements of what it takes to be successful that we can do faster or better by partnering with somebody else? In parallel, we did the same. We did quite a bit of market research in the US to see what the expectations of consumers would be for the emerging OTC category. We learned that a trusted brand was quite essential for consumers in this space, and also the availability of the product in channels different than the professional channels. Then we realized that teaming up with a partner that has a heritage in sound, a strong consumer brand related to sound, is as committed to innovation as we are, and has access to distribution channels where we are normally not operating — that would actually augment what we see as success criteria. It was a process of the two parties doing things in parallel, and fairly quickly into the discussions, both parties recognized that the two companies together could really help this category become a success.

Exactly. When we look at the opportunity space, we also recognize that today, particularly in the US market, there is a good network of audiologists and hearing care professionals that deliver outstanding service to those customers they serve. We believe the best hearing care any individual worldwide would be able to get is through an audiologist. The reality is that a lot of consumers today do not do that. In order to still deliver a good level of care, we need to develop new solutions that not only have the component of delivering amplification that patients need, but also help consumers through the process of adjusting the hearing aids to their individual needs. Again, the best way to do that is to go to the audiologist, but for those consumers that don't, we have to offer in the solution not only the hardware but also a workflow where we take the consumer through self-fitting. That is what I was referring to when I say the technology needs to catch up.

That's correct. The other aspect worth mentioning, particularly for the audience: in the research we did, we asked consumers where they would expect to find OTC solutions. It is encouraging that a lot of consumers said they expect to find OTC solutions in the professional channels. They also expect it to be available online and in big box retailers, but they also expect it in professional channels. That's why we believe that for the existing customers of our brands, this is an opportunity — they can offer a broader palette of solutions to the people that walk into their doors. It can make their business grow faster and serve more consumers, which is what drives all the hearing care professionals to their clinic every day.

Yes, we're very pleased that this is a partnership that is more than simply a brand license or a distribution agreement. It's truly a partnership where both parties bring all of their strong assets, and the technological element is very important. We all know that in the last decades, miniaturization has brought a lot of benefits to the hearing care market. This is something we're very good at, but obviously our partner Sony is also extremely good in miniaturization. Miniaturization gives the opportunity to augment the offering and bring new benefits. One of the big new benefits we have recently brought into the category is rechargeable hearing aids — in the beginning they were bigger than non-rechargeable, but now they are also very tiny and small. Another element is the connectivity to cell phones, which connects the hearing instruments to the outside world of the consumer. When you start to think about the things our partners at Sony can bring to bear — being very strong in entertainment and wellness solutions — I think there we have a world opening of opportunities. Of course, that is longer term, but it gives a lot of opportunities to continue to make these devices and solutions more and more something that consumers really want. That's one of the challenges in hearing care — consumers need hearing aids, but a lot of them don't want them. We see that by bringing the strengths of both parties together, we can make these devices and solutions more desirable for more consumers. With that, we want to contribute to a higher penetration of hearing care solutions amongst those consumers that need it.

I told you in the beginning that I have a background in consumer healthcare industries, and I've also been in an industry that used to have very low penetration and now has very high penetration — that is power toothbrushes. There we also saw that opening up new channels and broadening the scope of solutions in the end drives penetration. It is our joint responsibility to make sure we convert this opportunity into serving more consumers. If the only thing we manage to do is not grow the market and just have more options, then we have not delivered on our own purpose, on the purpose of why this law was passed, and on the purpose that all the hearing care professionals in the US have — they want to serve as many consumers as they can. It is a bit of a joint responsibility, but the data also show there is growth opportunity. A big survey done in the US shows that of those consumers that have hearing loss but have not yet decided to buy a hearing aid, a lot of them would actually consider buying if OTC devices would be available. There is clear indication in the research that we will expand the market and pull more consumers in that today are not being served.

Now, you mentioned barriers — that is a very important element. There is access, awareness, affordability — when you look at the big barriers — and of course stigma. With this partnership, I think we can address quite a number of those barriers. The Sony brand will make the solution more desirable and more appealing to a younger audience, but certainly also to elderly consumers. The form factors we are going to offer are going to play an important role there, and we have the plans to continue to evolve in that area. Then of course the availability through different sales channels works on access — it makes it easier to enter the category. And for some consumers, affordability is also an issue, and the OTC category is supposed to help in that aspect as well. I think we can really help work on these barriers. I think we should also realize that with one or two months into a new world with this category, or maybe a year, we haven't solved all the problems of all the consumers that are today not buying the category. So it will take some time for this to grow, but I think it is a great opportunity — and as I said, for consumers, absolutely, also for the existing hearing care professional channel, and of course for us to deliver on our purpose.

As you may know, we have a portfolio of brands. Our brands have their own product portfolio and their own go-to-market, and operate fairly independently. That we will continue. This is also a new channel, and that is Sony-branded. We will not bring Insignia-branded or Widex-branded OTC solutions to the market.

We're not yet in a position to talk about the specific solution we're going to offer, so I want to limit this to a bit more high-level direction. But when you look at the opportunity space from a hearing care professional point of view, the first one is: the research indicates that a lot of consumers expect these solutions to be available at the hearing care professional. With new entrants, there will be more noise and more communication around hearing care, which will lead to more consumers shopping for solutions, and they expect to find them in professional stores. I think that's one opportunity where they probably don't need to do anything but will benefit. The second element is: if you make OTC solutions part of your portfolio, you can make sure to use that in your advertising to specifically drive consumers to your own franchise. And the third element — and I'm sure all hearing care professionals watching this will recognize — is that it happens a lot that consumers make an appointment, you spend your time doing the examination and consultation, they experience the benefit in a fitting, and then consumers decide not to buy. For some of them, that might be because it's too costly, or they find it not good enough, or stigma still plays a role. For those consumers that would otherwise walk out without being served, there is a great opportunity to say: look, we also have a solution that gets you a lot of the benefits, is from a trusted brand, and is more affordable. The other part which is also not unimportant: this will bring consumers earlier into the category. As we all know, hearing loss progresses over time, and so many consumers for whom OTC solutions will bring good benefits and they're happy consumers — over time, we expect a lot of them will also start to seek professional support and professional solutions fitted by hearing care professionals. So I think there are quite a number of angles where this could benefit the hearing care professionals.

I will gladly take you up on that invite to come back. I think we all want the same: we want to bring consumers in earlier because we know it's good for preservation of hearing by starting early, but it's also making consumers' lives better — they're going to be happier people. The other part is that we bring in more consumers, because there's also still a lot of quite elderly consumers that would benefit from hearing aids that are not being served. I think we would all be proud — both parties in the partnership, but certainly also our partners the hearing care professionals — if we would really be able to show that the average age of the first-time user has really moved out and if the penetration would not be around 30% but let's say more around 60%. I think then we could all be very proud of ourselves.

That's great, thank you very much.