Private-Sector Engagement
The private sector is beginning to recognize the tremendous potential of digital products to meet the needs of older consumers, although this has been limited to markets with high-income consumers. In spite of this growing enthusiasm, furthering private-sector engagement in this market faces three barriers. Risk aversion prevents companies from making bold moves and rapidly responding to this still nascent market opportunity. For those that are eager to enter the market, funding and commercialization challenges, as well as a lack of familiarity of the older consumer segment, are the main obstacles to the development and marketing of technologies that suit older adults’ needs and interests. Early efforts have been made by both the public and private sector to prompt companies to participate in building the aging-related technology market by helping address these challenges.
Globally, the number of older adults is growing faster than the populations of any other age group, and their spending power is projected to total USD 15 trillion by 2020. Among the ARC countries, people age 65 or older in all industrialized economies (except Korea), as well as China and Brazil, are on average spending more than those ages 25 through 64.
Over the period from 2010 through 2015, more than half of VC, PE, and corporate funds invested into health-related technology and 47 percent of the investment deals were focused on products and services that could be used by those age 50 or older. The annual funds invested to target this 50-and-older segment rose five-fold, and the annual deal number tripled.
China’s Policy Push to Develop an Aging-Related Technology Market
Among emerging market economies, China stands out for its success in expanding its aging-related technology market, thanks to a strong policy push in recent years. Since 2013, the central government has introduced a rash of major policies to support aging in place and cultivate older-age care industries. With a focus on leveraging digital technology to develop innovative products and services, the government offers a range of incentives ranging from subsidies to preferential taxes. The government further incorporated the development of the smart older-age care sector into the national digital strategy – “Internet+” Action Plan – launched in July 2015. According to VCBeat Research, as of early 2016, 75 percent of startups in China that specialize in providing ICT-enabled products and services to older adults were established from 2013 through 2015. These companies cover an extensive range of products and services: 21 percent provide smart home-based or institution-based care systems, 18 percent provide older-age care services, and the rest focus on hardware, software, and e-business services, among others.