By Charlotte O’Toole (CC’25, Analyst 2022–23)
Over the past few years, the COVID-19 pandemic has seemingly altered every aspect of our daily lives, including the quality of our sleep. With the pandemic came a “rising prevalence of sleep disorders, including insomnia, narcolepsy, restless leg syndrome, sleep apnea, and parasomnias, around the world” (Business Wire). Sitting at home all day with a lack of natural light, fresh air, social interaction, and exercise disrupted our circadian rhythms, leaving 50 to 70 million Americans suffering from sleep problems (Sleep Health).
With the rise in sleep disorders came a demand for sleep tracking devices, so users could gain an understanding of the source of their exhaustion. Research funding for sleep has increased from $461 million in 2020 to a projected $520 million in 2023. The wearable sleep tracking device industry is forecasted to have a CAGR of 7.60% from 2021 to 2028, with the overall sleep tracking industry (including non-wearable devices) showing a CAGR of 17.50% from 2020 to 2028. While wearables account for 76% of the sleep tech devices market, other increasingly popular alternatives include beds, pillows, and bedside monitors that can track sleep.
The cutting-edge technology used in sleep tracking watches, wristbands, and rings has the ability to directly measure users’ body movements, heart rate and heart rate variability, breaths per minute, body temperature, and blood oxygen level, to generate a “sleep score” or rating, graphs of sleep stages (REM vs. deep vs. light sleep), and sleep debt/credit. Phone apps typically provide the data in a compact, comprehensible space that allows users to view trends and history.
Beyond the obvious tailwind for this industry -– the rise of sleep disorders during the pandemic — other factors also support further market growth, including a growing interest in activity/fitness trackers and wearable technology. Additionally, the novelty of the technology allows for significant room for development, as currently “sleep trackers are only accurate 78% of the time when identifying sleep versus wakefulness” (Nuffield Department of Clinical Neurosciences).
A cause for concern involves the spotlight on tech companies as they continue to be exposed for violating user privacy rights and sharing personal user data. Legal risks could complicate progress for these sleep tracking companies, as they battle with three main public concerns: “risk of unlawful surveillance (Section 3.1), risk of an active intrusion in private life (Section 3.2), and risk of data profiling (Section 3.3)” (InfoSec Institute).
Currently, large technology and fitness tracking companies dominate the competitive space, with Apple, Garmin, Fitbit, and Whoop at the forefront. However, interesting startups have emerged over the past 10 years that could change the face of the sleep tracking industry. Dreem, a startup founded in 2014, created a light, comfortable headband with an EEG sensor that monitors brain activity throughout the night, along with using “non-invasive sound stimulation technology” to help users stay in deep sleep” (Tracxn). However, this product is still in the process of clinical trials and is not yet accessible to the public. Similarly, a company named Kokoon, founded in 2013, designed headphones embedded with sleep tracking technology and tools to aid users in falling asleep faster. Startups continue to emerge with more comfortable, accessible, and effective products designed to relieve the burden of sleep disorders.
The wearable sleep tracking industry is one to keep an eye on, with strong predicted growth in the next 5–10 years and many potential areas for expansion. With a growing serviceable market, room for technological advancement, and potential to expand beyond its current concentration in North America, the wearable sleep tracking industry will make waves in the near future.