Over the past twenty years or so the media have frequently carried reports about population aging. According to World Health Organization, the number of people age 60-and-over will rise to 2.1. billion in 2030, which translates into one fifth of the global population being in the retirement age. It goes without saying that this trend raises many issues, such as a significant increase of health or public and private pension costs. However, there is a silver lining to this phenomenon: older people are on average healthier than in past generations and especially in the developed countries, economic growth and accumulation of wealth have created a generation of elderly that is wealthier and more willing to spend money than ever before. As a result, the demographical trend has turned out to be a boon for business, creating an attractive, profitable customer segment. Companies who acknowledge that older people have slightly different consumer needs resulting from physiological changes connected to ageing, such as changes in eyesight, hearing, mobility and dexterity, can benefit from an access to a vast customer group. This attention shift is not entirely novel, and has already been recognized by some companies, especially in the financial and healthcare industries. What is new is that firms currently targeting this market have now started to leverage the most innovative technologies that allow them to personalize their offer and encourage their customers to co-create the products. One of the most interesting examples of innovative business ideas targeted at elderly is virtual tourism offered by Rendever.
Rendever is a company that leverages virtual reality technology to create a virtual journey experience by using algorithms that convert 360 panoramic photos and videos. The firm’s offer is a subscription-based service for individuals and facilities and is designed specifically for elderly. The virtual reality headset allows older adults to overcome mobility difficulties and virtually travel to a myriad of places in the world. The firm’s offer includes various touristic spots destinations, such as Machu Picchu, but also other ways of entertainment such as concerts, historical tours or architectural exhibits. Apart from the company’s existing virtual tourism destinations offer, Rendever also provides a service of a personalized content. This includes recreating spots of sentimental value such as childhood homes or wedding locations and converting photographs of family members, but also capturing a family event on camera that is later converted to a virtual reality experience. Finally, the Rendever wearable devices can be synchronized with other headsets, allowing users to virtually travel together.
Apart from the entertainment aspect, the company puts an emphasis on health benefits of using virtual reality. As research shows, leveraging this technology can serve as a distraction from pain, which is especially vital for seniors, many of whom have to deal with chronic pain and painkiller medication side-effects. For this reason, VR can be used during exercises or rehabilitation. Moreover, using virtual reality helps delaying the progress of dementia, stimulating the brain and reactivating neuropathways. In such case of cognitive decline or memory losses, as a part of reminiscence therapy, the firm offers individualized packages created from images of family members and meaningful locations from the person’s life.
Both customers and the company profit from the product, therefore the joint profitability criterion is met. Elderly people, who due to mobility difficulties cannot commute, can overcome this barrier by travelling virtually – whether to far-off touristic destinations or places of sentimental value. The virtual technology helps them to avoid isolation that tends to increase especially when an older person needs to be transferred to an assisted living community, but also when he still lives at home but due to his age is not as dexterous as before. Customers of Rendever profit from goods and services tailored to their needs: the personalized offer helps them reconnect with family members and virtually attend events they would not be able to travel to. Furthermore, Rendever technology serves not only as an entertainment and an educational mean, but may also facilitate building new relationships through allowing users to virtually travel with others, therefore fulfilling their social needs. The health aspect is also of paramount importance, as using virtual reality may delay the diminishing quality of life due to memory and cognitive losses.
The company, on the other hand, gains access to two market segments. First, it can target a profitable and an increasingly larger group of elderly directly through their individual offer. Second, it can leverage a B2B business model. Marketing to elder care market and health care segment opens up a potentially vast revenue stream. As geriatric population increases, the number of elderly people suffering from chronic diseases such as dementia or Alzheimer rises. As a result, the senior care industry that encompasses elderly care or memory care facilities and assisted living communities has already reached 400 billion dollars of an annual revenue and is expected to grow at a significant pace. The company could also cooperate with the public health sector which struggles with providing care to an increasing number of seniors.
Furthermore, even though the company has to invest into costly advanced technology and production of wearable devices, a subscription-based business model allows it to reduce fixed costs. The manufacturing cost is also expected to decrease as virtual reality gear is becoming more popular and commonly used. Furthermore, the firm’s personalized offer creates an additional revenue stream and increases switching costs that customers may experience, as moving to a competitive product is connected to a loss of the personalized content.
There are two significant obstacles that the company may face in the future. Firstly, some of the elderly have an anti-technology views and can oppose using virtual reality technology. As a result, convincing assisted living communities to partner with Rendever may meet with challenges. Secondly, despite the fact that virtual reality technology may help sooth isolation in the short term, there is no guarantee that it would be able to still cheer elderly up as they get used to it. And while seeing family and friends in the virtual reality may ease the loneliness for some time, even an advanced technology cannot replace a real, human contact. In order for the company to overcome these barriers, an awareness about what virtual reality is, what are its benefits for elderly and limitations, needs to be built. Only then will Rendever be able to expand its reach and become profitable in the long term.
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