What does the future of happiness look like?

The art of happiness: the past and present

Over the past few decades, we have seen many factors related to happiness trend in the right direction. Economic prosperity is rising; access to critical resources and services has broadened; and people are more connected than ever, at least in the digital sense. Despite these trends, mental health concerns are mounting. In the US, teen depression rose 63% from 2007 to 2017, according to a Department of Health study. And the World Health Organization’s report on mental health and COVID-19 estimates the global economy loses USD 1 trillion every year to depression and anxiety.

How will our pursuit of happiness change in the next 10 years?

We believe demographic and technological developments will change our pursuit of happiness over the coming decade. In the following years, millennials will begin to reach midlife, and greater numbers of Generation Z will reach adulthood. These rising cohorts are “digital natives,” and as this tech-obsessed demographic becomes a larger proportion of the population, we can expect to see hours spent on digital devices rise further.

How will technology impact our health?

Unfortunately, more screen time could have consequences for well-being. But the relationship between technology and mental health is not straightforward. For instance, time spent learning online would likely have a different impact than time spent on social media. A study from the University of Pennsylvania found that spending less time on social media—which about 88% of 18- to 29-year-olds use some form of, according to Pew Research Center—could decrease feelings of loneliness and depression.

On the positive side, technology is broadening access to experiences at a cheaper cost and expanding the options available for maintaining well-being. For example, virtual reality technologies will increasingly enable remote entertainment—more of us will likely enjoy a concert or experience another country without leaving our homes.

In the healthcare space, health and wellness mobile apps are gaining traction and expanding access to mental health services. Similarly, we could see technology enable new possibilities for improving physical fitness. Since the pandemic, for example, we have seen former gym-goers transition to internet-based fitness experiences. While it’s too early to tell whether some of these self-directed, preventive care habits will stick, we have argued that will continue to influence how we manage our health going forward.

Understanding the shift in consumer preferences

Consumer preferences will change alongside demographic and technological developments. Given their population and rising spending power as they enter peak earnings years, millennials and Generation Z will increasingly influence consumption patterns. Companies will therefore need to consider these groups’ social and environmental values and their preferences for sustainable brands, as well as their affinity for digital experiences. Consumers are increasingly seeking greater transparency about the goods and services they buy. Technology has played a role in making this data available, and, at the same time, demographics have tipped the balance in favor of sustainable products. We believe that companies that offer sustainably-made products should be well positioned to capture future demand.

Technology in the driver's seat of consumer experience

While demographics will influence preferences for physical goods, technology will enable consumers to pursue a wider range of experiences. In the next decade, we believe that augmented and virtual reality-based entertainment will take digital experiences to the next level. AR and VR can be thought of as "technology cousins." Augmented reality adds digital elements to a scene that is typically displayed on a smartphone or tablet. It enhances reality rather than replaces it and typically requires little up-front investment as most modern smartphones can provide AR experiences. Virtual reality is more immersive as it often replaces a user's entire field of vision and leads the brain to sense the virtual experience as fully real.

Will augmented and virtual reality help us find happiness?

There are a number of future uses for AR and VR technology, spanning from education to healthcare, but currently we are seeing traction within the entertainment sector. The gaming industry, in particular, could be one of the fastest to adopt AR and VR due to their use of motion technologies. Even prior to COVID-19, AR had already seen early uptake in gaming, with the AR-based smartphone game Pokémon Go being a nearly overnight success. The retail industry has also been an early adopter—Ikea uses AR to enable customers to see a digital version of how new furniture would look in their home. Turning to VR, video gamers were early adopters of the technology and may draw more upon it in the future. The entertainment world is also exploring the use of VR to enable new movie and music experiences. For example, a movie watcher may be able to venture virtually through a scene or a set, leading to varied interactions and plot outcomes.

Looking ahead, we believe significant advances in sensor and graphics technologies should accelerate innovation and promote the use of AR and VR in significantly more areas. Based on various market sources, we estimate that the combined revenues of the AR and VR industries could grow from USD 8.6 billion in 2019 to USD 107 billion in 2025. While most of today’s sales are hardware, the mix of both AR and VR software should rise substantially as devices become cheaper, the availability of software content increases, and enabling technologies like 5G make it easier to deliver digital entertainment.

Esports gaining global interest

In addition, we expect esports to continue to gain popularity and become a larger part of the overall gaming market. Today, according to Newzoo, Asia Pacific accounts for 51% of the estimated 395 million esports fans globally, but we’re also seeing signs of increasing interest in other regions. Live events will remain essential to the industry’s growth. We expect to see further expansion of live venues such as the HyperX eSports arena in Las Vegas, and more leagues surrounding popular games. Gaming companies are looking to improve esports monetization by capitalizing on advertising, ticket sales, and merchandise. Epic Games earned more than USD 100 million a month through Fortnite in-game purchases, despite the game being free to download. We are still in the beginning stages of this esports trend, but growth should accelerate as the tech-savvy millennial and Generation Z cohorts increase their spending and as the technologies develop and scale.