How Headspace Is Winning the Cutthroat Meditation App War
In the race to quell our growing anxiety, Headspace may have a secret weapon
Headspace and Calm share the same friendly mission: Headspace wants “to improve the health and happiness of the world” while Calm wants to “make the world healthier and happier.” But the two companies, which both make apps that guide people through meditation exercises, are engaged in a cutthroat competition, one that has only intensified as the nation faces a growing mental health crisis exacerbated by the pandemic.
Before Covid hit, both companies had raised a lot of funding. Calm raised a $115 million Series B round in 2019. In February 2020, Headspace raised its Series C round, $93 million in equity and debt. Just a few months later, it extended the round and added another $47.7 million in equity. Since March, the companies have both spent millions on television commercials: Calm spent some $15.6 million on TV ads between March and August (up from $3 million the year before) and Headspace spent $27.3 million on its TV campaign, according to the New York Times.
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But Headspace may soon have a big advantage over Calm. The company has been expanding aggressively in its effort to provide wellness benefits for employers, and to gain distribution through the traditional health care system.
The holy grail of insurance reimbursement
As of August 2020, Headspace reported having 1,100 partnerships for its Headspace for Work product. (Calm for Business, not far behind, had 300 clients as of October 2019.) This week, Microsoft also announced it was adding Headspace meditation to its Microsoft Teams product. Similar to WeWork’s corporate office offering, these employer deals are usually set for longer terms than a customer’s subscription, and can help bring more stability than the consumer business.
What could set Headspace’s program apart from Calm and other wellness apps selling to employers is that it is not only selling a program, but also attempting to prove that program is effective — even effective enough to be covered by insurance.
The events of 2020 have pushed our anxiety to new levels. In late June 2020, the CDC reported 40% of adults are struggling with mental health issues or substance use.
Most wellness apps don’t back up their claims with evidence. In a literature review involving 1,009 wellness and stress management apps, only 21 — approximately 2% — “were supported by original research publications, with a total of 25 efficacy studies and 10 feasibility studies.” A paper in Nature shows a similar result, with only two of 73 apps having primary evidence to support their claims.
One reason few wellness apps pursue this type of research is that it’s expensive. A study of 59 new therapeutic agents approved by the FDA from 2015 to 2016 showed a median cost of $19 million to complete the process, and one entrepreneur estimates FDA trials for a new medical device can run at least $10 million.
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In 2018, Headspace started partnering with academic partners and conducting clinical research to investigate specific health benefits of its app. It also launched a subsidiary, Headspace Health, setting into motion a grander ambition to gain approval from the FDA by 2020, a first step to get insurance coverage for their product. Megan Jones Bell, the company’s chief science officer, describes Headspace Health’s goal as, “developing new treatments for the management of chronic conditions.”
If the company succeeds, it won’t be the first app-based product to win approval from the FDA or from insurance companies. In 2017, Pear Therapeutics’ reSET, which treats patients with substance use disorder, became the first app to be approved by the FDA. Omada Health, a program for chronic disease, got coverage for its Type 2 Diabetes management app with Blue Cross and Blue Shield of Minnesota. And the U.K.’s National Health Service now offers Big Health’s Sleepio app, used to treat insomnia.
But if Headspace does cross this milestone, it will be the first popular wellness app to do so.
A new world of digital medicine
The events of 2020 have pushed our anxiety to new levels. In late June 2020, the CDC reported 40% of adults are struggling with mental health issues or substance use. Some argue that the emerging field of “digital therapeutics” could help respond to this crisis, and the FDA has eased some of its rules on these treatments as part of its Covid-19 guidance.
The Digital Therapeutics Alliance, of which Headspace is a member, defines the category as, “evidence-based therapeutic interventions to patients that are driven by high quality software programs to prevent, manage, or treat a broad spectrum of physical, mental, and behavioral conditions,” a subcategory of digital medicine.
Headspace is betting that establishing its credibility as a digital therapeutic through clinical trials and scientific verdicts will entice more people to choose it over Calm.
Headspace’s Jones Bell has said the app wouldn’t be a replacement for serious care, but an alternative, which is how the Digital Therapeutics Alliance talks about the role of its members’ technology as well. Executive director Megan Coder told Stat News that the Alliance wants to see clinicians have the ability to prescribe digital tools in addition to traditional treatments, not in lieu of them.
That seems to be a strong enough case for investors, as Blackrock Health reports more investments in digital therapeutics in 2020 than ever before. The market research firm Valuates Reports forecasts that the digital therapeutics alliance market will grow to $9.64 billion by 2026.
A win-win for Headspace
In February 2020, Headspace announced it had a pipeline of 70 studies that are investigating the clinical efficacy of its app, along with 25 published studies. Some of Headspace’s clinical trials share similar sample sizes and terms of testing as Pear Therapeutics’ original one, an indication that it’s still working toward FDA clearance. For example, Oxford University conducted a preliminary study involving 238 healthy employees from Google and Roche using Headspace for eight weeks. According to Headspace, it resulted “in a 31% decrease in symptoms of anxiety and a 46% decrease in depression symptoms.”
Another study of 1,337 respondents in the U.K. police workforce showed improved well-being, life satisfaction, resilience, and performance scores in 10 weeks. Headspace has been used in a couple of other large-scale studies, the findings of which haven’t been announced yet.
However, other studies seem to point to the limits of the app. A study on critical thinking, for instance, found no difference between using Headspace and a sham meditation app, an equivalent to a digital placebo, that featured Headspace’s content but without any discussion of meditation.
But Headspace hasn’t shared any recent updates about when or whether it might receive FDA-approval. A Headspace spokesperson told MedCity News it hasn’t closed the door to seeking FDA approval, but was still pursuing clinical tests to bring “to bring an effective digital therapeutic product to market that meets the specific needs of the consumers.”
But even if Headspace does not ultimately achieve its goal of winning FDA approval, its thriving consumer business enables the company to mitigate a lot of the risks that typical health care startups face. Not to mention that companies are already working with Headspace without FDA approval. Headspace is betting that establishing its credibility as a digital therapeutic through clinical trials and scientific verdicts will entice more people to choose it over Calm, as well as mountains of other apps, as the solution to our collective anxiety.