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What’s the best way to encourage the update? Do the AirPods need have the case open and plugged in to make sure they remain connected to the phone?
 
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That's unlikely. Apple wouldn't have already announced the feature if it would require completely new AirPods.
IOS 14 Beta 6... (for AirPods Pro at least) there's a new Spatial Audio toggle available in the Accessibility section of the Settings app. Choose AirPods and then at the bottom of the screen, there's a "Follow iPhone" toggle. Follow ‌iPhone‌ makes audio for supported movies and TV shows sound like it's coming from the phone instead of following head movement. There's also new code and internal messaging related to the spatial audio feature. Though this toggle is available, Spatial Audio is not yet functional.
 
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IOS 14 Beta 6... (for AirPods Pro at least) there's a new Spatial Audio toggle available in the Accessibility section of the Settings app. Choose AirPods and then at the bottom of the screen, there's a "Follow iPhone" toggle. Follow ‌iPhone‌ makes audio for supported movies and TV shows sound like it's coming from the phone instead of following head movement. There's also new code and internal messaging related to the spatial audio feature. Though this toggle is available, Spatial Audio is not yet functional.
Right, but it will be available for existing AirPods. Enabling that functionality will not require replacing the AirPods, which is the only way the hardware version number would change.
 
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What’s the best way to encourage the update? Do the AirPods need have the case open and plugged in to make sure they remain connected to the phone?

Doing this wireless is much easier but

The case has to be open for let’s say.. 5-10 minutes (when I’m doing this) and paired to an iPhone

Then close the lid and let it stay for roughly a few minutes while the AirPods install the software and voila
 
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