Telecom Lead Asia: A number of copycat LBS start-ups have emerged in India, among other countries, over the last 12 months, according to ABI Research.
At present, the LBS market is largely concentrated in North America and Europe.
However, over the last 12 months there has been a major change in the LBS landscape in BRIC countries. A number of copycat LBS start-ups have emerged in Brazil, China, Russia, and India, with millions of subscribers and significant funding behind them.
ABI Research Senior analyst Patrick Connolly said: “There is heavy investment, strong local and international competition, and most importantly, an appetite for these applications. This does raise fears over a tech bubble, but it is clear that there is an appetite for location-based services, particularly around local search, social networking, and deals/offers. Interestingly, location is baked into these applications from the start, removing many of the issues around privacy.”
Advertising is now viewed by the majority of application developers as the main long-term source of revenue.
In 2012, advertising remained less than 30 percent of total application store LBS revenues, but the signs of growth are there and more importantly the business models are there. Applications around local search and discovery, proximity social networking, and retail are ideally suited to high-value location-based advertising.
Location-based retail applications will emerge as the most downloaded LBS category by 2016 as retailers embrace the power of proximity and indoor location advertising and analytics.
The industry is ready to support a combination of generic and highly localized and targeted advertising that will take LBS revenues well beyond the $6 Billion market by 2017.
Meanwhile, Strategy Analytics Wireless Media Strategies (WMS) report said location enabled search advertising will account for just over half of consumer location based service (LBS) revenues by 2017.
Popular maps and navigation applications are increasingly being offered for free on smartphones. Providers of those services are under growing pressure to find ways to generate revenue through a combination of advertising and additional premium content.
With Apple following the lead of Google and Nokia by embedding free maps and navigation its smartphone platform, iOS6, these popular location based services have become a core feature of over 80 percent of the smartphone installed base.
“Although there will be over 640 million users of mobile maps globally these services are not directly growing revenue for providers of those services,” said Nitesh Patel, senior analyst in the Strategy Analytics Wireless Media Strategies service.
According to this report, the rising consumer and advertiser spend on LBS will be primarily driven by location-enhanced search, accounting for 50 percent of spend by 2017 as advertisers target ads based on user location and desires.