LBS Industry Undergoing $5 Billion Shift

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ABI Research says that it has identified location based retail applications advertising and emerging markets as key revenue growth enablers for the LBS market over the next 5 years.

­Today, 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.

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% 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. In particular, ABI Research has forecast that 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.

Practice director, Dominique Bonte added, "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."

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