Location-based services are set for solid growth over the next few years with revenues increasing from €10.3 billion in 2014 to €34.8 billion in 2020, according to the latest report from analyst firm Berg Insight. The figures show a compound annual growth rate (CAGR) of 22.5%.
“The increase in usage of LBS has resulted in significant revenue growth, especially for leading players like including Google, Facebook, Baidu, Tencent, Twitter and Yahoo!,”said André Malm, senior analyst, Berg Insight. Together, these companies accounted for an estimated 60% of global LBS revenues in 2014.
The social networking and entertainment category – comprising services like social networking, messaging apps and games – is now the largest LBS segment in terms of the number of users and the second largest is terms of revenues.
“Revenue growth in the category comes from a larger active user base and the fact that more leading players have started to monetise their mobile services, primarily through ads and in-app purchases,”said Malm.
The local search and information service category, which includes general search services, directories, local discovery, shopping and coupon services, is now the second largest LBS category in terms of unique users, but the largest in terms of revenues.
Mapping, navigation and transportation is the third largest segment both in terms of revenues and in terms of the number of active users. Although the number of active users of mapping and navigation services is still growing, revenues are only increasing slowly as competition from free and low cost services has intensified.
In Berg’s view, since over-the-top players now dominate the LBS ecosystem for consumer oriented apps and services, mobile operators are instead looking for new opportunities to monetise location data through various forms of enterprise and B2B services.
Location data is now used to enhance a broad range of services such as fraud management, secure authentication and location-based advertising. Some operators have also launched analytics services for external customers that use the insights for applications such as site selection and footfall monitoring in the retail industry, outdoor media planning for advertisers, as well as for urban planning and traffic monitoring.
“Operators, however, often face uncertainty regarding subscribers’ reaction to privacy issues regarding mass location data collection, which still limits the willingness to launch analytics services on a broad scale,” concluded Malm.
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