Location and local search to hit €420m in revenues

31 May 2010

Mobile location-based service revenues in Europe are forecast to grow from €22m in 2009 at a compound annual rate of 12pc to reach €420m in 2015. Local search and social navigation will be the top applications.

Berg Insight estimates that one-third of all mobile subscribers in Europe will use some kind of location-enhanced application on a regular basis by 2015.

The social-networking category has been forecast to experience the highest growth in the coming years.

“Location-based services are finally on the verge of mainstream acceptance,” said André Malm, senior analyst, Berg Insight.

“Increasing sales of smartphones are driving end-user awareness of mobile internet services and applications in general. On-device application stores enable access to mobile services for a broader audience at the same time as flat-rate data plans make pricing more transparent.

“More and more developers are now adding location support in their applications to enhance the user experience.”

The GPS in handsets factor

Malm said that integration of GPS in handsets is an important driver. “The installed base of GPS handsets in Europe has recently surpassed 15pc of total handsets and will increase to 50pc three years from now.”

The revenue model for many mobile applications in the consumer segment is shifting from premium fees to ad funding. This is especially the case for location-based services, where now also navigation services are becoming free for end-users and developers monetise their offerings through ads and various bundles.

However, revenues may not grow at the same rate as usage because the mobile advertising ecosystem is still nascent.

“It will take some years before a successful model has been established that allows advertisers to reach out to a critical mass of active users. This is especially the case for emerging location-based advertising,” Malm said.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years