ABI Research recently published a report saying that location based social networking could be worth $3.3 Bn globally in another 5 years to come.
While the figure sounds exciting, it also fails to generate that huge an interest among developers to build them owing to effort involving not only the product development but also the tie-ups with major mobile carriersa and the already existing Social Networks.
On the same hand this is another potential opportunity for bigger players like Nokia, Motorola, Mobile Operators etc. to cash upon.
Also the fact that web based social networks, which already have the traffic peaking high on their servers and yet not matured w.r.t. revenue model, can think of LBS opportunity as a good revenue generation thread for them.
ABI Research says, “Location-based mobile social networking revenues will reach $3.3 billion by 2013, but successful business models may differ from what many observers expect“.
“While location-based advertising integrated with sophisticated algorithms holds a lot of promise, the current reality rather points to licensing and revenue-sharing models as the way forward for social networking start-ups to grow their customer base and reach profitability“.
While the above is pretty convincing, how to answer to the following issues at hand:
1. Any LBS service requires the consumer to be tracked which surely leads to the privacy concerns. How to address this issue is still a concern.
2. Data licensing cost is another challenge for the startups. While big players like Navteq and TeleAtlas offer high quality data, the costs on the same hand are superfluous. Other way could be to have a revenue sharing among all the entities like the data vendor, technology startup and the mobile carrier but it just looks like easier said than done.
3. Creating a sufficient brand awareness in the fragmented mass market can hit a startup hard. How many times will I check in on a social network when there are only one or two other friends using it?
Looking at the challenges at hand, it would be very interesting to see GIS startups coming up with location aware application on the already established social networks. If they manage to attract enough eye balls, it could be a good cashing deal on to the highly targeted location-based advertising.
While, whatever any observer says, whatever the current challenges talk, the fact is the location awareness is the strong contender of generation next social netwrorks or to say social network 2.0