ReachLocal Kills Bizzy, Takes $3.3 Million Loss

Location-based recommendation service Bizzy has announced that it will be shutting down in mid-November, marking a major turn of momentum in the local recommendation space. According to a statement released on the company’s blog, the application folded because it “ultimately did not attract the number of users it needed to sustain itself in the long run.”

In other words, Bizzy’s parent company ReachLocal canned the project. The decision to shut the doors on Bizzy was actually buried within the megalith’s Q3 earnings report released on Tuesday, stating: “ReachLocal’s Bizzy operations were determined to be discontinued operations during the third quarter of 2011.” According to the report, the local conglomerate, whose stock price plummeted Wednesday, took a $3.3 million hit on the venture.

Bizzy made news in September with a major update to its mobile application, which synced its trademark “check out” feature with Foursquare check-in’s in order to improve engagement. “Participation is absolutely key the success in this space,” the company’s founder Gari Shamia told Street Fight in an interview at the time.

It’s still unclear how large the market will be for local discovery applications but, Bizzy’s inability to gain traction seems to indicate that at least for the moment, consumers are unwilling to move beyond first-tier, geo-social services.With big players like Foursquare looking to expand its product to cater to a mainstream audience, small players like Bizzy — who are either directly built into Foursquare’s API or are within a single pivot’s distance — remain vulnerable.

When asked in September if Bizzy saw Foursquare as a potential threat to its core business, Shamia highlighted a difference in the fundamental question which the two companies asked: “Foursquare wants to know where you are, while Bizzy wants to know what you thought of the place you just left.”

Shamia declined to comment on the specifics of the decision that led to the closing of Bizzy in an email on Wednesday, adding only: “Bizzy was a part of a public company and communication regarding such matters is governed by the company.”