Quit obsessing about the check-in.

Companies in the hot location-based services space are frantically trying to come up with the next step beyond the very simple act of getting users to check in or announce their presence to friends when they arrive at a bar or a restaurant or a subway train. It’s generally agreed that location services need to create a deeper experience. But no one agrees on what that should be. Coupons, special deals, stories, and games are just some of the ideas being batted around.

The check-in, as popularized by companies like Brightkite, Booyah, Foursquare and Gowalla, has worked in introducing users to the whole concept of sharing their locations. It has helped push Foursquare to over a million users and Booyah’s MyTown iPhone game to over two million. But the momentum will grind to a halt if there’s nothing beyond becoming a “mayor” of a bakery.

This is a sentiment shared by Booyah’s CEO Keith Lee, who said the company is looking beyond the check-in to create “an experience people can be loyal to.” And Gowalla CEO Josh Williams says the term “check-in” is, well, “nerdy.”

“But it is what it is,” said Williams. “It is something that people understand. The big picture is what happens after checking in. It’s the story I can tell. It’s the basketball game I went to, the pictures I took, a way to share that moment. And if all the people who went to the same ballgame share their pictures and stories kind of like in a collective scrapbook, it’s a way to re-live the experience, or live it vicariously.”

So, the question is how to connect the real world with an application that runs on your smartphone. One angle is to make the world into a game, which is what a whole bunch of companies is doing—think of “I spy with my little eye” variation iSpyApp, role-playing game Parallel Kingdom, and Zombie, Run which makes players move in the world outrunning virtual zombies. A classic example in the pre-digital world is the scavenger hunt, where people look for a “treasure” in the real world.

This is also the approach of Scvngr (pronounced “scavenger”), a company putting out a series of “challenges” for physical locations which the players can complete. The idea is that when you are at a location, say, a diner, Scvngr gives players a challenge like building a tower out of salt and pepper shakers and taking a picture of it. Upon completion, the player is awarded points. And, according to Scvngr CEO and “chief ninja” Seth Priebatsch (right), this is the way to go for all location companies.

“It’s a question of the check-in versus the challenge,” said Priebatsch. “The challenge is a whole new core unit in location. I think a lot of the ‘check-in only’ services will realize that they have not picked the right core unit and will migrate toward the challenge.”

Priebatsch’s argument is as follows: The check-in is always the same, whether you’re at Grand Central Terminal or the Statue of Liberty. The challenge, however, is always unique to a location. Players will know the mechanics of the challenge, ie. what they are and how they are to be completed, but there’s always an element of discovery to the specific challenges at a given location.

The approach seems to be going well for the Google Ventures-backed Scvngr, which is earning steady revenue on its product, which is both a game and a gaming platform. Scvngr has been selling it’s product to different entities like museums and companies who can build their own challenges (the platform part). A museum can have challenges for visitors finding works of art in their exhibitions, a natural park can make finding landmarks into a game, a company can use it for team-building exercises, and so on. Earlier this week, the electric-car maker Tesla launched a promotion with Scvngr where completing challenges at a Tesla dealership can earn the player a special Tesla badge. (Tesla certainly needs help getting people to its dealerships.)

Scvngr also released a consumer-side version of the app, which means that everyone can create challenges for free for other players to complete. Priebatsch says that move has caused a “ridiculous” spike in the number of users, but he wouldn’t disclose any actual figures.

But how do you take a game or, in the case of Foursquare, Gowalla and MyTown, a game-like service, and break it out of that niche? People in the business and smartphone enthusiasts are well aware of these companies, but the vast majority of people with cell phones have never even heard of them, and maybe wouldn’t even care to hear about them. Priebatsch says it is in the ability for everyone to build their own challenges, at their locations, for their audience.

“By enabling everyone to do this, we’ll get tons of users from all walks of life,” said Priebatsch. “Think about how many people visit the City of Philadelphia or the Museum of Fine Arts or Patriots Stadium. All of them will be invited to play SCVNGR at those locations, and those institutions had a hand in building Scvngr. And that’s a really powerful concept which will translate into a ton of people.”

Monetization is important, says Priebatsch, but he is dismissive of advertising or location-based coupons which a lot of the other companies are trying out. Priebatsch said Scvngr will not do advertising because it’s not fun: “And until we crack the code on making it fun, we won’t do it. Period.”

We’ll see if the challenge vs. check-in approach will be the definitive game-changer in location services, but at least it testifies to the fact that the time of the check-in seems to be passing. For next-level location services, we are going to need next-level applications.

[This story is part of a weekly series on location-based services, written by VentureBeat’s JP Manninen. If you have an idea for a story you would like to see in this series, drop a line at jp@venturebeat.com
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