In the location-based app space, Foursquare gets all the press. But Booyah’s MyTown, which launched as a free app for the iPhone in December 2009, already has three times as many users spending more than ten times as many minute

s per day on it than Foursquare.

The reason for MyTown’s success is simple: made up of former members of Blizzard Entertainment (Diablo, Starcraft, World of Warcraft), Booyah brings a game-design savvy to the location-based space.

“We’re gamers,” Booyah CEO and co-founder Keith Lee said at Tuesday’s TechRader at Atelier. “We care most about engagement and retention.”

“The biggest problem right now, especially in the mobile space, it that you only have small pockets of time, small time spurts, because you’re waiting in line in Starbucks or you’re at the gate at the airport,” Lee said. “So the most important thing for us is to find ways to engage and retain users.”

On average, people spend five minutes on an iPhone app, Lee said, and after 30 days the average retention rate is around 2 percent. MyTown users, on the other hand, spend an average of 65 minutes per day on the app, and the retention rate is above 40 percent after 30 days.

Lee describes MyTown as a Farmville for mobile or a real-world Monopoly. Basically, it places an economy sim on top of location-awareness. You can buy locations, upgrade and rent them out to others, level up and look for power-ups.

“We’re bringing video games into the real world,” Lee said. “Our goal is to get people to level up in the real world.”

Do people want to level-grind in the real world, or are they content just becoming someplace's mayor? The numbers tell the tale:

Foursquare has 300,000 users who use the service for 5 minutes a day; MyTown’s 1.1 million users -- 150,000 new ones sign up each month -- spend 65 minutes per day on the app, spending an average of 10-15 minutes on it every time they log in. MyTown has 3.5 million check-ins per day while Foursquare has 87,000.

Not only was growth seemingly easy, coming up with a revenue model was simple as well: “We take the playbook of the stuff on Facebook,” Lee said.

“Twenty percent of our users contribute about 80 percent of our revenue through in-app purchases and virtual goods,” Lee said.

The virtual goods could be especially successful, since the location-based aspect provided strong opportunity for brand engagement. When logging into MyTown while near H&M, for example, users might be offered an H&M-branded virtual item.

“The whole idea is that you can get completely branded virtual items that drop, that are part of the game,” Lee said.

Thirty to 40 million MyTown virtual goods are consumed each week.

MyTown’s biggest disadvantage is that, while Foursquare and Gowalla are available in over 30 countries, MyTown is currently available only in the US. Booyah, which  has raised $9.5 million in Series A and B funding from Kleiner Perkins, is currently working on entering the European market.

By Mark Alvarez