New Opportunities in the Gaming Industry: How KGeN is Reshaping User Acquisition

1. Introduction

The game industry has surpassed the scale of film and music, and the overall trend continues to grow, but it has faced severe challenges in recent years. From 2023 to 2024, the industry is experiencing a wave of layoffs and consolidations, with soaring development costs and a significant reduction in investment.

The distribution and release of games is becoming increasingly difficult. The flooding of AI content, platform saturation, and players' preference for established IPs make it challenging for new projects to stand out, and acquiring highly engaged users has become an unprecedented challenge.

Nevertheless, the industry still has huge opportunities. Gen Z and Gen Alpha, as digital natives growing up in the virtual world, will continue to drive market expansion with their purchasing power.

At the same time, the long-neglected "Global South" market is experiencing explosive growth. Driven by the proliferation of smartphones, improvements in internet infrastructure, and income growth, these regions are set to become significant incremental markets for the gaming industry in the next decade.

The first half of this report discusses the latest challenges in game publishing and analyzes the high-growth opportunities in the "Global South". The second half focuses on KGeN - a blockchain-based gaming platform aimed at reshaping the incentive mechanisms between publishers and players. We will also evaluate the feasibility of Web3 task platforms and analyze the structural changes in the value distribution of the gaming industry.

2. Challenges Facing Issuance

One of the biggest challenges in the current gaming industry is distribution. Changes in consumer habits, adjustments in regulatory policies, lower barriers to market entry, and the continuous saturation of game content have made it more difficult than ever to successfully promote a game.

Players tend to spend most of their time playing familiar games or franchises, making it difficult for new titles to break through. In 2023, the top ten games by monthly active users all had release dates over seven years ago, with 60% of players' game time on new games still concentrated on series that release sequels every year.

In 2024, Steam saw a record release of 19,000 new games, but the games released that year only accounted for 15% of the total gameplay time of players.

The mobile gaming market once had a mature distribution model. The rise of early mobile advertising networks, coupled with the popularity of smartphones, helped many games achieve user growth into the hundreds of millions, generating billions of dollars in annual revenue. However, in 2021, Apple and Google made significant adjustments to their privacy policies, directly affecting how publishers reach their target users.

Although these changes have not ended mobile advertising, they have indeed had a significant impact on user acquisition strategies and mobile game business models. Many publishers have found new ways to scale in the mobile space, but the market is increasingly favoring well-capitalized companies, putting smaller teams under greater competitive pressure.

Looking to the future, the industry environment is unlikely to improve. AI can enable users to manage advertising more efficiently, but at the same time, it will lower the market entry threshold, leading to a significant increase in the quantity of content. UGC platforms have become common testing grounds for independent developers, but they themselves also face challenges in content filtering and promotion, and the widespread adoption of AI will only exacerbate these issues.

This brings us to the Web3 gaming market, where development teams must overcome a series of additional obstacles. In addition to the aforementioned challenges, Web3 games must adhere to stricter policies on mobile, Steam, and console platforms. Furthermore, Web3 games are even directly banned in certain key markets.

It is worth mentioning that the distribution status of Web3 games on consoles is gradually changing. The recent release of "Off The Grid" has set a precedent for Web3 games to enter this market, which was once considered a "forbidden zone." We look forward to more games developing along this path in the future.

In addition, the Web3 gaming market is still a niche sub-sector of the entire gaming industry, with approximately 6 to 7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. However, it is important to note that this data does not exclude the large number of bot accounts that exist in the Web3 space, and only about 200 protocols truly have more than 100 active on-chain accounts.

For such a relatively small market, the challenges it faces have been further exacerbated by the surge of emerging Web3 gaming ecosystems over the past two years. Data from Game7 indicates that although the number of new Web3 games has decreased by an average of 45% since 2021, the number of new networks has increased by an average of 187% during the same period. In 2024 alone, 104 new networks/ecosystems have been announced, while only 263 new Web3 games have been released in the same timeframe.

The problem is that most of these emerging networks have failed to successfully attract new players. All these issues have ultimately led to a scramble for player liquidity. As competition in the gaming market becomes increasingly fierce, Web3 projects are competing for the same limited pool of wallet users, and they have little effective means to break through this limitation and achieve scalable growth.

Under significant challenges, a group of Web3 companies is exploring new user acquisition models based on blockchain. Innovative incentive mechanisms and on-chain reputation systems are becoming potential avenues for these companies to gain competitive advantages through Web3 integration.

Many Web3 companies have demonstrated significant product-market fit in emerging markets. Compared to the increasingly saturated T1 market dominated by Web2 giants, those companies that can leverage blockchain's global payment network to truly unlock emerging markets may have tremendous growth opportunities.

Among many regions, one that continues to grow at a rate above the average and has shown a high level of recognition for blockchain applications is the Global South.

3. Global South

The Global South is a term used to describe countries and regions that have relatively low levels of economic development, typically located south of industrialized nations. Due to rapid improvements in internet infrastructure, high smartphone penetration rates, and growing disposable incomes, this vast area is often seen as an underdeveloped yet highly potential gaming market.

The characteristics of the gaming market in the Global South are: a large player base, a reliance on mobile devices for gaming, and overall lower willingness to pay. Historically, these markets have often been used by game publishers for soft-launch user acquisition testing and front-end data optimization.

However, the younger generation in these regions is the first group that grew up alongside smartphones, and they have a very high preference for game content. As this generation ages and benefits from economic development and increased income, many believe they will become a new generation of paying players, driving the gaming industry to new heights.

The following are the characteristics of key markets in the Global South, highlighting their importance in the future gaming industry.

India

Despite a relatively slow start, India is rapidly emerging as the largest gaming market in the Global South. In 2017, the number of gamers in the country was only 44.9 million, but this figure has now grown to approximately 466 million, and it is expected to surpass 640 million by 2027.

Market revenue is expected to grow by 13.6% in 2024 to reach $943 million, and to exceed $1 billion in 2025. It is projected to reach $1.4 billion by 2028, with a five-year compound annual growth rate of 11.1%. This growth is primarily attributed to the enhancement of users' in-app purchase habits and the increase in average revenue per user resulting from rising disposable income nationwide.

The Indian market has a strong preference for mobile games, largely thanks to the country being one of the fastest-growing nations for 5G globally and having a widespread digital payment infrastructure - Unified Payments Interface ( UPI ). The transaction volume of UPI has surged from 10.78 billion in 2019 to 83.75 billion in 2023, showcasing the rapid rise of the digital economy. At the same time, internet penetration has also seen a significant increase, rising from 14% in 2015 to the current 52%. Although still lower than other major gaming markets in the Global South, this indicates there is still enormous growth potential in the future.

These technological advancements are supported by strong macroeconomic fundamentals, including an average annual economic growth rate of 7-9% over the past three years, as well as rising income levels for the young and growing middle class.

India's gaming preferences exhibit a unique pattern that differs from other major markets:

• Mobile games dominate, contributing 77.9% of total revenue.
• PC games and console games account for only 14.5% and 7.7%

From the market revenue composition, the revenue distribution of different types of games is as follows:

• Real money gaming is the largest segment, with an annual revenue of $2 billion.
• Casual and hyper-casual games follow closely, with total revenue of $700 million.
• The market size of other categories of games is approximately 400 million USD.

( Southeast Asia

Southeast Asia, composed of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, is one of the most mature gaming markets in the Global South. According to Niko Partners data, the gaming revenue in the region reached $5.1 billion in 2023, an increase of 8.8% year-on-year, and is expected to grow to $7.1 billion by 2028, with a 5-year compound annual growth rate of 6.7%. In 2023, Southeast Asia had 277 million gamers, which is expected to grow to 332 million by 2028, with a 5-year compound annual growth rate of 3.7%.

According to Sensor Tower's report for the first half of 2024:

• Indonesia has the highest mobile game downloads, reaching 2.4 billion, accounting for 41% of the total downloads in the region.
• Thailand's in-app purchase revenue is the highest at $400 million, followed closely by Indonesia at $300 million.

Despite the differences among countries in the region, community and competitive culture are common features. Word-of-mouth is the main source of information, and the best-performing games usually have social features.

Similar to most countries in the Global South, the penetration of smartphones and the development of broadband infrastructure are key factors driving market growth. Southeast Asia is particularly prominent:

• In 2022, the smartphone penetration rate in all major countries exceeded 80%.
• It is expected that by 2026, the average penetration rate will reach 90.1%.

) Latin America

Latin America is another major market worth paying attention to, with a large population and a strong gaming culture, especially in the field of e-sports. In 2022, the region had an estimated 316 million gamers, but players were mainly concentrated in Brazil, which had 101 million players that year and generated $2.7 billion in gaming revenue.

The Brazilian market shows a strong preference for mobile games:

• 60% of players have played mobile games at least once in the past six months.
• The penetration rate of smartphones is expected to reach 83% by 2025, indicating that there is still significant growth potential in the mobile gaming market.

In terms of monetization capabilities, the Brazilian market demonstrates strong payment habits: 43% of players have in-game spending behaviors, with main motivations including unlocking exclusive content ###39%(, character customization )35%###, and game progression (30%). This indicates that a mature market is moving beyond basic monetization models. These spending patterns suggest that the market is maturing, gradually evolving from basic monetization models to more complex gaming economies.

The Brazilian market is expected to continue dominating the growth of the Latin American gaming industry in the future, mainly due to: 140 universities nationwide offering over 4,000 game-related courses, a total of 1,042 game studios in Brazil with total revenue of approximately $251.6 million, and the recently passed legal framework that officially recognizes game development as a profession and provides tax incentives and other incentives.

( Africa

The African gaming market is at a critical stage of development, with revenues expected to exceed $1 billion in 2024, marking a steady growth compared to $863 million in 2022. The core driver of this market is mobile gaming, which accounts for nearly 90% of the market share, reflecting both the realities of infrastructure and consumer preferences.

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