Challenges and Opportunities in the Gaming Industry: How KGeN Reshapes User Acquisition

1. Introduction

The gaming industry has surpassed the film and music industries in scale, but it has faced severe challenges in recent years. In 2023-2024, the industry has encountered waves of layoffs and consolidation, skyrocketing development costs, and significant reductions in investment.

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

Nevertheless, there are still huge opportunities in the industry. Gen Z and Gen Alpha, as digital natives, will continue to drive market expansion with their purchasing power. At the same time, the "Global South" market, which has long been overlooked, is experiencing explosive growth. Driven by the proliferation of smartphones, improvements in internet infrastructure, and income growth, these regions will become important 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 distribution of value within the gaming industry.

2. Challenges Facing Issuance

One of the biggest challenges facing the current gaming industry is publishing. Changes in consumer habits, adjustments in regulatory policies, lowered market access thresholds, and the continuous saturation of game content have made it more difficult than ever to successfully launch a game to millions of users.

Players often tend to spend most of their time playing familiar games or series, making it difficult for new releases to break through. In 2023, the top ten games ranked by average monthly active users (MAU) all have a release date of over seven years ago, and players still concentrate 60% of their gaming time on series that release sequels every year.

In 2024, despite Steam welcoming a record 19,000 new game releases, the games released that year accounted for only 15% of the total playtime of players.

The mobile gaming market once had a more mature distribution model. The rise of early mobile advertising networks, coupled with the widespread adoption of smartphones, helped many games achieve user growth in the hundreds of millions and generate 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 for (UA). Many publishers have found new ways to scale on mobile, but this market is increasingly favoring well-funded companies, while small teams are facing greater competitive pressure.

Looking to the future, the industry environment seems difficult to improve. AI can indeed make UA campaign management more efficient, but it will also lower the market entry threshold, resulting in a significant increase in content quantity. UGC platforms like Roblox and Fortnite Creative have become common testing grounds for independent developers, but they themselves face challenges in content curation and promotion, and the prevalence of AI will only exacerbate these issues.

This leads to the Web3 gaming market, where development teams need to overcome a series of additional obstacles. In addition to the aforementioned challenges, Web3 games must comply with stricter policies on mobile, Steam, and console platforms. Furthermore, Web3 games are even directly banned in some key markets like South Korea and China (.

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

In addition, the Web3 gaming market remains a niche sub-sector within the overall 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 there are only about 200 protocols that truly have more than 100 active on-chain accounts.

For a relatively small market like this, with a total of over 3 billion global gamers, the challenges it faces have been further exacerbated by the surge of emerging Web3 gaming ecosystems over the past two years. Data shows that although the number of new Web3 games has decreased by an average of 45% since 2021, the number of new networks has grown by an average of 187% during the same period. In 2024 alone, 104 new networks/ecosystems have been announced to launch, while only 263 new Web3 games were released in the same timeframe.

The problem is that most of these emerging networks have failed to successfully attract new players. All of these issues ultimately lead to a phenomenon we have detailed in multiple reports—a battle for player liquidity. As competition in the gaming market intensifies, Web3 projects are competing for the same limited pool of wallet users, and they have almost no effective means to break through this limitation and achieve scalable growth.

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

Many Web3 companies have demonstrated significant product-market fit in emerging markets ) PMF (. Compared to the increasingly saturated T1 market dominated by Web2 giants, those businesses that can leverage blockchain global payment networks and truly unlock emerging markets may have huge growth opportunities.

Among many regions, one that has consistently grown at a rate higher than the average and has shown a high recognition of blockchain applications is the Global South ).

3. Global South(Global South)

The Global South is a term used to describe countries and regions that are relatively low in economic development, typically located south of industrialized nations. Due to the rapid improvement of internet infrastructure, high smartphone penetration rates, and growth in disposable income, 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 primary reliance on mobile devices for gaming, and generally low willingness to pay. Therefore, 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 generation to grow up alongside smartphones, and they have a strong preference for gaming content (, including games, video content, and esports ). As this generation ages and benefits from economic development and increased income, many believe they will become the new generation of paying players, driving the gaming industry to new heights.

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

( 印度)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, and this figure has now grown to approximately 466 million, with projections to surpass 640 million by 2027.

Market revenue is expected to grow by 13.6% in 2024 to reach $943 million, and exceed $1 billion in 2025, with an anticipated $1.4 billion by 2028, resulting in a 5-year compound annual growth rate (CAGR) of 11.1%. This growth is mainly attributed to improved in-app purchase habits among users, as well as an increase in disposable income nationwide leading to higher average revenue per user (ARPU).

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 wide digital payment infrastructure—Unified Payment Interface ) UPI ###. The transaction volume of UPI has increased from 10.78 billion in 2019 to 83.75 billion in 2023, showcasing the rapid rise of the digital economy. At the same time, the internet penetration rate has also seen significant improvement, rising from 14% in 2015 to the current 52%. Although still lower than other major gaming markets in the Global South, it indicates that there is still immense growth potential in the future.

These technological advancements are strongly supported by robust macroeconomic fundamentals, including an average annual economic growth rate of 7-9% over the past three years and an increase in the income levels of a young and growing middle class.

India's gaming preferences exhibit a unique pattern distinct 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 composition of market revenue, the revenue distribution of different types of games is as follows:

• Real money games ( RMG ) are the largest niche market, 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 dollars.

( Southeast Asia ) SEA (

Southeast Asia ) SEA ( consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, making it one of the most mature gaming markets in the Global South. According to data, the gaming revenue in this 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 ) CAGR ( of 6.7%. In 2023, Southeast Asia had 277 million gamers, and this number is expected to grow to 332 million by 2028, with a 5-year CAGR of 3.7%.

According to the 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 IAP) in-app purchases( revenue is the highest, reaching 400 million USD, followed closely by Indonesia at 300 million USD.

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

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

• 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 ###LATAM(

LATAM ) is another major market worth paying attention to, with a large population and a strong gaming culture, particularly in the esports field. In 2022, the region was estimated to have 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 very high preference for mobile games:

• 60% of players have played a mobile game 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 a strong willingness to pay: 43% of players engage in in-game purchases, primarily motivated by unlocking exclusive content ( 39% ), character customization ( 35% ), and game progression ( 30% ). This indicates that a mature market is moving beyond basic monetization models. These consumption patterns suggest that the market is maturing, gradually evolving from basic monetization models to more complex game economies.

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