Challenges and Opportunities in the Gaming Industry: How KGeN Redefines 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 is experiencing a wave of layoffs and consolidations, soaring development costs, and a significant reduction in investment.

The distribution and release of games is becoming increasingly difficult. The proliferation of AI content, platform saturation, and players' preference for established IPs make it hard for new projects to stand out, making it unprecedentedly difficult to acquire high-retention users.

Nevertheless, there are still significant opportunities in the industry. The purchasing power of the digital native generation will continue to drive market expansion. At the same time, the long-ignored "Global South" market is experiencing explosive growth and will become an important incremental market for the gaming industry in the next decade.

This report will explore the latest challenges in game publishing, analyze the high-growth opportunities in the "Global South," and focus on KGeN - a blockchain-based gaming platform aimed at reshaping the incentive mechanisms between publishers and players. We will also assess the feasibility of Web3 task platforms and analyze the structural changes in value distribution within 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 market entry barriers, and the continuous saturation of game content make it exceptionally difficult to successfully promote games.

Players tend to spend most of their time playing familiar games or series. In 2023, the top ten games ranked by average monthly active users all had release dates over seven years ago. 60% of players' gaming time on new games is still focused on series that release sequels every year.

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

The mobile gaming market once had a mature distribution model. However, in 2021, Apple and Google made significant adjustments to their privacy policies, which directly affected how publishers reach their target users.

Although these changes have not put an end to 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 in the mobile space, but the market is increasingly favoring well-funded companies, putting smaller teams under greater competitive pressure.

Looking ahead, the industry environment seems difficult to improve. Although AI can make UA campaign management more efficient, it also lowers the market entry threshold, resulting in a significant increase in content quantity. UGC platforms have become a common testing ground for independent developers, but they themselves also face challenges in content filtering and promotion, and the proliferation of AI will only exacerbate these issues.

The Web3 gaming market faces 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 such as 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 to enter this market, which was once regarded as a "forbidden zone."

The Web3 gaming market is still a niche sub-sector of the entire gaming industry, currently with about 6 to 7 million active wallet addresses interacting with over 3,000 on-chain game protocols. However, this data does not exclude a large number of bot accounts, and there are only about 200 protocols that truly have more than 100 active on-chain accounts.

For such a relatively small market ), the total number of global gamers exceeds 3 billion (, and the challenges it faces have been further exacerbated by the surge of emerging Web3 gaming ecosystems over the past two years. Data from Game7 shows 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 period.

These issues ultimately led to a battle for player liquidity. As competition in the overall gaming market becomes increasingly fierce, 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 advantage 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 that can leverage blockchain's global payment networks to truly unlock emerging markets may have tremendous growth opportunities.

Among many regions, one that has shown a sustained growth rate above the average level and a high recognition of blockchain applications is the Global South ).

3. Global South(Global South)

The Global South refers to countries and regions that are relatively lower in economic development, usually located south of industrialized nations. Due to rapid improvements in internet infrastructure, high smartphone penetration rates, and rising 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 primary reliance on mobile devices for gaming, and generally low 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 to grow up with 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 some key markets in the Global South, illustrating their importance in the future gaming industry.

( 印度)India###

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 it has now grown to about 466 million, with expectations to exceed 640 million by 2027.

Market revenue is expected to grow by 13.6% in 2024, reaching $943 million, and will exceed $1 billion in 2025, with an estimated $1.4 billion by 2028. The 5-year compound annual growth rate (CAGR) is projected to be 11.1%. This growth is primarily attributed to the improvement in users' in-app purchase habits and the increase in average revenue per user (ARPU) due to rising disposable income nationwide.

The Indian market has a strong preference for mobile gaming, largely thanks to the country being one of the fastest-growing in 5G globally and having a robust digital payment infrastructure - Unified Payments 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 it is still lower than other major gaming markets in the Global South, it indicates that 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 an increase in income levels among 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% respectively.

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

• Real Money Gaming ( RMG ) is the largest niche market, with an annual revenue of $2 billion.
• Casual and hyper-casual games follow closely, with a total revenue of $700 million.
• The market size for other categories of games is approximately 400 million USD.

( Southeast Asia ) SEA (

Southeast Asia ) SEA ( consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, and is one of the most mature gaming markets in the global south. According to data from Niko Partners, the gaming revenue in the region reached $5.1 billion in 2023, an 8.8% increase 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 has 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 Sensor Tower 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 purchase revenue reached a high of $400 million, followed closely by Indonesia at $300 million.

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 usually have social features.

Like 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 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 )LATAM(

LATAM) is another major market worth paying attention to, with a large population and a strong gaming culture, especially in the field of eSports. In 2022, the region had an estimated 316 million gamers, with players primarily concentrated in Brazil, which had 101 million players and generated $2.7 billion in gaming revenue that year.

The Brazilian market shows a strong 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 capability, the Brazilian market shows strong spending habits: 43% of players engage in in-game purchases, 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 game economies.

The Brazilian market will continue to dominate the growth of the Latin American gaming industry in the future, mainly due to: 140 universities nationwide offering more than 4,000 game-related courses, a total of 1,042 game studios across Brazil with a total revenue of approximately $251.6 million, and the latest approved legal framework officially recognizing game development as a profession and providing tax incentives and other measures.

非洲(Africa)

The African gaming market is at a critical stage of development, with revenues expected to exceed $1 billion in 2024, showing 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 reality of the infrastructure and consumer preferences.

Research shows that 92% of African players use their mobile phones to play games, while the popularity of computers (51%) and game consoles (31%) is relatively low, this mobile