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

1. Introduction

The scale of the gaming industry has surpassed that of films and music, but it has faced severe challenges in recent years. From 2023 to 2024, the industry has encountered waves of layoffs and consolidation, skyrocketing development costs, and a significant reduction in investment. Game publishing and distribution have become increasingly difficult, with an overflow of AI-generated content, market saturation, and players preferring mature IPs, making it hard for new projects to stand out.

Nevertheless, there are still huge opportunities in the industry. Gen Z and Gen Alpha, as digital natives, will continue to drive market expansion. At the same time, the "Global South" markets are 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 the value distribution within the gaming industry.

2. Challenges Faced by Issuance

One of the biggest challenges in the current gaming industry is distribution. Changes in consumer habits, adjustments in regulatory policies, lower market entry thresholds, and the continuous saturation of game content make it difficult to promote new games.

Players tend to spend most of their time on familiar games. In 2023, the top ten games ranked by average monthly active users were all released over seven years ago, with 60% of players' gaming time on new games concentrated in series that release sequels annually. In 2024, 19,000 new games on Steam accounted for only 15% of the total gaming time of players.

The mobile gaming market once had a mature distribution model, but in 2021, adjustments to privacy policies by Apple and Google affected the way publishers reached users. Although many publishers have found new ways to expand, smaller teams are under greater pressure.

The widespread adoption of AI may further exacerbate the challenges of content screening and promotion. Web3 games also need to overcome additional obstacles, such as stricter policy restrictions and bans in certain markets.

The Web3 gaming market remains a niche sector, with approximately 6-7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. The increasing number of emerging networks has intensified the competition in this small market.

Faced with challenges, some Web3 companies are exploring new user acquisition models based on blockchain. Innovative incentive mechanisms and on-chain reputation systems could become their competitive advantages. In emerging markets, businesses that can leverage blockchain global payment networks may have significant opportunities.

3. Global South

The Global South refers to countries and regions that are relatively lower in economic development, typically located south of industrialized nations. Due to improvements in internet infrastructure, the proliferation of smartphones, and income growth, this region is seen as a game market with immense potential.

The characteristics of the global South gaming market are: a large player base, primarily relying on mobile devices, but overall willingness to pay is relatively low. The younger generation is the first group that has grown up with smartphones, having a strong preference for game content. With economic development and increasing income, they may become a new generation of paying players driving growth in the gaming industry.

India

India is rapidly emerging as the largest gaming market in the Global South. Currently, there are about 466 million gamers, and this number is expected to exceed 640 million by 2027. Market revenue is projected to grow by 13.6% in 2024, surpassing $1 billion in 2025, and reaching $1.4 billion by 2028.

The Indian market has a strong preference for mobile games, thanks to the rapid development of 5G and extensive digital payment infrastructure. The internet penetration rate has increased from 14% in 2015 to the current 52%, indicating that there is still significant growth potential in the future.

Composition of revenue in the Indian gaming market:

• Real Money Games ( RMG ) annual revenue of 2 billion dollars
• The total revenue from casual and hyper-casual games is $700 million.
• The market size of other category games is approximately 400 million USD.

Southeast Asia

Southeast Asia is one of the most mature gaming markets in the Global South. In 2023, the region's gaming revenue reached $5.1 billion, expected to increase to $7.1 billion by 2028. In 2023, there were 277 million gamers, projected to rise to 332 million by 2028.

Indonesia has the highest mobile game downloads, while Thailand has the highest in-app purchase revenue. The region is characterized by a community and competitive culture, with word-of-mouth being the primary source of information.

The proliferation of smartphones and the development of broadband infrastructure are key factors driving market growth. By 2026, the average smartphone penetration rate in major Southeast Asian countries is expected to reach 90.1%.

Latin America

Latin America is another market worth paying attention to, with a large population and a strong gaming culture. It is estimated that there were 316 million gamers in 2022, with Brazil having 101 million players, generating $2.7 billion in gaming revenue.

The Brazilian market has a high preference for mobile games, with 43% of players engaging in in-game purchases. Brazil will continue to dominate the growth of the Latin American gaming industry in the future, thanks to a well-established gaming education system and policy support.

Africa

The African gaming market is expected to exceed $1 billion in revenue by 2024. Mobile games account for nearly 90% of the market share. 92% of African players use mobile phones to play games, with the main challenges being high data costs and hardware prices.

The payment system is both a challenge and an opportunity. 63% of players engage in in-game purchases, but payment methods vary by region.

Middle East and North Africa

The MENA region is the fastest-growing gaming market in the world, with a revenue growth of 4.7% in 2023, reaching $7.1 billion. The compound annual growth rate is expected to reach 9.4% from 2024 to 2030.

MENA-3( Saudi Arabia, UAE, and Egypt ) are the core markets in the region, with projected revenues reaching $2.9 billion by 2027. Market drivers include a high proportion of young population, increased internet penetration, and the adoption of new technologies.

4. What is KGeN

KGeN is a blockchain-driven gaming platform that leverages on-chain and off-chain data, an incentive-based task platform, and a decentralized reputation system to enhance user engagement across different games. KGeN returns funds from publishers to users, driving its growth flywheel.

The core of the platform is a decentralized player data network that covers millions of micro-game communities (KGeN Tribe ). The network uses "Player Proof" (Proof of Gamer, PoG ) engine to create a cross-chain player reputation layer, providing publishers with a highly engaged target user base.

Since January 2024, the total number of registered KGeN accounts has increased by over 700%, with a 1333% growth in monthly active users and a 992% increase in total data attributes, making it the most active Web3 task and player reputation platform in the market.

The KGeN ecosystem is gradually decentralizing, protecting the PoG engine through a distributed oracle network and providing greater transparency for core stakeholders. Both the oracle network and the KGeN store are powered by KGEN tokens.

4.1 Grassroots Growth

The core of KGeN's growth lies in its grassroots tribes and network of tribe leaders. The tribes represent thousands of micro-communities that have joined the KGeN ecosystem. As of December 2024, KGeN reports a total of 2,525 tribes, of which 152 tribes have more than 100 members.

Tribes are one of the core ways KGeN promotes user acquisition through recommendations. Approximately 1.7 million KGeN accounts that have passed KYC verification were acquired through tribes. Tribe leaders are not only incentivized to bring in new members but also need to coordinate tribe activities and maintain community engagement.

KGeN's largest market is currently India, but over 30% of independent active wallets and transactions occur on Kaia, indicating that KGeN has strong growth potential in Asia.

4.2 Incentivize participation through KGeN Play

KGeN Play is the front-end interface where the majority of players on the platform participate, and all reward tasks are published here. Users earn rewards by completing tasks while building their own PoG reputation score.

KGeN Play can be accessed through the PC portal or mobile application. When creating an account, the system automatically creates a blockchain wallet in the background to store all user assets as well as the non-tradable player reputation NFTs.

The task activities are divided into K-Drops and K-Quests. K-Drops provide automatic real-time verification through the API, while K-Quests go through a manual verification process.

4.3 PoG Engine

The PoG engine is a decentralized player rating system composed of five core pillars, each containing five to ten attributes. These data points track players' skills, "humanization", engagement, wealth, and social networks, building a multi-faceted cross-chain reputation system.

The five core pillars are divided into "Human Proof" ( PoH ), "Game Proof" ( PoP ), "Skill Proof" ( PoS ), "Business Proof" ( PoC ), and "Social Network Proof" ( PoSN ).

The PoG engine currently consists of over 270 million data attributes, coming from more than 13 million registered accounts and 4.4 million MAUs. Since January 2024, the data from various groups has shown significant growth, highlighting the continuous increase in platform engagement.

Using the PoG engine, KGeN is leading the alternative UA framework for "effective customer acquisition cost" ( eCAC ). KGeN only charges active users who reach the middle or bottom of the user funnel, rather than simply for impressions or top-of-funnel installs.

4.4 KGeN Token Economy

The economy of KGeN consists of two core assets: KCash and KGEN tokens. KCash primarily serves as an off-chain asset for reward currency and can be used for purchases on KStore. KGEN tokens are utility tokens that drive the growth flywheel of the ecosystem.

rKGEN airdrop activity. The rKGEN allocation is based on the total amount of K-Points held by the user, their platform usage time, and relevance. rKGEN can be converted to KGEN tokens at a 1:1 ratio.

The KGEN token will be used for incentives, discounts at the KGeN Store, subscription fees, and more. There will also be a token staking mechanism, where tribe leaders and publishers can gain additional benefits through staking.

4.5 Oracle Network

KGeN Oracle Network is a distributed network that forms the backbone of the PoG engine. The oracle is responsible for storing PoG data, calculating PoG scores, and delivering the scores.