New Challenges and Opportunities in the Gaming Industry: How KGeN is Reshaping 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 consolidation, with development costs soaring and investments significantly reduced.

The issuance and distribution of games is becoming increasingly difficult. The proliferation of AI content, platform saturation, and player preference for mature IPs make it harder 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, are growing up in the virtual world, and their purchasing power will continue to drive market expansion.

At the same time, the "Global South" market, which has long been overlooked, is experiencing explosive growth. Driven by the widespread adoption 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 explores 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 value distribution within the gaming industry.

2. Challenges Facing Issuance

One of the biggest challenges currently facing the gaming industry is undoubtedly distribution. Changes in consumer habits, adjustments in regulatory policies, lower 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 spend most of their time playing familiar games or series, making it difficult for new titles to break through. In 2023, the top ten games ranked by average monthly active users (MAU) have all been released for over seven years, and players still concentrate 60% of their gaming time on those series that release sequels every year.

In 2024, despite Steam welcoming the release of 19,000 new games, the games released that year only accounted for 15% of the total gaming hours of players.

The mobile gaming market once had a more mature distribution model. The rise of early mobile advertising networks, coupled with the proliferation of smartphones, helped many games achieve hundreds of millions of user growth and generated billions of dollars in annual revenue. However, in 2021, significant adjustments to privacy policies directly impacted the way publishers reached 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 leaning towards well-funded companies, and smaller teams are facing greater competitive pressure.

Looking ahead, the industry environment seems difficult to improve. AI can make UA campaign management more efficient, but it will also lower the market entry threshold, leading to 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.

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.

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 regarded as a "forbidden zone." We look forward to more games being able to develop along this path in the future.

In addition, the Web3 gaming market remains 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 should be noted that these figures do not account for the large number of bot accounts present in the Web3 space, and only about 200 protocols 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. 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 of these issues ultimately lead to a battle for player liquidity. As competition in the gaming market becomes increasingly fierce, Web3 projects are competing around the same limited pool of wallet users, and they have almost no effective means to break through this limitation and achieve scalable growth.

Amid numerous 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 ways 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 companies that can leverage blockchain's global payment networks to truly tap into emerging markets may have enormous growth opportunities.

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

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3. Global South)Global South(

The Global South is a term used to describe countries and regions with relatively low levels of economic development, typically located south of industrialized nations. Due to the rapid improvement of internet infrastructure, high smartphone penetration rates, and the growth of disposable income, this vast region 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, primarily relying on mobile devices for gaming, and overall 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 that 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, showcasing their importance in the future gaming industry.

) India (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 it has now grown to about 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 surpass $1 billion in 2025. By 2028, it is projected to reach $1.4 billion, with a 5-year compound annual growth rate (CAGR) of 11.1%. This growth is mainly attributed to the improvement in user in-app purchase habits and the increase in average revenue per user (ARPU) resulting from rising disposable income nationwide.

The Indian market has a strong preference for mobile games, largely due to the fact that the country is one of the fastest-growing in the world for 5G and has a broad digital payment infrastructure - Unified Payments Interface ### UPI (. The transaction volume of UPI has grown from 10.78 billion in 2019 to 83.75 billion in 2023, showcasing the rapid rise of the digital economy. Meanwhile, internet penetration has also seen significant improvement, increasing 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 room for growth in the future.

These technological advances have been 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 among a young and expanding 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 composition of market revenue, the income distribution of different types of games is as follows:

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

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) 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. The gaming revenue in the region reached $5.1 billion in 2023, with a year-on-year growth of 8.8%, and it 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### generated the highest revenue, reaching $400 million, followed closely by Indonesia at $300 million.

Although there are 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.

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 notable:

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

( Latin America )LATAM(

Latin America ) 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 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 capability, the Brazilian market exhibits a strong payment habit: 43% of players engage in in-game spending, with primary 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 across the country offering more than 4,000 gaming courses.