New 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 has faced severe challenges in recent years. From 2023 to 2024, the industry has encountered waves of layoffs and consolidation, soaring development costs, and significant reductions in investment.

Issuing and distributing have become increasingly difficult. The proliferation of AI content, platform saturation, and players' preference for established IPs make it harder for new projects to stand out, and acquiring highly engaged users has become more challenging than ever.

Nonetheless, there are still huge opportunities in the industry. The consumer power of the digital native generation will continue to drive market expansion. At the same time, the "Global South" market, long overlooked, is experiencing explosive growth.

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, discussing how it reshapes the incentive mechanisms between publishers and players.

2. Challenges Facing Issuance

One of the biggest challenges currently facing the gaming industry is distribution. Changes in consumer habits, adjustments in regulatory policies, lower market entry barriers, and the ongoing saturation of game content have made it increasingly difficult to successfully promote a game.

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

In 2024, despite Steam releasing a record 19,000 new games, the games released that year accounted for only 15% of players' total gaming time.

The mobile gaming market once had a mature distribution model. However, the significant adjustments to privacy policies by Apple and Google in 2021 directly affected the way publishers reached their target users.

Looking to the future, the industry environment seems unlikely to improve. AI may make UA campaign management more efficient, but it will also lower the barriers to market entry, resulting in a significant increase in the quantity of content. UGC platforms face challenges in content filtering and promotion, and the widespread use of AI will only exacerbate these issues.

The Web3 gaming market faces additional obstacles. In addition to the aforementioned challenges, Web3 games must adhere to stricter policies on mobile platforms, Steam, and console platforms. In some key markets, they are even directly banned.

The Web3 gaming market is still a niche sub-sector of the gaming industry, with around 6 to 7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. However, there are only about 200 protocols that truly have more than 100 active on-chain accounts.

In such a relatively small market, the challenges faced 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.

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

Under numerous 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 ways for these companies to gain a competitive advantage 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 businesses that can leverage blockchain's global payment network to truly unlock emerging markets may have substantial growth opportunities.

Among many regions, the growth rate continues to be above average, and one of the areas that 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 with relatively low levels of economic development, usually 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, while the overall willingness to pay is relatively low. Historically, these markets have often been used by game publishers for soft launch user acquisition testing and frontend 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. 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, highlighting their importance in the future gaming industry.

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, expected to exceed 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, with an expected increase to $1.4 billion by 2028, resulting in a 5-year compound annual growth rate of 11.1%. This growth is mainly attributed to the improvement of user in-app purchase habits and the increase in disposable income nationwide leading to higher average revenue per user.

The Indian market has a strong preference for mobile games, largely thanks to the country being one of the fastest-growing nations for 5G and having a widespread digital payment infrastructure. The transaction volume of the Unified Payment Interface ) 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 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 that there is still huge 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%

From the composition of market revenue, 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 followed closely, with total revenue of $700 million
• The market size of other categories of games is about 400 million dollars.

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) Southeast Asia

Southeast Asia, comprised of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, is one of the most mature gaming markets in the Global South. In 2023, the gaming revenue in the region reached $5.1 billion, an increase of 8.8% year-on-year, and it 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, and this number is expected to grow to 332 million by 2028, with a 5-year compound annual growth rate 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 in-app purchase revenue is the highest, reaching $400 million, followed closely by Indonesia at $300 million.

Despite the differences among countries in the region, community and competition 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 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 exceeded 80% in all major countries.
• It is estimated that by 2026, the average penetration rate will reach 90.1%

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) Latin America

Latin America is another major market worth paying attention to, with a large population and a strong gaming culture, especially in the esports sector. 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 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 a strong tendency to pay: 43% of players have in-game spending behavior, with the 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.

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 in Brazil with a total revenue of approximately $251.6 million, and the latest enacted legal framework officially recognizing game development as a profession and providing tax incentives and other measures.

) Africa

The African gaming market is at a critical development stage, 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.

Domestic research shows that 92% of African players use mobile phones to play games, while the penetration rates for computers (51%) and game consoles ###31%( are relatively low. This mobile-first approach has been partially validated; however, the sample size of the study is only 2588, making it difficult to comprehensively represent the market situation across the entire continent.

Main challenges: High data costs ) 42% ( is the biggest obstacle, followed by hardware prices ) 31% ( and network connectivity issues ) 31% (.

Payment systems are both a challenge and an opportunity: While 63% of players have in-game purchase behavior, payment methods vary by region. Kenya leads in mobile payments, with 67% of players using mobile wallets for gaming consumption. Credit cards )45%( and mobile payments )40%( are the most common payment methods across Africa.

) Middle East and North Africa

The Middle East and North Africa region is the fastest-growing gaming market in the world, with a revenue growth of 4.7% in 2023, reaching $7.1 billion, far exceeding the global market's growth of 0.6%. It is expected to maintain rapid growth in the future, with a projected compound annual growth rate of 9.4% from 2024 to 2030.

By 2027, the core market revenue of three countries in the Middle East and North Africa, namely Saudi Arabia, the UAE, and Egypt, is expected to reach $2.9 billion, with a compound annual growth rate of 8.3%. Market drivers include a high proportion of young population, which boosts the activity of the gaming market, a significant increase in internet penetration in Qatar and the UAE, and widespread adoption of new technologies.

The gaming grid in the area