Challenges and Opportunities Facing the Gaming Industry

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 a wave of layoffs and consolidations, soaring development costs, and a significant reduction in investment. Game publishing and distribution have become increasingly difficult, with an oversaturation of AI content, platform saturation, and players favoring mature IPs, making it hard for new projects to stand out.

Nevertheless, there are still huge opportunities in the industry. The purchasing power of the digital native generation will continue to drive market expansion. Meanwhile, the long-overlooked "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.

2. Challenges Faced by 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 saturation of game content have made it exceptionally difficult to promote new games.

Players tend to spend most of their time playing familiar games or series. In 2023, the top ten games by average monthly active users had a release time of over seven years. In 2024, a record 19,000 new games were released on Steam, but the games released that year only accounted for 15% of the total gaming time of players.

The mobile gaming market once had a mature distribution model, but the privacy policy adjustments in 2021 had a significant impact on user acquisition strategies and business models. While many publishers have found new ways to expand, smaller teams face greater competitive pressure.

AI may make UA campaign management more efficient, but it will also lower the market entry threshold, significantly increasing the quantity of content. UGC platforms have become a common testing ground for independent developers, but content curation and promotion still face challenges.

The Web3 gaming market is relatively small, with around 6 to 7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. However, only about 200 protocols truly have more than 100 active on-chain accounts. In recent years, the surge of emerging Web3 gaming ecosystems has further intensified the challenges.

A group of Web3 companies is exploring a new user acquisition model 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.

3. Global South

The Global South is a term that describes countries and regions with relatively low levels of economic development, typically located south of industrialized nations. These areas are becoming a 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 a generally low willingness to pay. The younger generation in these regions is the first group to grow up with smartphones, and they have a very high preference for game content.

India

India is rapidly emerging as the largest gaming market in the Global South. Game revenue is expected to grow by 13.6% in 2024, reaching $943 million, and is projected to reach $1.4 billion by 2028. The Indian market has a strong preference for mobile games, with the rapid proliferation of 5G networks and the development of digital payment infrastructure being the main driving factors.

Southeast Asia (SEA)

Southeast Asia is one of the most成熟的游戏市场之一 in the Global South. In 2023, the region's gaming revenue reached $5.1 billion, and it is expected to grow to $7.1 billion by 2028. Community and competition culture are common characteristics of the region, while the proliferation of smartphones and the development of broadband infrastructure are key factors driving market growth.

Latin America (LATAM)

Latin America is another significant market worth paying attention to, with a large population and a strong gaming culture. In 2022, the region was estimated to have 316 million gamers, with Brazil being the largest market. Brazilian players have a very high preference for mobile games and show strong payment habits.

Africa

The African gaming market is at a critical stage of development, with projected revenues exceeding $1 billion in 2024. Mobile games dominate the market, accounting for nearly 90% of the share. Major challenges include high data costs, hardware prices, and network connectivity issues.

Middle East and North Africa (MENA)

The MENA region is the fastest-growing gaming market in the world, with revenues increasing by 4.7% in 2023, reaching $7.1 billion. A high proportion of young people, an increase in internet penetration, and the widespread adoption of new technologies are the main driving factors.

4. Introduction to KGeN

KGeN is a blockchain-driven gaming platform that promotes user engagement across different games by utilizing on-chain and off-chain data, an incentivized task platform, and a decentralized reputation system. At the core of the platform is a decentralized player data network that spans millions of micro-game communities.

KGeN adopts the "Proof of Gamer" (PoG) engine to create a cross-chain player reputation layer, offering publishers a highly engaged target user base. Since January 2024, the total number of registered accounts has increased by over 700%, monthly active users have grown by 1333%, and the total amount of data attributes has increased by 992%.

4.1 Grassroots Growth

The core of KGeN's growth lies in its grassroots tribes and tribe leader network. 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.

4.2 Incentivized Participation through KGeN Play

KGeN Play is the front-end interface where most players on the platform participate, and all reward tasks are published here. Users can access it through the PC portal or mobile application to participate in various activities to earn rewards.

4.3 PoG engine

The PoG engine is a decentralized player rating system hosted by a distributed network of nodes. It consists of five core pillars: Proof of Humanity (PoH), Proof of Play (PoP), Proof of Skill (PoS), Proof of Commerce (PoC), and Proof of Social Network (PoSN).

4.4 KGeN Token Economics

The KGeN economy consists of two core assets: KCash and KGEN tokens. The KGEN token is key to driving the growth flywheel of the KGeN ecosystem. The community allocation accounts for 40%, and the team and investors have a four-year lock-up period.

4.5 Oracle Network

The KGeN oracle network is a distributed network composed of permissioned nodes, which will collectively form the backbone of the PoG engine. Oracle operators will receive KGEN tokens and stablecoin earnings as rewards.

5. Competitive Landscape

KGeN faces competition from the Web2 and Web3 markets. Major competitors in the Web2 market include Facebook, Applovin, and Mystplay. Competition in the Web3 market mainly comes from the publisher ecosystem and task platforms.

5.1 Analysis of Web2 Competitors

Facebook has achieved success in the gaming advertising sector through its in-depth analysis of user behavior. Applovin holds a significant position in the mobile advertising market thanks to its end-to-end data integration advantages. Mystplay has rapidly risen in the gaming industry as a reward-based user acquisition platform.

5.2 Web3 Competitive Landscape

Web3 competitors mainly include publisher ecosystems (such as Ronin, Immutable, Xai, and Catizens) and task platforms. KGeN has advantages in user scale and data depth, but its competitiveness in total potential rewards (TPR) needs further assessment.

5.3 Competitive Analysis

The PoG engine of KGeN, especially the PoH and PoP ratings, constitutes its key competitive advantage in the high bot traffic market. KGeN needs to continue expanding in the global south market to achieve a market coverage comparable to giants like Applovin, while maintaining an eCAC cost advantage.

6. Future Opportunities

KGeN needs to demonstrate that the value of its user base is not just reflected in player liquidity. It is recommended to focus external rewards on incentivizing users to complete tasks they would not actively undertake, while avoiding offering predictable fixed ROI.

The ability to monetize will be key to the platform's long-term success. KGeN needs to enhance the PoC dimension through on-chain transactions and build a unique dataset. As the PoG engine grows, more publishers will list a wider range of SKUs in the KGeN Store, thereby naturally promoting on-chain transactions.

KGeN also needs to quickly establish a bidirectional data flow between advertisers and publishers, and improve its attribution and AI technology stack to build a highly defensible data barrier.

7. Conclusion

KGeN is currently the largest gaming player data repository in the Web3 space, having established a competitive growth flywheel. Its early layout in the Global South market has given it a significant first-mover advantage.

In the future, KGeN needs to prove its ability to continue growing after the token issuance and become the preferred UA solution in the Global South market. Monetization capability and optimization of the UA model will be key to KGeN's success.