New Challenges and Opportunities in the Gaming Industry

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 has encountered waves of layoffs and consolidation, soaring development costs, and a significant reduction in investment. Game publishing and distribution have become increasingly difficult, and new projects find it hard to stand out.

However, there are still huge opportunities in the industry. The digital native generation will continue to drive market expansion. The "Global South" market, which has long been neglected, is now 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, assessing its potential to reshape the incentive mechanisms between publishers and players.

2. Challenges Faced in Issuance

One of the biggest challenges currently facing the gaming industry is distribution. Changes in consumer habits, adjustments in regulatory policies, lower market entry thresholds, and content saturation have made it exceedingly difficult to successfully 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 were all released over seven years ago. In 2024, despite Steam releasing 19,000 new games, the games released that year accounted for only 15% of the total gaming time of players.

The mobile gaming market once had a mature distribution model, but the adjustments to privacy policies by Apple and Google in 2021 directly impacted how publishers reach their target users. Although mobile advertising continues, it has caused significant disruption to user acquisition strategies and business models.

The widespread adoption of AI may further exacerbate the challenges of content curation and promotion. The Web3 gaming market also faces additional obstacles, such as stricter regulatory restrictions and direct bans in certain markets.

The Web3 gaming market is relatively small, with about 6 to 7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. The surge of emerging networks and ecosystems has further intensified the challenges, leading to a scramble for player liquidity.

In the face of these challenges, some Web3 companies are exploring new user acquisition models based on blockchain. Innovative incentive mechanisms and on-chain reputation systems may become a way to gain competitive advantages, especially in emerging markets.

3. Global South

The Global South refers to countries and regions that are relatively less developed economically, typically located south of industrialized nations. These areas are rapidly becoming important markets for the gaming industry, primarily due to improvements in internet infrastructure, the proliferation of smartphones, and increases in disposable income.

The characteristics of the global South gaming market are a large player base and a heavy reliance on mobile devices for gaming, but the overall willingness to pay is relatively low. As the younger generation grows and benefits from economic development, they are expected to become the new generation of paying players, driving the gaming industry to new heights.

India

India is rapidly emerging as the largest gaming market in the Global South. The market revenue is expected to grow by 13.6% in 2024, reaching $1.4 billion by 2028. The Indian market has a strong preference for mobile gaming, thanks to the rapid development of the country's 5G network and extensive digital payment infrastructure.

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 and is expected to grow to $7.1 billion by 2028. Community and competitive 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

Latin America is another market worth paying attention to, with a large population and a strong gaming culture. Brazil is the main market in the region, with 101 million players in 2022, generating $2.7 billion in gaming revenue. The Brazilian market shows a high preference for mobile games while also demonstrating strong spending habits.

Africa

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

Middle East and North Africa (MENA)

The MENA region is one of the fastest-growing gaming markets in the world, with revenue growth of 4.7% in 2023, reaching $7.1 billion. It is expected that by 2027, the core market revenue of MENA-3 (Saudi Arabia, UAE, Egypt) will reach $2.9 billion.

4. Introduction to 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 drive user engagement across different games. The core of the platform is a decentralized player data network that encompasses millions of micro-game communities.

KGeN adopts the "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 accounts has increased by over 700%, monthly active users have grown by 1333%, and the total amount of data attributes has increased by 992%.

The KGeN ecosystem is gradually decentralizing, protecting the PoG engine through a distributed oracle network, and providing greater transparency for all core stakeholders.

4.1 Grassroots Growth

The core of KGeN's growth lies in its grassroots tribes and tribe leader network. Tribes represent thousands of micro-communities that have joined the KGeN ecosystem. Tribes are one of the key ways KGeN drives user acquisition based on referrals.

KGeN's largest market currently is India, but it also shows strong growth potential in other parts of Asia. To replicate India's success in other markets in the Global South, KGeN is encouraged to adopt similar grassroots growth strategies.

4.2 Incentivize participation through KGeN Play

KGeN Play is the front-end interface on the platform where most players participate, and all reward tasks are published here. Users can access KGeN Play through the PC portal or mobile application. Task activities are divided into K-Drops and K-Quests, both of which are limited-time, limited-participation events that reward participants with K-Points, leaderboard-based achievements, K-Cash, or tokens.

4.3 PoG engine

The PoG engine is a decentralized player rating system hosted by a distributed node network. It consists of five core pillars, each containing five to ten attributes that track players' skills, "humanity", engagement, wealth, and social networks to build a multifaceted cross-chain reputation system.

4.4 KGeN Token Economics

The economy of KGeN will consist of two core assets: KCash and KGEN tokens. KCash primarily serves as an off-chain asset for reward currency, while KGEN tokens are the utility tokens that drive the growth flywheel of the KGeN ecosystem.

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. The task of the oracle is to store PoG data, calculate PoG scores, and submit these scores to the blockchain for settlement.

5. Competitive Landscape

King of Advertising Technology: Past and Present

In the Web2 market, Facebook and Applovin are two typical cases, and their business models have many synergies with KGeN. Facebook's core competitiveness lies in the deep mining of user profiles and behavioral analysis, while Applovin is a company deeply engaged in advertising technology, spanning the mobile advertising ecosystem.

5.2 Web3 Competitive Landscape

In the Web3 market, competitors can be mainly divided into two categories: publisher ecosystems and task platforms. Publisher ecosystems typically provide token subsidies or utilize ecosystem token inflation for user acquisition incentives. Task platforms aggregate tasks from multiple projects, offering users a one-stop task participation experience.

5.3 Competitive Analysis

The PoG engine of KGeN constitutes a key competitive advantage for the platform in the high-robot traffic market. KGeN needs to effectively monetize users, acquire more data throughout the user journey, and utilize this data to provide precise targeting and optimization for partners to ensure profitability.

6. Future Opportunities

KGeN needs to demonstrate that the value of its user base is not solely reflected in player liquidity. It is recommended that KGeN, during its expansion process, focuses external rewards on incentivizing users to complete tasks they would not actively undertake, while also avoiding providing users with 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 to build a unique dataset that combines wallet activity with user behavior and demographic data.

KGeN also needs to quickly establish a two-way data flow between advertisers and publishers, and improve its attribution and AI technology stack, in order to build a highly defensible data barrier and strengthen its market position.

7. Conclusion

KGeN is currently the largest player data repository in the Web3 space, having established a competitive growth flywheel. Its early positioning in global southern markets has given it a significant first-mover advantage.

Next, 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 is also key to KGeN's future success, and the platform needs to optimize UA.