The New Growth Engine of the Gaming Industry: How KGeN Reshapes User Acquisition

1. Introduction

The scale of the gaming industry has surpassed that of film and music, but it has faced severe challenges in recent years. From 2023 to 2024, the industry experienced layoffs and consolidation, rising development costs, and reduced investment. Game publishing and distribution have also become more difficult, with new projects struggling to stand out.

However, opportunities still exist. The generation of digital natives will continue to drive market expansion. The long-neglected global South market is experiencing a surge, and it will become an important incremental market for the gaming industry in the next decade.

This report will explore the latest challenges in game distribution, analyze 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 structural changes in the value distribution of the gaming industry.

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 barriers, and content saturation have made it increasingly difficult to successfully promote new games.

Players tend to spend most of their time on familiar games. In 2023, the top ten games ranked by monthly active users were all released over seven years ago. In 2024, despite Steam releasing 19,000 new games, the games released that year only accounted for 15% of the total game time of players.

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

The future industry environment is difficult to improve. AI may increase UA efficiency, but it will also lower the entry threshold and exacerbate content oversupply. UGC platforms have become a testing ground for independent developers, but they also face challenges in content selection and promotion.

The Web3 gaming market needs to overcome additional obstacles, such as stricter policy restrictions and bans in certain markets. Currently, there are about 6 to 7 million active wallets interacting with over 3,000 on-chain gaming protocols, but only about 200 protocols actually have more than 100 active accounts.

The rise of emerging Web3 ecosystems has further intensified the challenges. In 2024, 104 new networks will be launched, while only 263 new Web3 games have been released. This has led to a battle for player liquidity, with Web3 projects competing for a limited user base.

Amid numerous challenges, some Web3 companies are exploring a new UA model based on blockchain. Innovative incentive mechanisms and on-chain reputation systems may become pathways to gaining competitive advantages. Compared to the saturated T1 market, companies that can leverage blockchain to open emerging markets may have tremendous opportunities.

3. Global South

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

The characteristics of the global South gaming market are: a large player base, a primary reliance on mobile devices, and a generally low willingness to pay. The younger generation is the first group to grow up with smartphones and has a strong preference for game content. With economic development and increased income, they may become the new generation of paying players, driving industry rise.

The following are some key market characteristics:

India

• Game revenue is expected to rise by 13.6% to $943 million in 2024, with the potential to reach $1.4 billion by 2028.
• Mobile games dominate, contributing 77.9% of total revenue
• The internet penetration rate rose from 14% in 2015 to 52%, with still significant growth potential.
• Real money games are the largest segment, with an annual revenue of $2 billion.

Southeast Asia

• Game revenue reached $5.1 billion in 2023, expected to rise to $7.1 billion by 2028.
• Indonesia's mobile game downloads reached the highest at 2.4 billion.
• Thailand's IAP revenue is the highest, reaching $400 million.
• The average smartphone penetration rate is expected to reach 90.1% by 2026.

Latin America

• In 2022, it is estimated that there were 316 million gamers, with Brazil having 101 million players.
• 60% of players in Brazil have played mobile games at least once in the past six months.
• 43% of Brazilian players have in-game spending behavior.

Africa

• Game revenue is expected to rise to over 1 billion USD in 2024.
• Mobile games account for nearly 90% of the market share.
• 92% of players use their mobile phones to play games
• High data costs ( 42% ) is the biggest obstacle

Middle East and North Africa

• The revenue in 2023 rose by 4.7% to 7.1 billion USD
• Saudi Arabia, the UAE, and Egypt are core markets, with expected revenues reaching $2.9 billion in 2027.
• Saudi Arabia accounts for 60.6% of the total gaming revenue and 30.3% of the total number of players in the region.

4. Introduction to KGeN

KGeN is a blockchain-driven gaming platform that leverages on-chain and off-chain data, an incentivized task platform, and a decentralized reputation system to drive user engagement. The core of the platform is a decentralized player data network that uses "Player Proof" ( PoG ) engine to create a cross-chain player reputation layer.

Since January 2024, the total number of registered KGeN accounts has risen by over 700%, monthly active users have increased by 1333%, and the total amount of data attributes has risen by 992%. The platform is gradually becoming decentralized, protecting the PoG engine through a distributed oracle network.

4.1 grassroots rise

The core of KGeN's rise lies in its grassroots tribes and tribe leader networks. Tribes represent micro-communities that join the ecosystem, such as colleague groups, esports organizations, etc. As of December 2024, KGeN has 2,525 tribes, of which 152 have more than 100 members.

The tribe is the core way for KGeN to drive user acquisition based on recommendations. Approximately 1.7 million KYC-verified accounts were obtained through the tribe. Tribe leaders are incentivized to bring in new members and maintain community engagement.

The largest market for KGeN is India, but over 30% of active wallets and transactions occur on LINE's blockchain Kaia, demonstrating the rise potential in Asia.

4.2 KGeN Play

KGeN Play is the main front-end interface for players to participate, where all reward tasks are published. Users earn rewards by completing tasks while building their PoG reputation score.

The task activities are divided into K-Drops and K-Quests. K-Drops provide automatic real-time verification through the API, while K-Quests are verified manually. These tasks offer users the opportunity to earn K-Points, K-Cash, or tokens.

4.3 PoG Engine

The PoG engine is a decentralized player scoring system, consisting of five core pillars:

• PoH( Human Proof ): Tracking User "Humanization" Metrics
• PoP( game proof ): determine platform participation and game preferences
• PoS( Skill Proof ): Recognize players' abilities and achievements
• PoC( Business Proof ): Identifying User Monetization Potential
• PoSN( Social Network Proof ): Mapping User Social Profiles

The PoG engine currently contains over 270 million data attributes from more than 13 million registered accounts. KGeN utilizes this data to optimize UA activities, providing the "effective customer acquisition cost" ( eCAC ) framework.

4.4 Token Economy

The KGeN economy consists of two core assets: KCash and KGEN tokens. KCash mainly serves as an off-chain reward currency, while KGEN tokens are the utility tokens that drive the ecosystem rise.

rKGEN airdrop event.

4.5 oracle network

The KGeN oracle network is a distributed network composed of permissioned nodes, forming the backbone of the PoG engine. The oracle is responsible for storing PoG data, calculating scores, and submitting them to the blockchain.

The oracle network will achieve decentralization in phases, which is expected to take at least three years. The oracle key is the NFT required to participate in the network, and it may be made available for public sale in the future.

5. Competitive Landscape

5.1 Advertising technology giants in the Web2 field

Facebook

• Become a leader in mobile advertising through precise user profiling and behavior analysis.
• Social features provide additional rise channels for games.

Applovin

• Own the supply and demand platform MAX and AppDiscovery.
• The AXON machine learning engine provides leading data insights and advertising optimization capabilities.

Mistplay

• One of the fastest rising reward-based UA platforms in the Web2 space
• Independent game discovery app, users play trials to earn points to exchange for gift cards
• In 2023, the monthly active users exceeded 2 million, with an annual revenue of approximately 55 million US dollars.

5.2 Web3 Competitive Landscape

Web3 competitors are mainly divided into two categories: publisher ecosystems and task platforms.

Publisher Ecosystem

• Represents: Ronin, Immutable, Xai, Catizens
• Mainly supports UA through token subsidies and inflation incentives.
• Master end-to-end user data, with an advantage in data visibility.

Task Platform

• Aggregate tasks from multiple projects to provide a one-stop participation experience.
• The main competitive advantage lies in scale and the ability to bring value to publishers.

KGeN leads in the number of registered accounts and monthly active users, with unique advantages in PoH and PoP ratings. However, the comparison in terms of total potential rewards (TPR) is not very intuitive, as factors such as token price and distribution mechanism need to be considered.

6. Future Opportunities

KGeN Future Development Suggestions:

• Optimize the incentive mechanism to avoid providing predictable fixed ROI
• Enhance PoC dimensions through on-chain transactions to build a unique dataset
• Expand the SKU variety in the KGeN Store to promote on-chain transactions
• Improve attribution and AI technology stack, build data barriers
• Accelerate the expansion in the Global South market

7. Conclusion

KGeN has established a competitive rise flywheel, gaining a first-mover advantage in the global South market. The PoG engine creates customizable experiences for players.