New Challenges and Opportunities in 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 faces severe challenges in recent years. In 2023-2024, the industry is experiencing layoffs and consolidation, soaring development costs, and reduced investment. Publishing and distribution are becoming more difficult, and new projects are struggling to stand out.

However, opportunities still exist. The generation of digital natives will continue to drive market expansion. The "Global South" market is experiencing explosive growth and will become an important incremental market 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

The game distribution is facing unprecedented challenges. Players tend to prefer familiar games, making it difficult for new releases to break through. The number of new games on Steam in 2024 has reached a record high, but they only account for 15% of total gaming time.

The mobile gaming market once had a mature distribution model, but adjustments to privacy policies have impacted user acquisition strategies. While AI has improved efficiency, it has also lowered the entry barrier. Web3 games face more obstacles, such as strict policies on mobile and console platforms.

The Web3 gaming market is relatively small, with about 6-7 million active wallets interacting with 3,000 on-chain gaming protocols. The new network's activation has intensified challenges, leading to a battle for player liquidity.

Some Web3 companies are exploring new user acquisition models based on blockchain. Companies that demonstrate product-market fit in emerging markets may have significant opportunities, and the Global South is one of them.

3. Global South

The Global South refers to countries and regions with relatively low levels of economic development. These areas are rapidly becoming a highly potential gaming market, characterized mainly by a large player base, reliance on mobile devices, and lower willingness to pay.

India:

• The number of players increased from 44.9 million in 2017 to the current 466 million.
• The market revenue is expected to grow by 13.6% in 2024, reaching 943 million USD.
• Mobile games dominate, contributing 77.9% of total revenue.
• Real money gaming is the largest niche market, with an annual revenue of $2 billion.

Southeast Asia:

• Game revenue in 2023 was $5.1 billion, a year-on-year increase of 8.8%.
• 277 million gamers in 2023
• Indonesia has the highest mobile game downloads, while Thailand has the highest IAP revenue.
• 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, of which 101 million were in Brazil.
• 60% of players in Brazil have played mobile games in the past six months.
• 43% of Brazilian players engage in in-game spending behavior

Africa:

• Revenue is expected to exceed $1 billion in 2024
• 92% of players use their mobile phones to play games
• High data costs ( 42% ) is the biggest obstacle.

Middle East and North Africa:

• Revenue grew by 4.7% in 2023, reaching $7.1 billion
• MENA-3( Saudi Arabia, UAE, Egypt ) are core markets
• Saudi Arabia accounts for 60.6% of total game revenue

4. What is 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 enhance user engagement across different games. KGeN returns funds from publishers to users, driving its growth flywheel.

The core of the platform is a decentralized player data network that covers millions of micro-game communities ( KGeN Tribe ). The network employs the "Player Proof" ( PoG ) engine to create a cross-chain player reputation layer, providing publishers with a highly engaged target user base.

The KGeN ecosystem is gradually decentralizing, protecting the PoG engine through a distributed oracle network and providing higher transparency for core stakeholders. Both the oracle network and the KGeN store are powered by KGEN tokens.

4.1 Grassroots Growth

The core of KGeN's growth lies in its grassroots tribes and tribal leader network. Tribes represent thousands of micro-communities that have joined the KGeN ecosystem. Tribal leaders earn points by inviting members and having them complete tasks. This mechanism has proven to be very effective, with approximately 1.7 million KGeN accounts verified through KYC being acquired through tribes.

KGeN's largest market currently is India, but over 30% of independent active wallets and transactions occur on Kaia, which is the proprietary blockchain of the LINE messaging application. This indicates that KGeN has strong growth potential in Asia.

4.2 Incentivize participation through KGeN Play

KGeN Play is the front-end interface that most players on the platform participate in. Users can access it via the PC portal or mobile app to complete tasks and earn rewards. The task activities are divided into K-Drops and K-Quests, with the former providing automatic real-time verification via API and the latter requiring manual verification.

4.3 PoG engine

The PoG engine is a decentralized player rating system composed of five core pillars: Human Proof ( PoH ), Game Proof ( PoP ), Skill Proof ( PoS ), Commercial Proof ( PoC ), and Social Network Proof ( PoSN ). These data points track players' skills, "humanity", engagement, wealth, and social networks, building a multifaceted cross-chain reputation system.

The PoG engine currently consists of over 270 million data attributes, sourced from more than 13 million registered accounts and 4.4 million MAUs. KGeN leverages the PoG engine to drive the "effective customer acquisition cost" ( eCAC ) framework, charging only active users who reach the middle or bottom of the user funnel.

4.4 KGeN Token Economics

The KGeN economy consists 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 ecosystem. 12.6% of the total token supply will be unlocked at TGE.

4.5 oracle network

The KGeN oracle network is a distributed network made up of permissioned nodes, forming the backbone of the PoG engine. Oracle operators will receive KGEN tokens and stablecoin rewards. The decentralization of the oracle network will be a gradual process, expected to take at least three years.

5. Competitive Landscape

The King of Advertising Technology: Past and Present

In the Web2 market, Facebook and Applovin are two typical examples:

Facebook:

• Optimize ad placements by accurately tracking user behavior.
• The social features provide game developers with additional growth channels.

Applovin:

• Own supply-side platform (SSP) and demand-side platform (DSP)
• The machine learning engine AXON combines user behavior data with bidding data.

Mystplay:

• One of the fastest-growing reward-based UA platforms in the Web2 space
• With rich social features and an AI-driven recommendation engine

5.2 Web3 Competitive Landscape

The competitors in the Web3 market are mainly divided into two categories: publisher ecosystems and task platforms.

Publisher Ecosystem:

• Provide UA subsidies and incentives
• Represents including Ronin, Immutable, Xai, and Catizens

Task Platform:

• Aggregate tasks from multiple projects to provide a one-stop experience.
• KGeN has a strong community base in India and Brazil.

5.3 Competitive Analysis

The core competitiveness of the task platform lies in its scale and its ability to deliver value-driven results for publishers. Key metrics include total potential rewards (TPR) and platform locked value (LPV).

KGeN is in a leading position in terms of registered accounts and monthly active users, with PoH and PoP scoring forming key competitive advantages. However, the comparison in TPR is not as straightforward and requires consideration of factors such as token price and reward distribution mechanisms.

6. Future Opportunities

KGeN needs to demonstrate that the value of its user base is not only reflected in player liquidity. Recommendation:

• Use external rewards to incentivize users to complete specific tasks
• Avoid providing predictable fixed ROI
• Enhance PoC dimensions through on-chain transactions
• Encourage more publishers to list SKUs on the KGeN Store
• Improve attribution and AI technology stack, build data barriers

7. Conclusion

KGeN is the largest player data repository in the Web3 gaming space, with a first-mover advantage in the Global South market. The PoG engine creates composable on-chain game scores for players, providing publishers with highly engaged real users.

In the future, KGeN needs to:

• Maintain the growth momentum after the token issuance
• Become the preferred UA solution in the Global South market
• Optimize UA model to enhance ROAS calculation capability
• Accelerate the development of AI and data tools
• Continuously enhance competitiveness in the Web3 UA field