1. Introduction
Today, the game industry has surpassed the film and music industries in size, and the overall trend is still growing, but it has faced severe challenges in recent years. After record growth during the pandemic, the industry suffered a wave of layoffs and consolidation in 2023-2024, with development costs soaring and investment slashed.
In addition, the publishing and distribution of games are becoming increasingly difficult. The proliferation of AI content, platform saturation, and players’ preference for mature IPs have made it more difficult for new projects to stand out, and acquiring highly sticky users has become an unprecedented challenge.
Despite this, the industry still has huge opportunities. As digital natives, Gen Z and Gen Alpha grew up in virtual worlds such as Roblox and Minecraft, and their spending power will continue to drive market expansion.
At the same time, the long-neglected "Global South" market is experiencing explosive growth. Driven by the popularity of smartphones, improved Internet infrastructure and income growth, these regions will become important incremental markets for the gaming industry in the next decade.
The first half of this report will explore the latest challenges in game publishing and analyze high-growth opportunities in the "Global South". The second half focuses on KGeN, a blockchain-based game network that aims to reshape the incentive mechanism between publishers and players. We will also evaluate the feasibility of Web3 task platforms and analyze the structural changes in the distribution of value in the game industry.
2. Challenges of Issuance
As we all know, one of the biggest challenges facing the current gaming industry is undoubtedly distribution. Changes in consumer habits, regulatory policy adjustments, lower market entry barriers, and the continued saturation of game content have made it more difficult than ever to successfully promote a game to millions of users.
Players tend to spend most of their time playing games or series they are familiar with, making it difficult for new games to break out. In 2023, the top ten games ranked by average monthly active users (MAU) were all released more than seven years ago, and 60% of players' gaming time on new games is still concentrated in series that release sequels every year.
In 2024, despite Steam seeing a record 19,000 new game releases, games released that year only accounted for 15% of players' total gaming time.
The mobile game market used to have a more mature distribution model. The rise of early mobile advertising networks such as Facebook and Google, coupled with the popularity of smartphones, helped many games grow to hundreds of millions of users and generate billions of dollars in annual revenue. However, in 2021, Apple and Google made major adjustments to their privacy policies, which directly affected the way publishers reach their target users.
While these changes haven’t ended mobile advertising, they have had a significant impact on user acquisition (UA) strategies and the business model of mobile games. Many publishers have found new ways to scale on mobile, but the market is increasingly skewed toward deep-pocketed companies, and smaller teams are facing greater competition.
Looking ahead, it seems difficult for the industry environment to improve. AI can indeed make UA delivery management more efficient, but at the same time, it will also lower the market entry barrier and significantly increase the amount of content. UGC platforms such as Roblox and Fortnite Creative have become common testing grounds for independent developers, but they themselves face challenges in content screening and promotion, and the popularity of AI will only further exacerbate these problems.
This brings us to the Web3 gaming market, where development teams need to overcome a host of additional hurdles. In addition to the aforementioned challenges, Web3 games must comply with stricter policies on mobile, Steam (the largest distribution platform for PC games), and console platforms. In addition, Web3 games are even banned outright in some key markets (such as South Korea and China).
It is worth mentioning that the distribution of Web3 games on the console side is gradually changing. The recent release of "Off The Grid" has set a precedent for Web3 games to enter this market that was once considered a "forbidden zone". We look forward to more games developing along this path in the future.
In addition, the Web3 gaming market is still a niche sub-sector of the entire gaming industry, with about 6 million to 7 million active wallet addresses interacting with more than 3,000 on-chain gaming protocols. However, it should be noted that these data fail to exclude the large number of robot accounts in the Web3 field, and there are only about 200 protocols that actually have more than 100 active on-chain accounts.
For such a relatively small market (there are more than 3 billion gamers worldwide), the challenges it faces have been further exacerbated by the surge in emerging Web3 gaming ecosystems over the past two years. Game7 data shows that while the number of new Web3 games has fallen by an average of 45% since 2021, the number of new networks has increased by an average of 187% over the same period. In 2024 alone, 104 new networks/ecosystems were announced, while only 263 new Web3 games were released during the same period.
The problem is that most of these emerging networks have failed to successfully attract new players. All of these issues ultimately lead to a phenomenon we have explored in detail in multiple reports - the battle for player liquidity. As the entire gaming market becomes increasingly competitive, Web3 projects are competing for the same limited number of wallet users, and they have few effective means to break through this limitation and achieve scaled growth.
Amidst numerous challenges, a group of Web3 companies are exploring new user acquisition (UA) models based on blockchain. Innovative incentive mechanisms and on-chain reputation systems are becoming potential ways for these companies to gain competitive advantages through Web3 integration.
Many Web3 companies have demonstrated significant product-market fit (PMF) in emerging markets. Compared to the increasingly saturated T1 market dominated by Web2 giants, those that can leverage blockchain’s global payment network and truly open up emerging markets may have huge development opportunities.
One of the regions that continues to grow at above-average rates and has demonstrated a high level of acceptance of 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, generally located south of industrialized nations. This vast region is often seen as an under-tapped, yet high-potential gaming market, due to rapid improvements in internet infrastructure, high smartphone penetration, and rising disposable incomes.
The game markets in the Global South are characterized by a large player base, a strong reliance on mobile devices for gaming, and a low overall willingness to pay. Therefore, historically, these markets have been used by game publishers for soft-launch user acquisition testing and front-end data optimization.
However, the younger generations in these regions are the first generation to grow up with smartphones and have a high preference for gaming content, including games, video content and e-sports. As this generation ages and benefits from economic development and rising incomes, many believe they will become the new generation of paying players, driving the gaming industry to new heights.
Below are some of the key markets in the Global South to highlight their importance in the future of the games industry.
India
Despite a relatively slow start, India is rapidly emerging as the largest gaming market in the Global South. In 2017, the country had only 44.9 million gamers, a number that has now grown to approximately 466 million and is expected to exceed 640 million by 2027.
Market revenue is expected to grow by 13.6% in 2024 (reaching $943 million), surpass $1 billion in 2025, and reach $1.4 billion in 2028, a five-year compound annual growth rate (CAGR) of 11.1%. This growth is mainly due to the improvement of users' in-app purchase habits and the increase in average revenue per user (ARPU) brought about by the increase in disposable income nationwide.
The Indian market has a strong preference for mobile gaming, thanks in large part to the country being one of the fastest growing 5G countries in the world and having an extensive digital payment infrastructure, the Unified Payments Interface (UPI). UPI transaction volume has grown from 10.78 billion in 2019 to 83.75 billion in 2023, demonstrating the rapid rise of the digital economy. At the same time, Internet penetration has also experienced a significant increase, from 14% in 2015 to 52% today, which, although still lower than other major global southern gaming markets, indicates that there is still huge room for growth in the future.
These technological advances are supported by strong macroeconomic fundamentals, including average annual economic growth of 7-9% over the past three years and rising income levels among a young and growing middle class.
Gaming preferences in India show unique patterns that differ from other major markets:
Mobile games dominate, contributing 77.9% of total revenue;
PC games and console games only accounted for 14.5% and 7.7% respectively.
From the perspective of market revenue structure, the revenue distribution of different types of games is as follows:
Real money gaming (RMG) is the largest segment, with annual revenue of $2 billion;
Casual and hyper-casual games followed closely behind, with a total revenue of $700 million;
The market size of other categories of games is about US$400 million.
Southeast Asia (SEA)
Southeast Asia (SEA), which consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, is one of the most mature gaming markets in the global south. According to Niko Partners, gaming revenue in the region will reach $5.1 billion in 2023, up 8.8% year-on-year, and is expected to grow to $7.1 billion by 2028, with a five-year compound annual growth rate (CAGR) of 6.7%. In 2023, Southeast Asia has 277 million gamers, which is expected to grow to 332 million by 2028, with a five-year CAGR of 3.7%.
According to Sensor Tower’s 2024 H1 report:
Indonesia had the highest number of mobile game downloads at 2.4 billion (41% of the region’s total downloads);
Thailand had the highest IAP (in-app purchase) revenue at $400 million, followed by Indonesia at $300 million.
Despite differences across countries in the region, a culture of community and competition is a common denominator. Word of mouth is the primary source of information, and the best performing games often have social features.
Similar to most countries in the Global South, smartphone penetration and broadband infrastructure development are key factors driving market growth. Southeast Asia stands out:
Smartphone penetration in all major countries will exceed 80% in 2022.
The average penetration rate is expected to reach 90.1% by 2026.
Latin America (LATAM)
Latin America (LATAM) is another market to watch, with a large population and a strong gaming culture, especially in esports. In 2022, the region is estimated to have 316 million gamers, but the players are mainly concentrated in Brazil, which had 101 million gamers that year and generated $2.7 billion in gaming revenue.
The Brazilian market shows a high preference for mobile games:
60% of gamers have played a mobile game at least once in the past six months.
Smartphone penetration is expected to reach 83% in 2025, indicating that the mobile gaming market still has a lot of room for growth.
In terms of monetization, the Brazilian market shows strong payment habits: 43% of players have in-game consumption behaviors, and the main motivations include unlocking exclusive content (39%), character customization (35%) and game progress (30%). This shows that a mature market is moving beyond basic monetization models. These consumption patterns show that the market is maturing and gradually evolving from basic monetization models to more complex game economies.
The Brazilian market will continue to dominate the growth of the Latin American gaming industry in the future, mainly due to: there are 140 universities in the country offering more than 4,000 game-related courses, there are 1,042 game studios in Brazil with a total revenue of approximately US$251.6 million, and the newly passed legal framework officially recognizes game development as a profession and provides incentives such as tax breaks.
Africa
The African games market is at a critical juncture, with revenues expected to exceed $1 billion in 2024, up steadily from $863 million in 2022. The core driver of the market is mobile gaming, which accounts for nearly 90% of the market, reflecting both infrastructure realities and consumer preferences.
Domestic research shows that 92% of African gamers use mobile phones to play games, while the penetration rates of computers (51%) and game consoles (31%) are relatively low. This mobile-first approach has been partially verified. However, the research sample size is only 2,588, which is difficult to fully represent the market situation of the entire continent.
Key challenges: High data costs (42%) are the biggest barrier, followed by hardware prices (31%) and network connectivity issues (31%).
Payment systems are both a challenge and an opportunity: While 63% of gamers make in-game purchases, payment methods vary by region. Kenya leads in mobile payments, with 67% of gamers using mobile wallets to make in-game purchases. Credit cards (45%) and mobile payments (40%) are the most common payment methods in Africa overall.
Middle East and North Africa (MENA)
The MENA (Middle East and North Africa) region is the fastest growing gaming market in the world, with revenue increasing by 4.7% to $7.1 billion in 2023, far exceeding the global market’s 0.6% growth. It is expected to maintain rapid growth in the future, with a compound annual growth rate (CAGR) of 9.4% from 2024 to 2030.
MENA-3 (Saudi Arabia, UAE, Egypt) is the core market in the region and is expected to reach US$2.9 billion in revenue by 2027, with a compound annual growth rate of 8.3%; market drivers include a high proportion of young population driving the active gaming market, a significant increase in Internet penetration in Qatar and the UAE, and the widespread adoption of new technologies.
The region’s gaming landscape is dominated by three strong markets – Saudi Arabia, the UAE and Egypt – collectively known as MENA-3, which are showing exceptional performance, growing 7.8% year-on-year to $1.92 billion by 2023 and forecast to reach $2.9 billion by 2028, a five-year CAGR of 8.3%. Saudi Arabia leads the way, accounting for 60.6% of total gaming revenue and 30.3% of the total number of gamers in the Middle East and North Africa, showcasing the country’s dominance in the regional ecosystem.
4. What is KGeN
KGeN is a blockchain-powered gaming network that leverages on-chain and off-chain data, an incentivized task platform, and a decentralized reputation system to drive user engagement across different games. Unlike other user acquisition (UA) platforms and networks, KGeN returns publisher funds to users, driving its growth flywheel.
At its core, KGeN is a decentralized player data network covering millions of micro-gaming communities (KGeN tribes). The network uses a novel data model called the Proof of Gamer (PoG) engine, creating a cross-chain player reputation layer and providing publishers with a highly engaged target user base at a fraction of the cost of many existing networks.
As more players join KGeN and the PoG dataset grows, more game studio and publisher partnerships are established. This further drives ecosystem rewards, thereby increasing the value of participating players. Since January 2024, this growth flywheel has shown significant results, with total registered accounts increasing by more than 700%, monthly active users (MAU) increasing by 1333%, and total data attributes increasing by 992%. This makes KGeN the most active Web3 task and player reputation network on the market.
The KGeN ecosystem is currently being decentralized, securing the PoG engine through a distributed oracle network and providing greater transparency to all key stakeholders. This oracle network, as well as the KGeN store, are powered by KGEN tokens.
4.1 Grassroots Growth
At the heart of KGeN’s growth and key to its continued expansion in the Global South is its grassroots network of tribes and tribal leaders. Tribes represent the thousands of micro-communities that have joined the KGeN ecosystem, such as peers, esports organizations, influencers, and gaming-centric social groups. As of December 2024, KGeN reported a total of 2,525 tribes, of which 152 tribes have more than 100 members.
Tribes are one of the core ways KGeN drives referral-based user acquisition. When creating a tribe, the tribe leader earns points by inviting up to five tribe members and having them complete at least one task. These points are counted towards the KGeN leaderboard, one of KGeN’s main reward systems (more on this later). This incentive-driven funneling mechanism has proven to be very effective, with approximately 1.7 million KYC-verified KGeN accounts (39% of MAUs and 13% of total registered accounts) being acquired through tribes.
Not only are tribal leaders incentivized to bring in new members, they must also coordinate tribal activities and maintain community engagement if they wish to maximize their earnings potential. This is because a portion of the total tribal earnings flow back to the tribal leader, which becomes one of the key growth incentives for the ecosystem.
KGeN’s largest market is currently India, thanks to the company’s origins and its strong presence in the region’s micro-gaming community. However, over 30% of unique active wallets and transactions occur on Kaia, the proprietary blockchain for the LINE messaging app. LINE’s largest markets are Japan (86 million users), Thailand (47 million users), Taiwan (21 million users), and Indonesia (13 million users), indicating strong growth potential for KGeN in Asia.
To replicate India’s success in other markets in the Global South, KGeN was encouraged to adopt a similar grassroots growth strategy. Partnering with local gaming micro-communities such as schools, internet cafes, small esports organizations, and online communities will allow it to gradually expand its reach while creating opportunities to deepen social dynamics, further driving user engagement and retention.
Another potential issue is the relative lack of tribal social features in the KGeN PC portal and mobile apps. As we will discuss in detail in the report, adding social features is a way to increase ecosystem participation. The more time users spend participating in the ecosystem, the richer the user data, the more opportunities for users to interact with K-Quest and K-Drop features, and the greater the room for monetization.
4.2 Incentivizing participation through KGeN Play
KGeN Play is the front-end interface for most players in the ecosystem, and all reward tasks are published here. This usually marks the beginning of the user journey and will become the main portal for users to interact with the Kgen network while they build their own PoG reputation score.
KGeN Play is accessible via the PC portal or mobile app. Users will get the best experience through the PC portal, but the mobile app provides a quick solution for those on the go and will play an important role in expansion in the Global South.
Upon account creation, a blockchain wallet is automatically created in the background to store all of the user's assets as well as the non-tradable player reputation NFT. Once the minimum withdrawal threshold is reached, the user will be prompted to verify their mobile number via OTP and take full control of their wallet - a critical step in entering the PoG engine directly. The KGeN wallet has limited functionality but has a smooth onboarding process, supports multi-chain and gas-free transactions, and performs its main three functions (check balance, view transaction history, and withdraw) with low friction.
Before users realize they have a blockchain wallet, they first need to start earning rewards. To do this, users need to participate in various activities posted on the KGeN Play portal. Mission activities are divided into K-Drops and K-Quests.
Both K-Drops and K-Quests are limited-time, limited-volume events that reward participants with K-Points, leaderboard-based achievements, K-Cash, or tokens. The core difference between the two is that K-Drops provides automatic real-time verification through endpoint API integration, while K-Quests is conducted through a manual verification process.
Not surprisingly, mission platforms that leverage real-world financial incentives, especially those targeting users in the Global South, see above-average completion rates. KGeN is unique in that it combines KGeN Play with the PoG engine to deliver high-converting targeted campaigns.
4.3 PoG Engine
The PoG engine is a decentralized player rating system hosted by a distributed network of nodes. PoG consists of five core pillars, each containing five to ten attributes. These data points track a player's skill, "humanity", engagement, wealth, and social network to build a multifaceted cross-chain reputation system.
The result is a PoG vanity score that allows players to display their player IDs across different ecosystems thanks to the inherent composability of blockchain technology. At the same time, publishers and advertisers can use the PoG engine to access a highly engaged player base in the Global South at competitive prices.
The five core pillars are divided into Proof of Humanity (PoH), Proof of Play (PoP), Proof of Skill (PoS), Proof of Commerce (PoC) and Proof of Social Network (PoSN).
PoH is exactly what it sounds like - it tracks various data points to reduce the likelihood that a user is a bot. This could include KYC status or the number of social apps connected, one of the most valuable attributes in the eyes of issuers. In addition to tracking "humanity", PoH further segments user groups based on platform preferences and geography. This pillar not only helps with user targeting, but also enhances trust in the quality of acquired users and the network as a whole.
PoP determines the level of player engagement on the KGeN network and the types of games they have played. It tracks metrics related to retention, game modes, preferences, and user habits. This pillar improves targeting by further segmenting different user types and is another set of attributes that publishers value highly.
PoS recognizes players' abilities, competitiveness, engagement, and achievements over time. It takes data from in-game achievements, tournaments, and ecosystem activities to rank players. This pillar highlights the most active players and provides them with social capital.
PoC identifies the monetization potential of users. This could come from direct purchases, on-chain transactions, on-chain history, or net assets. This not only improves the efficiency of targeting and UA campaigns, but also demonstrates different ways that users can add value. In addition to early activities (such as game testing), PoC will eventually become the most valuable dataset for publishers in the post-IDFA era.
PoSN maps the size of users’ social profiles and builds their social graph within the KGeN network. This pillar filters out non-gaming data and tracks social accounts, tribe activity, and network size to understand their social preferences, influence, and impact within the gaming community.
The PoG engine currently consists of over 270 million data attributes from over 13 million registered accounts and 4.4 million MAUs. Since January 2024, the PoH, PoP, PoS, PoC, and PoSN groups have grown by approximately 214%, 1320%, 777%, 384%, and 487%, respectively. In particular, the growth of PoP and PoS related data highlights how ecosystem participation continues to increase over time.
Using the PoG engine, KGeN is pioneering an alternative UA framework called “effective customer acquisition cost” (eCAC). Instead of charging for simple impressions or top-of-funnel installs, KGeN only charges for active users who reach the middle or bottom of the user funnel.
For example, in a campaign with Karate Combat, KGeN reported a nearly 40% reduction in eCAC while charging nothing for top-of-funnel installs and a 5% bottom-of-funnel conversion rate. In a four-week mission campaign with Game7, KGeN said they helped bring in 50,000 PoH verified users with an eCAC 55% lower than competitors. User registration, wallet connection, and avatar creation events were all free, meaning clients only paid for users who completed at least four missions and minted SBT (estimated conversion rate of 20%).
PoH and PoP groups are particularly valuable because these data points provide a relatively high return on investment (ROI) for participation for commercial customers. This is especially important for Web3 projects that leverage financial incentives, which are often plagued by bad actors and bots. However, these data points are not perfect, and even KYC can be manipulated.
Nonetheless, KGeN’s ability to be highly certain of user quality brings tremendous added value to its partners. As we will explain in detail in the report, ad fraud results in an estimated $84 billion in wasted digital ad spend. This is a big reason why over 60% of KGeN’s partners have become repeat customers since August 2024.
Over time, the growth flywheel that is critical to KGeN's future expansion will gain momentum. As long as there is demand for positive PoG scores, engagement on KGeN Play will increase (which can be further accelerated by financial incentives based on PoG scores). This activity will fuel the PoG engine, increasing the total number of properties and enriching KGeN's user database. Subsequently, more publishers will be attracted to the ecosystem, increasing the product variety of KGeN Play and KGeN Store, thereby attracting more users.
PoG Scoring is core to KGeN’s business model and key to its ability to offer competitive, low-cost eCAC to its customers. A key question is, what are the incentives driving this user behavior?
As long as the incentives are financial in nature, the platform will undoubtedly show promising results. However, this creates extrinsic motivational forces that determine how users interact with the platform and its partners.
Extrinsically motivated users are less likely to continue playing a game they were initially attracted to because of the reward. Additionally, research shows that providing extrinsic rewards for otherwise intrinsically rewarding behavior can reduce intrinsic motivation—also known as the overjustification effect.
Intrinsically motivated users find value in things they enjoy, such as social interaction, recognition and respect, advancement, and fun. If over time strong network effects can transform the core value proposition of PoG Scoring into something rooted in social capital and enjoyment, then motivations will gradually become internalized, increasing the potential value provided to partner publishers.
4.4 KGeN Token Economy
The KGeN economy will consist of two core assets: KCash and KGEN tokens. KCash has been online for some time and is mainly used as an off-chain asset for reward currency, but it can also be purchased directly with fiat currency. The main use of KCash is in the KStore, where it can be used to purchase in-app purchases (IAPs), gift cards, or participate in VIP tournaments and missions.
Driving the growth flywheel of the KGeN ecosystem is the KGEN token. This is a utility token with a 40% community allocation (8% unlocked at the Token Generation Event (TGE)) and a four-year lockup period for the team and investors. 12.6% of the total token supply will be unlocked at the TGE, but this does not include the circulating supply locked with market makers or exchanges.
It was recently announced that KGeN will be utilizing a K-Points -> rKGEN airdrop prior to the TGE. rKGEN allocation is based on a user’s total K-Points, time on KGeN, and relevance. Once the token is live, rKGEN can be converted to KGEN tokens at a 1:1 ratio. However, select users will be able to start staking rKGEN prior to the TGE to earn additional token gains.
The K-Points -> rKGEN airdrop model prioritizes transparency and clear communication to maximize community sentiment and token distribution before the TGE. If successfully executed, this could help build momentum and secure additional CEX listings at launch, but comes with its own risks.
Ambiguous reward systems have been shown to increase participation in a variety of different areas. Pure point airdrop campaigns, while less transparent, provide teams with more flexibility in token airdrop allocation. This design concept raises the question of whether KGeN Play events will utilize the K-Points -> KGEN reward system after the TGE, or will they make direct token payments.
At launch, we assume that KGEN tokens will be used primarily for incentives. However, over time, as the network matures, we expect more users to use tokens in the KGeN Store to enjoy better discounts than fiat purchases.
Another potential form of token burn could be subscription fees. As users become more reliant on the network to host their reputation scores, gaming achievements, and social touchpoints, KGeN may decide to limit the number of tasks available to free users. This would effectively limit the majority of earning potential on the network and act as an additional bot protection measure.
Still, unless non-financial rewards have significant intrinsic value to users, many will not spend tokens unless they can achieve a positive ROI. To prevent this from becoming an inflationary drain (i.e. more tokens are released than removed), KGeN should offer a third-party token, KCash, or NFTs. Ultimately, the most sustainable drain is the drain driven by internal motivations such as entertainment and social capital.
In addition to direct token consumption, there will be token staking. In addition to users seeking simple staking yields, clan leaders can stake tokens to increase their membership cap and gain access to additional platform tools. Issuers can also participate in a tiered staking program to gain more free top-of-funnel users in their UA campaigns - a feature we expect to see increasing traction if the platform continues on its current growth trajectory.
Typical token staking is an inflationary model that ultimately dilutes token supply in exchange for delaying sell pressure. Despite the potential short-term benefits, it’s exciting to see KGeN utilizing non-inflationary staking incentives for tribe leaders and issuers.
4.5 Oracle Network
The KGeN Oracle Network is a distributed network of permissioned nodes that will collectively form the backbone of the PoG engine. Each oracle is tasked with storing PoG data, calculating PoG scores (and collectively verifying their accuracy), and submitting these scores to the Aptos blockchain for settlement. In return for providing this service, oracle operators will receive a fixed KGEN token yield based on revenue forecasts, as well as a stablecoin yield associated with the amount invested in the oracle.
The oracle network will eventually decentralize a process that is usually carried out in a centralized manner. This will be a gradual process that is expected to take at least three years. In the first phase, oracles will mainly retrieve PoG data from centralized servers and participate in calculations, verifications, and settlements - decentralized storage of PoG data will begin in the second phase.
Another core component of the oracle network is the oracle key. The key is an NFT required to participate in the network. The more an authorized oracle operator spends on their oracle license, the more keys they receive. KGeN also stated that additional key sales may be offered to the public in the future.
Oracle keys will remain account-locked until the network transitions to Phase 2, when they will become tradable and key holders can delegate their keys to oracle operators. Key delegation is similar to a typical staking mechanism, temporarily locking up a key NFT in exchange for KGEN token earnings from the key reward pool.
The weight of an oracle in the key reward pool is calculated based on three variables: the number of keys staked to the oracle, the protocol's base reward, and the oracle's performance. Performance will only be relevant when KGeN transitions to Phase 2, and the exact calculation method has not yet been determined. The base reward is based on emissions and is an indicator of overall network health. Although the specifics have not yet been confirmed, the goal is that the base reward for all oracles will increase as the value of the network grows.
The Oracle Network combines aspects of the Node and Delegated Proof of Stake (DPoS) frameworks to decentralize the PoG engine. In a fully centralized framework, KGeN's centralized data centers represent a single point of failure for data corruption or deletion. Additionally, core stakeholders (i.e. players and publishers) hold some trust assumptions that these PoG ratings are not manipulated.
In this case, the benefits of decentralization are fairly subjective to users. In certain circles, it might be hard to find a gamer who would actively complain about the centralized nature of their Xbox Gamerscore or Steam account. Likewise, publishers are primarily concerned with scalable UA, not decentralization.
However, this ignores the potential network effects and aligned incentives that a token model can help achieve. By providing stakeholders with a way to benefit from KGeN’s growth, you can create brand advocates who support the project. Assuming KGeN’s growth flywheel translates into positive token price action, more stakeholders will be attracted to the ecosystem, further accelerating the network effect.
5. Competition landscape
KGeN is not the only company with this ambition. As we’ve discussed before, distribution is seen by many as one of the biggest challenges facing the gaming industry right now. Whether it’s scaling user acquisition (UA) campaigns monetarily or optimizing core engagement metrics by improving player liquidity, multiple industry players are tackling these issues with varying degrees of success.
Next, we will focus on analyzing some companies operating in the Web2 and Web3 markets, comparing their business models, exploring potential opportunities, and highlighting some key considerations.
5.1 The King of Advertising Technology: Past and Present
In the Web2 market, there are two typical cases that have many synergies with KGeN's current business model and reveal key opportunities for future growth. The first is Facebook, whose core competitiveness lies in the deep mining of user portraits and behavioral analysis. The second is Applovin, a company that is deeply engaged in advertising technology and spans the mobile advertising ecosystem. With its powerful AI-enabled tools, it has seized a considerable market share in the field of mobile user acquisition (UA).
Facebook:
After trying a variety of advertising formats, Facebook found its footing at the end of the web gaming era and the rise of mobile.
After successfully creating games on Facebook web pages, companies such as King (Candy Crush Saga), Playtika (Solotomania), and Zynga (Farmville) began to seek ways to grow beyond organic traffic. These game companies invested in Facebook advertising at an unprecedented level, so much so that in the first half of 2011, Zynga contributed 12% of Facebook's revenue.
Between 2013 and 2016, Facebook gradually shifted its focus to mobile advertising, and in 2014 it captured nearly 30% of the mobile advertising market share, compared to 0% two years ago, making it the second largest company in the industry after Google.
The success of Facebook's advertising business lies in the accurate tracking of user behavior, game engagement and consumption patterns to optimize delivery and advertising distribution. The core value of the platform lies in its ability to identify and accurately reach high-value users - those players with higher game engagement and willingness to pay, and developers are willing to pay a higher price for this targeted delivery.
Facebook has further enhanced this capability by integrating with the game's SDK, enabling it to track user behavior after installation and optimize downstream metrics such as ROAS (return on advertising spend). In addition, Facebook's social features also provide game developers with additional organic growth channels.
To some extent, KGeN adopts a similar strategy to Facebook, which is to use player data as its core value. However, Facebook's target users are mainly concentrated in the field of light games, covering hundreds of millions of users, while KGeN focuses more on medium and heavy game categories, and its user base is completely dominated by gamers.
To further solidify its position as a decentralized Facebook ad network, KGeN could invest more heavily in the social features of the platform’s own products (they plan to gradually roll out new messaging and tournament features). This would not only help KGeN collect more data about user journeys, preferences, and behaviors, but also provide developers with additional distribution channels.
Applovin:
Applovin is a highly mature advertising technology platform whose business model relies on optimizing advertising delivery and improving delivery results, while using its supply-side platform (SSP) data for pricing analysis. The company has a presence in both ports of the mobile advertising market:
Its supply-side platform (SSP) MAX has accumulated massive data through the acquisition of MoPub, Machine Zone and its own game studio Lion Studios, helping developers sell advertising inventory at the best price.
Its demand-side platform (DSP) AppDiscovery helps advertisers purchase ad inventory based on user acquisition (UA) goals and cost indicators.
After Apple launched the App Tracking Transparency (ATT) privacy policy, the traditional user-level tracking model was impacted. Applovin, relying on its end-to-end data integration advantages, is able to provide developers with user valuations within the scope of compliance, thereby maintaining the accuracy of advertising delivery.
At the core of the Applovin ecosystem is its machine learning engine, AXON, which combines mobile app user behavior data with platform bidding data to predict the apps that users are most likely to download and engage with.
This two-way data flow model gives Applovin a competitive advantage, enabling it to obtain data from the demand side of advertising as well as understand market dynamics and pricing information from the supply side, thereby providing industry-leading data insights and advertising optimization capabilities.
It is undeniable that Applovin's ad technology platform is far more mature and scalable than KGeN. However, similar to Applovin, KGeN also has the opportunity to work directly with partners to encourage them to integrate their own SDKs or return game databases to the PoG engine.
This will not only greatly enrich the PoG database, but also improve the delivery tracking capabilities. At the same time, this more complete data system will also support KGeN's latest POG-E LLM (an enhanced large model trained based on KGeN's own data), enabling it to recommend more matching tasks for players who are more likely to convert into paying users, just like AXON.
Mystplay:
Mystplay is one of the fastest growing reward-based UA platforms in the Web2 space. Its core product is an independent game discovery app where users can earn points by trying games on the platform, which can be exchanged for gift cards.
Reward-based UA platforms are rapidly emerging in the gaming industry, with 68% of developers believing that reward-based marketing brings higher ROAS compared to other UA channels. Such platforms generally claim that the users they acquire perform better than the industry average in terms of retention and revenue. For example, some cases of Mystplay show that its rewarded users can increase their 7-day retention rate or ROAS by 20%-50%. Currently, other well-known reward-based UA platforms include Adjoe, Almedia (Freecash), Tapjoy, MyAppFree (MAF), etc.
Mystplay's unique advantage lies in its rich social features (such as chat, weekly competitions and leaderboards) and its AI-driven recommendation engine, which can match players with the most suitable games for them, increase user stickiness and game time. Mystplay adopts a quality-led UA strategy, which has enabled it to achieve rapid growth in the past 24 months.
As of 2022, Mystplay has approximately 16 million registered users, more than 2 million monthly active users (MAU) in 2023, more than 400 cooperative games, and is often rated as one of the top 10 best-performing distribution platforms on Android. Its annual revenue is expected to be around US$55 million, the team size has grown by approximately 43% in the past year, and has achieved a 445% growth in four years, successfully selected into Deloitte's 2024 Tech Fast 50.
On the surface, Mystplay and KGeN have very similar value propositions. However, Mystplay is mainly aimed at the primary market in Europe and the United States, and is limited by the lack of a globally universal blockchain payment channel, so it has to adopt a "quality over quantity" strategy. Therefore, Mystplay relies on AI for precise matching to improve conversion and retention rates, which is an important direction that KGeN can learn from.
5.2Web3 Competition Landscape:
In the Web3 market, competitors can be divided into two categories: publisher ecosystems and task platforms. The ultimate goal of both is to drive user growth through cooperative projects.
Web3 Issuer Ecosystem:
Publisher ecosystems usually provide Web3 user acquisition (UA) optimization support to partners in the following ways: providing token subsidies that can be used for UA spending, using ecosystem token inflation for UA incentives, etc. Some representative ecosystems that adopt these models include Ronin, Immutable, Xai, and Catizens, with fully diluted valuations (FDV) of US$1.65 billion, US$2.34 billion, US$288.2 million, and US$261.6 million, respectively.
The publisher ecosystem and KGeN are not in direct competition due to some fundamental differences. The publisher ecosystem's profit model is mainly based on the fee structure of developer activities, while KGeN is centered on "controlling" the user journey and being able to operate freely between different public chains and games. This agnosticism allows KGeN to avoid falling into a zero-sum exclusive protocol competition, thereby expanding its total available market (TAM).
However, as mentioned in the Applovin section, KGeN currently often fails to obtain many key data points after the user arrives at the target location (inside the game or application). Publisher ecosystems such as Ronin have greater advantages in user behavior visibility due to their end-to-end user data (especially on-chain data and wallet portraits). In addition, publisher ecosystems further deepen their competitive barriers by providing financial and infrastructure support for applications.
Mission Platform:
Reward tasks are widely used by Web3 projects in various fields to increase market awareness and distribute assets to stakeholders. This is especially true for gaming projects that want to accelerate growth through UA incentives, increase user retention through reward mechanisms, and maximize protocol activity.
The core advantage of task platforms is that they can aggregate tasks from multiple projects, providing users with a one-stop task participation experience while allowing publishers to reach a wider audience.
Currently, KGeN is also a task discovery platform, competing with other Web3 task platforms for user attention. Its strong community base in India and Brazil has earned it a first-mover advantage in these markets. However, this does not guarantee its continued success in the future. The following analysis will delve into the success factors of blockchain-driven task platforms and evaluate the strengths and weaknesses of KGeN's existing model.
5.3 Competition Analysis
Essentially, all quest platforms offer a quest-to-earn service, with their differences primarily reflected in their scale and ability to deliver value-driven outcomes for publishers.
The market demand for high-quality UA results has never been greater. As traffic distribution becomes more and more challenging, a large amount of UA budget is wasted on low-quality interactions every year. According to statistics, in 2023 alone, the wasted expenditure of digital advertising due to bot traffic will reach $84 billion.
While fraud is less of an issue on owned ad inventory (SRN) platforms such as TikTok, Snapchat, and Instagram, there are always malicious actors in large-scale UA campaigns using last-click attribution. Some industry leaders such as Applovin have tried to reduce criticism from gamers and publishers by partnering with third-party anti-fraud technology solutions. However, publishers and advertisers using programmatic advertising still need to build trust in ad platforms.
For KGeN, its PoG engine (especially PoH and PoP scores) constitutes the platform's key competitive advantage in the high robot traffic market. By gradually decentralizing the PoG engine, KGeN attempts to reduce the remaining trust assumptions. The market is in high demand for these verifiable high-engagement users, which can be verified by KGeN's continued growth in revenue and a high proportion of repurchase customers.
That being said, when measuring the success of UA activities, it is not enough to just look at the effective customer acquisition cost (eCAC). KGeN needs to effectively monetize users, obtain more data on the user journey (especially PoC-related data), and use this data to provide partners with precise targeting and optimization to ensure profitability.
When examining the key factors for how Web3 task platforms can win in the scale competition, we can make the following assumptions:
As long as switching costs are low and economic incentives between platforms are sufficient, the same users will attempt to participate in tasks on all platforms.
When time is the primary constraint, users will invest their energy in activities with the highest ROI.
Based on this assumption and excluding the cyclical narrative fluctuations in the Web3 field, we can use two key indicators to measure the scale competitiveness and user retention ability of Web3 task platforms: total potential rewards (TPR) and platform locked value (LPV).
TPR (Total Potential Rewards) refers to the total amount of financial rewards that users can obtain during the life cycle of the platform. TPR is mainly affected by factors such as the token economic model (such as distribution ratio, inflation mechanism, etc.), the number of available incentive mechanisms, the ratio of cash rewards to token rewards, the frequency of task rewards, etc., and is also constrained by some external factors, such as token price and liquidity.
LPV (Locked Platform Value) measures the degree of "control" of the protocol over its users and the level of awareness of the quality of its users. Factors that affect LPV include the ratio of new wallets to high-asset wallets in the associated wallets, user loyalty, a reputation-based reward system (which prefers long-term active users), on-chain and off-chain transaction history, and user data held by the protocol (which also feeds back to TPR, as more accurate user data can increase the protocol's advertising revenue, thereby further enhancing the user reward pool).
In terms of TPR, we can assume that in the absence of monopoly pricing power, UA incentive rewards between different platforms will gradually balance over time.
In terms of LPV, the most valuable platforms for advertisers are those with the largest user bases and those with the deepest user data (which improves targeting and monetization capabilities).
KGeN currently has the largest number of registered accounts among all task platforms, as well as the highest number of 30-day independent active wallets. In addition, as mentioned earlier, PoH (Proof of Humanity) and PoP (Proof of Participation) are important metrics that many other platforms lack. These two factors give KGeN a significant competitive advantage in the LPV dimension, and this advantage will continue to expand as PoC (Proof of Contribution) data is improved.
In contrast, the comparison of TPR is less intuitive. A core factor is the number of active tasks at any point in time and how often new tasks are launched. Some platforms may inflate these numbers through unsustainably high inflation token issuance, but here we assume that all rewards are calculated in USD for a more objective comparison.
As mentioned above, KGeN leads in both total registered accounts and monthly active users (MAU), both of which are important reference points for publishers to judge market demand. In addition, KGeN officials stated that the company has never funded any UA activities on KGeN Play, so it can be inferred that the market demand for its services is at least equal to that of Web3 competitors, or even higher.
After the TGE (token generation event), other key factors affecting TPR include token price, token reward issuance mechanism and overall reward distribution. The specific issuance rates of the latter two cannot be predicted for the time being, but it is worth noting that KGeN's community reward allocation ratio is as high as 40%, which is already at the high end of the industry reward allocation range.
Regarding token price, assuming that the rewards for individual tasks remain the same, in order to gain a foothold in the market competition, the market value of KGeN tokens needs to reach at least $140 million at launch in order to be competitive with Zentry ($138 million market value) and YGG ($132 million market value). From the perspective of FDV (fully diluted valuation), the most valuable task platform at present is Carv, which exceeds $600 million (although Carv seems to be transforming from a task platform to a multi-chain data infrastructure provider).
In order to be globally competitive in the Web3 and Web2 markets, KGeN needs to continue to expand in the global southern market to achieve a market coverage comparable to that of giants such as Applovin. At the same time, KGeN needs to maintain its eCAC cost advantage at this scale and prove that these users have monetizable value through attributes such as PoC (Proof of Contribution).
6. Future Opportunities
KGeN has established a strong core growth flywheel, but it still relies heavily on external incentives in the user acquisition stage. However, as the network continues to expand, KGeN has the opportunity to evolve into an important distribution layer of the Web3 ecosystem, transcending the initial financial incentives and truly unleashing the huge potential of network effects.
External incentives (such as reward mechanisms) can not only be used for initial growth, but can also effectively guide users to develop new skills or acquire new knowledge, gradually transforming into users' internal driving force. To this end, KGeN should strategically use external rewards in the future expansion phase to guide users to participate in non-active tasks such as friend invitations, marketing, user feedback, community governance, and bug bounty programs. At the same time, the platform should avoid predictable fixed financial returns (ROI) and give priority to in-game items, privileges, social rights or other non-monetary rewards to improve user stickiness and community loyalty.
More importantly, KGeN has the opportunity to significantly increase the data value of the PoC (Proof of Consumption) dimension through on-chain transactions and behavioral data, combining user wallet activities with user behavior, consumption preferences, social interactions and other data to build a unique, in-depth and widely applicable data ecosystem. This data-driven capability will significantly surpass traditional Web2 UA platforms, providing unprecedented user behavior insights, thereby optimizing advertising and user value mining.
As the PoG (Proof of Gamer) engine matures, it will gradually develop into a standardized reputation and identity system for Web3. As a composable reputation layer, PoG will be widely adopted by more projects, not only supporting game publishers to launch more SKUs and expand the scale of on-chain transactions, but also becoming the underlying infrastructure for multiple application scenarios including decentralized finance (DeFi), e-sports events, community governance, AI model training, etc. This widespread adoption across projects will further enhance the KGeN network effect and form an irreversible market leading advantage.
At the same time, KGeN should implement a flexible incentive and monetization mechanism, effectively reduce arbitrage behavior, optimize user structure, and cultivate a high-value user group by blurring rewards and setting revenue payment thresholds. This will promote the healthy growth of the network and further consolidate KGeN's strategic position in the Web3 ecosystem.
Data capabilities are KGeN's core competitive advantage. The network not only provides a pool of high-quality players (such as the golden user group) in the early stage, but also improves the attribution model by building a two-way data flow during the scale expansion stage, and performs real-time optimization through AI technology. In the future, KGeN should quickly develop a data sharing mechanism for advertisers and publishers, and build highly differentiated AI data tools, such as personalized recommendation engines, real-time user matching algorithms, and dynamic optimization tools. This will establish a data barrier that is difficult to replicate and strengthen the competitive advantage of the game network in the Global South and other emerging markets.
7. Conclusion
KGeN has become one of the largest gaming networks in Web3, with more than 270 million data attributes and more than 13 million registered accounts. With its unique growth flywheel, KGeN not only effectively reduces the eCAC costs of publishers, but also significantly increases the long-term value of users.
KGeN's early deployment in the global southern market gives it significant market advantages and strategic depth. Its active user base of 4.4 million MAUs and comprehensive community operation capabilities make KGeN an ideal partner for entering emerging markets and the preferred Web3 UA distribution network (Distribution Layer).
As a composable reputation layer, the PoG engine has been successfully used to generate users' on-chain reputation scores and has been widely recognized. Its decentralized design enhances the trust and resilience of the network and reduces the risk of manipulation. In the future, KGeN will further expand the application scope of the PoG engine, build a deeper data ecosystem, and support various scenarios including precise UA optimization, user reputation evaluation, and AI large model data training.
Looking ahead, KGeN is committed to becoming the core distribution network (Distribution Layer) of the Web3 ecosystem, continuously improving its monetization capabilities, perfecting its ROAS calculation system, and accelerating the development and application of AI and data tools to consolidate its strategic position in the next generation of the Internet era.
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