New Opportunities and Challenges in the Development of the Gaming Industry

The scale of the gaming industry has surpassed that of film and music, and the overall trend is still growing, but it has faced severe challenges in recent years. From 2023 to 2024, the industry has experienced waves of layoffs and consolidation, skyrocketing development costs, and a significant reduction in investment.

Issuing and distributing has become increasingly difficult. The flood of AI content, platform saturation, and players' preference for mature IPs make it challenging for new projects to stand out, and acquiring high-retention users has become an unprecedented challenge.

Nevertheless, there are still huge opportunities in the industry. Gen Z and Gen Alpha, as digital natives, grow up in a virtual world, and their purchasing power will continue to drive market expansion.

At the same time, the "Global South" market, which has long been neglected, is experiencing explosive growth. Driven by the proliferation of smartphones, improvements in internet infrastructure, and income growth, these regions will become important incremental markets for the gaming industry in the next decade.

Challenges Faced in Issuance

One of the biggest challenges currently facing the gaming industry is distribution. Changes in consumer habits, adjustments in regulatory policies, lowered market entry barriers, and the continuous saturation of game content have made it difficult to successfully promote games.

Players tend to spend most of their time playing familiar games or series, making it difficult for new titles to break through. In 2023, the top ten games, calculated by average monthly active users (MAU), all had release dates over seven years ago, and 60% of players' game time on new games is still concentrated on series that release sequels every year.

In 2024, Steam welcomed a record 19,000 new game releases, but the games released that year only accounted for 15% of the total playtime of players.

The mobile gaming market once had a mature distribution model. The rise of early mobile advertising networks, coupled with the popularity of smartphones, helped many games achieve hundreds of millions of user growth and generate billions of dollars in annual revenue. However, in 2021, significant changes to privacy policies directly impacted the way publishers reached their target users.

Although these changes have not ended mobile advertising, they have indeed caused a significant impact on user acquisition strategies and mobile game business models for (UA). Many publishers have found new ways to scale on mobile, but the market is increasingly leaning towards well-funded companies, putting smaller teams under greater competitive pressure.

Looking to the future, the industry environment is unlikely to improve. AI can make UA campaign management more efficient, but it will also lower the market entry threshold, leading to a significant increase in content quantity. UGC platforms have become common testing grounds for independent developers, but they themselves also face challenges in content curation and promotion, and the proliferation of AI will only exacerbate these issues.

The Web3 gaming market faces additional obstacles. In addition to the aforementioned challenges, Web3 games must comply with stricter policies on mobile, Steam, and console platforms. Furthermore, Web3 games are even directly banned in some key markets.

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 entering this market, which 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 remains a niche segment within the entire gaming industry, with approximately 6 to 7 million active wallet addresses interacting with over 3,000 on-chain gaming protocols. However, it should be noted that these figures do not exclude the large number of bot accounts present in the Web3 space, and only about 200 protocols actually have more than 100 active on-chain accounts.

For such a relatively small market (, the total number of global gamers exceeds 3 billion ), and the challenges it faces have been further exacerbated by the surge of emerging Web3 gaming ecosystems over the past two years. Data shows that although the number of new Web3 games has decreased by an average of 45% since 2021, the number of new networks has increased by an average of 187% during the same period. In 2024 alone, 104 new networks/ecosystems have been announced to launch, while only 263 new Web3 games have been released in 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 battle for player liquidity. As competition in the entire gaming market intensifies, Web3 projects are competing for the same limited pool of wallet users, with almost no effective means to break through this limitation and achieve scalable growth.

Under numerous challenges, a group of Web3 companies is exploring a new user acquisition model based on blockchain (UA). Innovative incentive mechanisms and on-chain reputation systems are becoming potential avenues for these companies to gain competitive advantages through Web3 integration.

Many Web3 companies have demonstrated significant product-market fit in emerging markets ( PMF ). Compared to the increasingly saturated T1 market dominated by Web2 giants, those enterprises that can leverage blockchain's global payment network and truly unlock emerging markets may have substantial growth opportunities.

Among many regions, one that has consistently shown a growth rate above the average and has demonstrated a high level of recognition for blockchain applications is the Global South (.

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全球南方)Global South(

The Global South is a term used to describe countries and regions that have relatively low levels of economic development, usually located south of industrialized nations. Due to the rapid improvement of internet infrastructure, high smartphone penetration rates, and increasing disposable incomes, this vast area is often seen as an underdeveloped yet 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 overall lower willingness to pay. Therefore, historically, these markets have often been used by game publishers for soft-launch user acquisition testing and front-end data optimization.

However, the younger generation in these regions is the first generation to grow up with smartphones, and they have a strong preference for game content ), including games, video content, and esports (. As this generation ages and benefits from economic development and increased income, many believe they will become a new generation of paying players, driving the gaming industry to new heights.

The following are the characteristics of some key markets in the Global South, highlighting their importance in the future gaming industry.

India)India(

Despite starting relatively late, India is rapidly emerging as the largest gaming market in the Global South. In 2017, the number of gamers in the country was only 44.9 million, but this figure has now grown to approximately 466 million, and it is expected to surpass 640 million by 2027.

Market revenue is expected to grow by 13.6% in 2024 to reach $943 million, and to surpass $1 billion in 2025, with an expected reach of $1.4 billion by 2028, resulting in a 5-year Compound Annual Growth Rate (CAGR) of 11.1%. This growth is mainly attributed to the improvement of user in-app purchase habits and the increase in disposable income nationwide, leading to a rise in Average Revenue Per User (ARPU).

The Indian market has a strong preference for mobile games, largely thanks to the country being one of the fastest-growing nations in the world for 5G and having a robust digital payment infrastructure—Unified Payments Interface ) UPI (. The transaction volume of UPI has increased from 10.78 billion in 2019 to 83.75 billion in 2023, showcasing the rapid rise of the digital economy. At the same time, internet penetration has also seen a significant increase, rising from 14% in 2015 to the current 52%. Although this is still lower than other major gaming markets in the Global South, it indicates that there is still huge growth potential in the future.

These technological advancements have been strongly supported by robust macroeconomic fundamentals, including an average annual economic growth rate of 7-9% over the past three years, as well as an increase in the income levels of a young and growing middle class.

India's gaming preferences exhibit a unique pattern distinct from other major markets:

• Mobile games dominate, contributing 77.9% of total revenue;
• PC games and console games account for only 14.5% and 7.7%.

From the composition of market revenue, the income distribution of different types of games is as follows:

• Real Money Gaming ) RMG ( is the largest niche market, with an annual revenue of $2 billion;
• Casual and hyper-casual games followed closely, with total revenue of $700 million;
• The market size for other category games is approximately 400 million USD.

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Southeast Asia)SEA(

Southeast Asia ) SEA ( consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, and is one of the most mature gaming markets in the Global South. According to data, the gaming revenue in the region reached $5.1 billion in 2023, an increase of 8.8% year-on-year, and is expected to grow to $7.1 billion by 2028, with a 5-year compound annual growth rate ) CAGR ( of 6.7%. In 2023, Southeast Asia had 277 million gamers, and it is projected to grow to 332 million by 2028, with a 5-year CAGR of 3.7%.

According to the report for the first half of 2024:

• Indonesia has the highest mobile game downloads, reaching 2.4 billion, accounting for 41% of the total downloads in the region; ).
• Thailand's IAP( in-app purchase revenue reached $400 million, followed closely by Indonesia at $300 million.

Despite the differences among countries in the region, community and competitive culture are common characteristics. Word-of-mouth is the primary source of information, and the best-performing games usually have social features.

Similar to most countries in the Global South, the penetration of smartphones and the development of broadband infrastructure are key factors driving market growth. Southeast Asia is particularly notable:

• In 2022, the smartphone penetration rate exceeded 80% in all major countries.
• It is expected that by 2026, the average penetration rate will reach 90.1%.

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Latin America)LATAM(

LATAM) is another major market worth paying attention to, with a large population and a strong gaming culture, especially in the esports sector. In 2022, the region had an estimated 316 million gamers, but players were mainly concentrated in Brazil, which had 101 million players that year and generated $2.7 billion in gaming revenue.

The Brazilian market shows a strong preference for mobile games:

• 60% of players have played a mobile game at least once in the past six months;
• The penetration rate of smartphones is expected to reach 83% by 2025, indicating that there is still significant growth potential in the mobile gaming market.

In terms of monetization capability, the Brazilian market demonstrates strong spending habits: 43% of players engage in in-game purchases, primarily motivated by unlocking exclusive content ( 39% ), character customization ( 35% ), and game progression ( 30% ). This indicates that a mature market is moving beyond basic monetization models. These spending patterns suggest that the market is maturing, 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: 140 universities across the country offering more than 4,000 game-related courses, a total of 1,042 game studios in Brazil with a total revenue of approximately $251.6 million, and the recently passed legal framework that officially recognizes game development as a profession and provides tax incentives and other measures.

Africa(Africa)

The African gaming market is at a critical development stage, with revenue expected to exceed $1 billion in 2024.