Saudi Arabia is investing vast sums of money in an effort to establish supremacy in the worldwide gaming sector

Saudi Arabia is investing vast sums of money in the worldwide gaming sector

In the past year and a half, Saudi Arabia has invested nearly $8 billion in acquiring and obtaining stakes in gaming companies worldwide, as part of an aggressive investment campaign aimed at establishing itself as a dominant player in the expanding entertainment industry.

Leading the way in these deals is the Saudi-backed Savvy Games Group, which has secured significant stakes in companies such as VSPO in China, Embracer Group in Sweden, and the acquisition of Scopely in the United States. With its considerable wealth, Saudi Arabia’s Public Investment Fund, worth $650 billion, wholly owns Savvy, which is chaired by Crown Prince Mohammed bin Salman. The crown prince’s vision is to transform the kingdom into the ultimate global hub for the gaming and esports sector within a span of seven years.

To support these ambitious plans, Savvy has been equipped with a $38 billion fund. Piers Harding-Rolls, a games analyst at Ampere Analysis, describes Saudi Arabia’s approach as a “bulldozer approach,” highlighting that the country is still in the early stages of building its gaming industry from scratch.

Saudi Arabia aims to attract 250 gaming companies and studios, create 39,000 jobs, and have the industry contribute 1% to the country’s gross domestic product by 2030. The plans also involve venturing into esports through a partnership with VSPO. Government officials familiar with the kingdom’s strategies suggest that more deals are in the pipeline, as part of an overall effort to diversify the economy beyond oil, which includes investments in various growing industries like electric vehicle production.

The Saudi gaming strategy has generated interest and competition within the industry, as Riyadh competes with major players such as Tencent, Microsoft, and Sony for top talent and intellectual property. Saudi Arabia has a young population, with 70% of its 36 million citizens being under the age of 35, and a significant portion identifying as gamers. Prince Mohammed himself is known to be an avid gamer. This demographic and the engaged gaming community make Saudi Arabia an attractive market and partner for global gaming companies.

Apart from Savvy’s activities, the Public Investment Fund has also acquired an 8% stake in Nintendo, making it the largest foreign investor in the Japanese company. Additionally, the fund holds holdings in Activision Blizzard and Ubisoft. The kingdom aims to leverage its financial power to secure a substantial presence in the gaming sector, which is projected to be worth $200 billion according to industry tracker NewZoo. Reports suggest that global video game revenue could exceed $300 billion by 2026, accounting for more than 10% of total entertainment and media spending.

While cash is a valuable resource, industry executives believe that it may not be the sole factor in winning over game developers targeted by Savvy. Some analysts view Savvy’s $5 billion acquisition of Scopely as an indication that the company may need to overpay to secure deals. Concerns also linger about doing business with Saudi Arabia due to its human rights record, despite Prince Mohammed’s social reforms. Nevertheless, the PIF’s massive investments have enticed businesses to return to Riyadh.

Saudi Arabia’s foray into acquiring entertainment assets, including sports and gaming, has drawn criticism from rights groups due to ongoing human rights abuses. Although the billions invested by the kingdom could provide a crucial opportunity for the gaming industry, the sector itself is facing challenges, such as slowing growth and rising marketing costs. Some private game studios may prefer selling to Savvy rather than pursuing the complicated path of an initial public offering, although ethical concerns remain about engaging with the Saudi regime.

Overall, Saudi Arabia’s substantial investments in the global gaming industry have stirred both excitement and skepticism, as the country aims to carve out a significant presence in the sector and diversify its economy beyond oil.