Saudi authorities are actively increasing the country’s presence in the video game industry by investing in large companies and hosting some players. These measures are the implementation of a plan to diversify the country’s economy, he writes The edge. Today it relies on fossil fuels as the world moves towards a rapid transition to environmentally friendly energy sources. There are other reasons too.
The global gaming industry is worth $187 billion and Saudi Arabia is making inroads into this space. To date, Saudi Arabia’s sovereign wealth fund (PIF) has built a portfolio of minority stakes in some of the world’s largest gaming players, including Nintendo, Take-Two, EA and Activision Blizzard. PIF also controls specialist company Savvy Games Group, through which it acquired mobile application developer Scopely for $4.9 billion, as well as esports organizations ESL and Faceit for $1.5 billion. An additional $13 billion was allocated for the “acquisition and development of a leading games publisher”; In addition, additional funds will be made available for further minority investments.
Saudi Arabia is aiming to become a gaming “powerhouse” – a hub for development and esports – and Crown Prince Mohammed bin Salman is expected to be the most powerful and best-known gamer in the world, says Savvy CEO Brian Ward, a former CEO of Savvy top manager at EA and Activision. This will help the Kingdom maintain its importance in the world and strengthen its position of political power in the country. In the current era of widespread mergers and acquisitions, even a gigantic investment by PIF may not seem remarkable, but “the appetite with which Savvy and PIF jumped on it.” [игровую отрасль]“unprecedented,” as Professor Joost van Dreunen of New York University put it. In his opinion, throughout the history of video games, the business world has largely ignored the industry, but that all changed with the widespread adoption of digital distribution of games and the move away from physical media.
However, some experts are certain that the industry is not yet in the best phase: During the pandemic, in-person eSports events were interrupted, and many leagues and teams are now considered almost impossible to monetize. And given emerging expectations that the eSports bubble will soon burst, Saudi Arabia’s entry into the arena can be seen as timely. Amid the collapse, publishers and tournament organizers are eager to accept investments from Savvy, a company with a “Western face” not associated with the kingdom’s harsh political regime. Ordinary Saudis are also ready to support their involvement in the gambling industry: 70% of the population belongs to the under 35 age group.
Finally, industry is also an effective instrument in foreign policy activities. In December 2022, Chinese President Xi Jinping made an official visit to the Persian Gulf, visiting the Saudi capital Riyadh rather than Qatar, which was hosting the World Cup at the time. Weeks later, the kingdom acquired a stake in Chinese e-sports team VSPO for $265 million, the first manifestation of the e-sports-as-a-form-of-diplomacy strategy. Saudi Arabia is also actively investing in traditional European sports – golf and football. This doesn’t bother local sports fans, who are starting to express their support for the new owners of their favorite clubs – similar fan mechanisms work in the e-sports segment. And that has a positive impact on the country’s overall foreign policy reputation.
Saudi Arabia’s presence in the gaming segment is already noticeable. This year, a failed $2 billion deal forced major Swedish developer Embracer to announce a major restructuring, including studio closures and staff cuts. As it later turned out, his failed partner was the Savvy Games Group, which withdrew from the business, even despite the serious obligations it had assumed. As a result, Volition, the studio that created the Saints Row and Red Faction franchises, closed. Experts believe that Saudi Arabia strives to become inseparable from many industries, and one of them is the gambling industry.