What's Behind Saudi Arabia's Massive Engagement in the Video Game Industry?

Electronic Arts was in the news lately with the announcement of a massive deal valued at approximately fifty-five billion dollars to take the company private. Backers including investment fund Silver Lake, investment firm Affinity Partners, and the Kingdom's sovereign wealth fund might significantly alter the trajectory of Electronic Arts.

The EA deal is a single component of Saudi Arabia's billions in commitments in the gaming and entertainment sectors. Lately, the PIF purchased the popular mobile game maker Niantic through game publisher Scopely and its Savvy Games. Furthermore acquired the Evo Championship through the Qiddiya company, under the control of the PIF. The Savvy Games Group additionally controls ESL FACEIT Group, which merged two prominent esports organizers.

The Kingdom has invested billions to acquire stakes in companies including Activision Blizzard, the Capcom company, Embracer Group, Nexon, Nintendo, and Take-Two in recent years. Moreover owns developer of fighting games SNK Corporation, stake that some competitive gaming followers think affected the content of the developer’s newest release, Fatal Fury: City of the Wolves.

What is driving the Kingdom so heavily engaged in gaming? A key factor lies in economic diversification. But the Kingdom is allocating significant resources on the interactive entertainment business for additional motives too.

Understanding the Public Investment Fund of Saudi Arabia?

The PIF is the sovereign wealth fund of Saudi Arabia. Established in 1971, the wealth fund is under the direction of Mohammed bin Salman, the Kingdom's key decision-maker since 2015. Per data, the Kingdom's Public Investment Fund manages around nine hundred twenty-five billion dollars in holdings.

What is Savvy Games Group?

Savvy Games Group was created in 2021 by the PIF. This entity was established with the Kingdom's “broadening economic bases and societal change” as a goal, per CEO Brian Ward. Mohammed bin Salman, the Kingdom's leader, and supposedly a “dedicated gaming enthusiast,” acts as the Public Investment Fund's chairman.

This group states it is “committed to promoting long-term growth and advancement in the interactive entertainment field through strategic acquisitions, capital injections, and enterprises.” The group aims to reach “dominance in the video game market” by the year 2030, through fast and substantial expansion.

Why games?

Besides the Crown Prince's supposed interest in video games, Saudi Arabia is planning to back a growing market. Based on its website, the PIF projects to see gaming industry revenues exceed 300 billion dollars by the end of the decade.

The Kingdom is additionally aiming that its esports district in Qiddiya, a component of the Qiddiya initiative in the capital, will become a focal point for esports and gaming. The goal is to “attract millions of tourists each year to its facilities by the year 2030, and support 30 top game developers.” This is included in a comprehensive strategy called the Gaming and Esports National Plan, which plans to develop two hundred fifty companies, create tens of thousands of positions, and provide thirteen point three billion dollars to the economic output, according to the PIF.

However the gaming sector is just one component of the Public Investment Fund's financial plan, which is designed to diversify Saudi Arabia’s economic base into additional industries, like the tourism industry, the entertainment business, and the tech sector. The country’s economy is largely dependent on the energy market, which represents around forty percent of gross domestic product. Saudi Arabia is anticipating a future beyond oil time.

However, the fund's investments in publishing companies, developers, and competitive gaming entities have been controversial, sparking claims like the PIF “sportswashing” — funding in sports competitions including the FIFA World Cup and the creation of LIV Golf to improve Saudi Arabia’s worldwide standing. The country’s history of rights violations and MBS's alleged directing of the murder of Washington Post columnist Khashoggi have significantly harmed the public view of the nation. If gaming could possibly polish the nation's standing remains unclear, but the likely economic returns could be a higher priority.