What's Behind Saudi Arabia's Significant Investment in the Gaming Business?
Electronic Arts was in the news recently with the revelation of a substantial agreement worth approximately 55 billion dollars to make the company private. Investors such as investment fund the Silver Lake fund, financial firm Affinity Partners, and Saudi Arabia's Public Investment Fund may radically change the trajectory of EA.
This agreement is just one part of the Kingdom's multi-billion dollar ventures in the gaming and entertainment sectors. Over the past few months, the PIF purchased Pokémon Go maker the Niantic company via game publisher Scopely Inc. and its Savvy Games. Additionally acquired the Evo Championship via the Qiddiya Investment Company, under the control of the Public Investment Fund. The Savvy Games Group holds ownership of the ESL FACEIT organization, which merged two major tournament hosts.
Saudi Arabia has invested billions to purchase shares in companies like Activision, Capcom, Embracer, Nexon, Nintendo, and Take-Two in recent years. Moreover controls fighting game maker SNK Corporation, control that a number of fans of the genre feel shaped the design of the developer’s newest title, Fatal Fury: City of the Wolves.
Why is Saudi Arabia so heavily engaged in gaming? A big part lies in economic diversification. However the Kingdom is investing heavily on the video game sector for other reasons also.
What is the Saudi Arabia Public Investment Fund?
The PIF is the sovereign wealth fund of the Kingdom. Established in the early 1970s, the wealth fund is now overseen by Mohammed bin Salman, the Kingdom's primary leader since 2015. Based on data, the Kingdom's PIF manages about nine hundred twenty-five billion dollars in assets.
What is Savvy Games Group?
The group was created in recently by the PIF. The organization was founded with Saudi Arabia’s “economic diversification and social transformation” in mind, as stated by CEO the CEO. The Crown Prince MBS, Saudi Arabia's crown prince, and supposedly a “massive gamer,” acts as the PIF’s chairman.
The Savvy Games Group claims it is “focused on driving sustainable expansion and creativity in the games and esports industry through targeted purchases, investments, and business initiatives.” It hopes to reach “leadership status in the gaming sector” by the year 2030, via swift and determined development.
Why games?
In addition to MBS's alleged passion for video games, Saudi Arabia is aiming to back a booming market. Per its website, the Public Investment Fund projects to see video game sector revenues top $300 billion by the end of the decade.
Saudi Arabia is furthermore planning that its Qiddiya gaming hub, within the Qiddiya initiative in Riyadh, will transform into a focal point for gaming. The goal is to “draw ten million tourists annually to its locations by 2030, and support several dozen leading game developers.” This forms part of a broad initiative known as the National Gaming and Esports Strategy, which plans to develop two hundred fifty enterprises, create tens of thousands of positions, and add 13.3 billion dollars to the economic output, according to the PIF.
Yet the gaming sector is a single element of the Public Investment Fund's overall strategy, which is designed to diversify the Kingdom's economic base into new areas, like tourism, entertainment, and technology. The Kingdom's economic system is highly reliant on the energy market, which represents around a large portion of gross domestic product. The kingdom is anticipating a future beyond oil time.
Nonetheless, the fund's ventures in publishing companies, developers, and esports organizations have been controversial, resulting in accusations comparable to the Public Investment Fund “sportswashing” — funding in sports competitions including the FIFA World Cup and the formation of the LIV Golf tour to boost the Kingdom's global reputation. The country’s record of abuses and Mohammed bin Salman’s claimed authorizing of the assassination of journalist Jamal Khashoggi have significantly harmed the public view of the country. If gaming could ever polish the kingdom’s reputation remains unclear, but the possible financial benefits are likely a greater focus.
