Saudi Arabia has turned its gaze towards the international gaming landscape with an audacious £8bn investment, in a whirlwind spree over the past year and a half. This bold move underlines the nation’s aggressive strategy to diversify its income streams and enhance its global influence.
The campaign, led by the Saudi-backed Savvy Games Group, has seen the company snapping up stakes in key gaming corporations around the world. Significant acquisitions include China’s VSPO, Sweden’s Embracer Group, and the US-based Scopely, marking Riyadh’s earnest endeavour to diversify beyond its traditional petro-dollar stronghold.
Savvy, launched in 2023 and entirely owned by Saudi Arabia’s £650bn Public Investment Fund, is helmed by Crown Prince Mohammed bin Salman. The prince has made it clear that he envisions the Kingdom as the globe’s paramount hub for gaming and esports within the next seven years. To fuel this ambitious vision, Savvy has been handed a hefty £38bn budget.
According to Piers Harding-Rolls, a games analyst at Ampere Analysis, the nation’s gaming industry is in its infancy and will need to be built from the ground up. “It’s a bulldozer approach,” he noted.
Saudi Arabia’s ambitious plan includes fostering 250 gaming companies and studios, creating 39,000 jobs, and generating a contribution of 1 per cent to the national GDP by 2030. Part of this strategy involves a significant leap into e-sports, marked by a partnership with VSPO.
Informed officials familiar with Riyadh’s strategy suggest that more deals are in the pipeline. They indicate that the concentrated focus on gaming is part of a sweeping shift in the nation’s economy to move beyond oil. This has led Saudi Arabia to invest heavily in a broad spectrum of growth industries, like electric vehicle production.
This initiative sits in tandem with Riyadh’s strategies to acquire global soft power. Critics argue that the significant spending in sports like football and golf are attempts to shift attention from the country’s human rights record.
The Kingdom’s tactical moves have sent shockwaves across the industry as it competes with gaming behemoths like Tencent, Microsoft, and Sony for top talents and intellectual property rights.
“The Saudi endeavour is leaving an indelible mark on the global gaming industry,” opined Vincent Wang, general manager of global publishing and global esports at Tencent Games.
Gaming resonates well with the Saudi youth, where 70% of its population of 36 million is under the age of 35. A similar percentage of the population identify as gamers, according to local gaming officials.
“Saudi Arabia is a youthful nation with a highly active gaming community. It’s an extremely vibrant market and a promising partner for us,” affirmed Danny Tang, VSPO’s CFO and Head of Global Strategy.
In addition to Savvy’s deals, the PIF has also secured an 8% stake in Nintendo, making it the Japanese firm’s largest foreign investor. It has also obtained shares in Activision Blizzard and Ubisoft.
Saudi Arabia hopes to harness its substantial financial power to carve out a significant slice of the gaming industry. According to NewZoo, a market research firm, the gaming sector is worth around £200bn.
As consumer behaviour shifts, industry insiders predict that gaming could soon dethrone traditional television as the primary source of entertainment revenue.
Brian Ward, CEO of Savvy, optimistically stated, “The region is replete with demographics that are advantageous to us. Combine this with the national strategy and the move to diversify the economy from oil and gas; it naturally leads to substantial investments in Saudi Arabia towards gaming.”
However, some voices within the sector argue that Savvy’s acquisition of Scopely for £5bn is an indication of the high price Riyadh might need to pay to secure lucrative deals.
Critics also warn that despite the allure of abundant funding, the Kingdom’s tarnished human rights record could pose a stumbling block. Despite social reforms, the 2018 murder of Saudi commentator Jamal Khashoggi has led many companies to think twice about doing business in Riyadh.
Regardless, businesses are once again gravitating towards Riyadh, enticed by the billions that the PIF is spending domestically and internationally.
As the gaming industry’s growth slows to single digits, private game studios may find the idea of being acquired by Savvy more appealing than the challenging path to an IPO. However, ethical concerns about collaborating with the Saudi regime linger.
“It’s evident that the public markets are cooling down and investors are becoming jaded,” observes an industry investor. “I’m confident that there will be other deals akin to Scopely.”
