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The Saudi Arabian government is betting $38 billion on the country’s potential to become the next hub for the video-game industry.
As part of its strategy to diversify its economy away from oil, Saudi Arabia, through its Public Investment Fund, wants to become a big player in the $184 billion global gaming market. After focusing initially on the eSports industry, which has been struggling, the fund’s subsidiary, Savvy Gaming Group, is now looking to develop, publish and acquire top-tier games and support a gaming industry in Riyadh.
“We are now more of an eSports company than a games company,” Savvy Chief Executive Officer Brian Ward told Bloomberg News. “What we’re doing this year is focusing more on game publishing and development.”
Savvy’s plans are ambitious in a crowded market where longstanding players like Electronic Arts are laying off employees. But the fund has already made multibillion-dollar investments in gaming companies like Nintendo, Tencent Holdings, and Activision Blizzard.
The fund in February increased its stake in Nintendo to 8.3 per cent, becoming the largest outside shareholder. Saudi Arabia has almost no footprint in global game development. The country’s rapidly increasing population of gamers led Ward, a former executive at Electronic Arts, Activision, and Microsoft, to move to Riyadh and lead Savvy. There are approximately 21 million gamers in the country, according to analysts at Niko Partners. That’s about 58 per cent of the population, compared with the US’s 66 per cent. By 2026, the games market in West Asia and North Africa is expected to grow by 56 per cent to $2.79 billion.
A faster path to Savvy’s ‘ultimate objective’ to help the country become a global entertainment hub by 2030 is to acquire studios or publishers, including internationally, Ward said. Savvy has $13 billion to invest in acquiring a game publisher — although Ward would consider taking another public game publisher private.
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Saudi Arabia remains controversial among esports professionals and gamers due to the government’s association with human rights abuses. Savvy took an 8 per cent stake in video-game holding company Embracer Group AB in 2022, which also led to an outcry.
In 2022, sales for the video-game industry fell 4.3 per cent, however analysts expect 2023’s crowded release calendar to resuscitate the business.
