Saudi Arabia invests USD38 billion to become a global center for electronic sports
Savvy, a subsidiary of the Public Investment Fund (PIF) in Saudi Arabia, is pumping billions into leading and emerging companies specialising in developing and publishing games. Ahmad Abdul-Rahman explains.
Saudi Arabia plans to invest 142 billion riyals (USD38 billion) to become a centre for electronic sports by 2030. This is part of the plan to diversify the economy of the world's largest oil exporter.
Savvy Games Group will spend 50 billion riyals to buy and develop an electronic games publisher, as well as 70 billion riyals to acquire minority stakes in gaming companies, according to a statement. This group will also invest 20 billion riyals in leading companies in the gaming industry, and another 2 billion riyals in emerging companies specialising in games and electronic sports (Esport), the statement said.
"We are working to take advantage of the untapped potential in the esports and gaming sector, to diversify our economy and drive innovation in this sector, as well as to expand the range of entertainment and esports competition offerings throughout the Kingdom," said Prince Mohammed bin Salman, the Saudi Crown Prince and president of Savvy.
Saudi Arabia took important steps towards becoming an active investor in the electronic games industry when the PIF purchased stakes in Activision Blizzard Inc and Electronic Arts Inc. In February, the fund increased its stake in Nintendo Co to 8.3 percent, becoming the largest external shareholder.
At the same time, Savvy bought a stake in Embracer Group AB and acquired the esports division of Modern Times Group for USD1.05 billion. Savvy CEO Brian Ward is the former head of Universal Studios at Activision Blizzard.
Focus on games development and publishing
"We are now more of an esports company than a game company," Ward said in an interview with Bloomberg News during the Game Developers Conference in San Francisco, California. "What we're doing this year is focusing more on publishing and developing games", he added.
Savvy's ambitious plans in this crowded market coincide with established companies such as Electronic Arts which is laying off employees. However, Savvy plans to leverage PIF's relationships with game companies such as Nintendo, Tencent Holdings Ltd and Activision Blizzard to develop its business.
"We would like to use these investments to start working with these companies. we are looking at how we can work together to expand in the Middle East and North Africa (MENA) region, run these companies' esports business or develop new intellectual property together," Ward said.
The Kingdom of Saudi Arabia did not have a large footprint in the development of electronic games globally, but the rapid increase in the number of gamers in the kingdom has led to Ward, the former CEO of Electronic Arts, Activision and Microsoft, moving to Riyadh to lead the company. "Part of our mission is to help partners and other companies come to Saudi Arabia and choose Riyadh over any other place to set up their publishing or distribution business to serve the region," Ward said.
Great prospects for growth
There are approximately 21 million gamers in the kingdom, according to analysts at Niko Partners, or about 58 per cent of the population. This compares to 66 per cent in the US. By 2026, the gaming market in the Middle East and North Africa is expected to grow by 56 per cent to reach USD2.79 billion.
In 2022, Savvy achieved significant success in the competitive gaming world after acquiring ESL, an esports competition production company. This was merged with gaming platform Faceit as part of a USD1.5 billion-combined deal.
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