With avowed ‘massive gamer’ Mohammed bin Salman at the helm, the kingdom’s insatiable appetite and bottomless riches are already remaking the global video game industry.
You could call it the summer that Saudi Arabia swallowed sports. On June 6th, news broke that Saudi-backed LIV Golf was merging with the Professional Golfers’ Association, funded to the tune of over a billion dollars by the Saudi Public Investment Fund (PIF). In soccer, the world’s most popular and lucrative sport, the kingdom has brought global superstars such as Karim Benzema, Neymar, and Jordan Henderson to the desert to play their trade, laboring not only under the region’s sweltering heat but virulent criticisms of sportswashing. For established institutions, it was a summer of humbling disruption in which they had perhaps quietly sensed, for they would never admit it, the dawning of a new world order.
The spending spree isn’t limited to sports. In recent years, Saudi Arabia has invested in movies, establishing the Red Sea International Film Festival. The country hosts — in what feels like the final boss of late-stage capitalism — pay-per-view WWE events. Then there are video games, a global industry worth $187 billion that the kingdom is intent on muscling its way into, but with perhaps not quite the equivalent, naked levels of aggression that it has shown toward sports.
The minority investments are stacking up now: Nintendo, Take-Two, EA, Activision Blizzard. These are significant pieces of some of the industry’s most profitable pies. Through the PIF-funded Savvy Games Group (which declined to be interviewed for the piece), the kingdom has acquired mobile developer Scopely for $4.9 billion and esports organizations ESL and Faceit for $1.5 billion. A further $13 billion has been earmarked “for the acquisition and development of a leading game publisher” with many more billions reserved for further minority investments. Oil money, then, is coursing through the video game industry almost as quickly as Saudi Arabia can pump it from the ground.
Where is it all leading? According to Savvy CEO Brian Ward, a former executive at EA and Activision, the country aims to become a gaming “powerhouse,” transforming the kingdom into a hub of development and esports and, in the process, perhaps making Crown Prince Mohammed bin Salman the most powerful, avowed “gamer” in the entire world. Ward has said this investment is part of the Saudi plan for “economic diversification and social transformation,” a gargantuan effort to maintain the kingdom’s economic relevance in a world rapidly transitioning away from fossil fuels while strengthening its political position at home through the oldest play in the book: bread and circuses.
Above all, Mohammed bin Salman seems intent on putting his nation’s bottomless, oil-gained riches to persuasive use — and the plan appears to be working.
In this era of mergers and acquisitions, such gigantic investment is hardly remarkable, but “the appetite with which Savvy and PIF has sucked their teeth into this is unprecedented,” says Joost van Dreunen, a New York University professor who wrote a book about the business of video games. For most of video games’ history, he says, it was ignored by the wider business world — that is, until the digital distribution blew access to games wide open. This has led to the current bizarre moment: a nation state with an appalling human rights record, and which hands out the death sentence to those who tweet critically of it, forcing its way into what continues to be an often nerdish, escapist pursuit. The dissonance is such that van Dreunen says it reminds him of “real estate companies in China that all of a sudden got all these film ambitions.”
The rate of investment might be unprecedented, but the actual plan is not: neither the aim to transform the kingdom into a video game hub nor to acquire a leading publisher. van Dreunen points to the way South Korea invested heavily in internet infrastructure in the late 1990s which, in turn, led to it becoming a new focal point for video games in Asia and the home for many esports stars, “like the Alps for the Tour de France,” he says. China, meanwhile, has emerged as a fulcrum of external development, particularly the production of detailed 3D assets for blockbuster titles like Horizon Zero Dawn. “The ability to plug into the global economy, which required some investment from the government and some momentum from the market, has led to the emergence of these new hubs that didn’t previously exist,” van Dreunen says.
If the acquisition of major soccer clubs by petro-states is any indicator, then Saudi Arabia should have no problem picking up a major publisher. Esports is, if not a more complicated question, then a riskier bet — an industry that Wired recently described as “facing an economic downturn and a dampening of hype,” particularly in the US. Covid-19 shut down live, in-person events, viewing figures are declining, and the lofty expectations set by individuals like Steve Bornstein, former CEO of the NFL Network before he became Blizzard’s esports chair, have not been met. According to Mikhail Klimentov, a Washington Post foreign desk editor (and former editor at the paper’s Launcher gaming vertical) who also runs the esports newsletter ReaderGrev, “the bigger problem is that a lot of esports leagues and teams are not monetizable in a particularly robust way … once you start building a bigger infrastructure, once you start hiring people, you lose money really quickly.”
Source: https://www.theverge.com/2023/12/1/23948992/saudi-arabia-gaming-investment
