Summary of Key Points
Saudi Arabia’s Public Investment Fund (PIF) has invested over $70 billion in the gaming industry, most recently acquiring EA (the parent company of games like “Battlefield” and “The Sims”) for $55 billion, making it the second-largest merger in gaming history. This move is not just a personal hobby of the Crown Prince (although he is a gaming enthusiast), but a crucial step towards Saudi Arabia’s “Vision 2030”: to reduce reliance on oil and transition to a digital economy. They are not only acquiring companies but also building a comprehensive ecosystem that includes esports, mobile games, and gaming consoles, with the aim of promoting Arab culture through gaming. However, they face challenges related to cultural values and the need to build a strong domestic gaming industry.
Detailed Analysis
1. Why is Saudi Arabia investing so heavily in gaming? It’s not about whimsy; it’s a necessity for national transformation
70% of Saudi Arabia’s revenue comes from oil, but the global trend towards reducing carbon emissions is making oil’s importance decline. The country aims to increase non-oil revenue to 50% of GDP, and the gaming industry, with a value of over $200 billion, is a sector that is not resource-intensive and environmentally friendly. More importantly, there is a strong domestic demand for gaming: 70% of the population is under 35 years old, and 67% of them play games (approximately 23.5 million people). Saudi Arabia has had no cinemas for 40 years (until 2018), making gaming the only legal form of entertainment for young people. Acquiring gaming companies not only caters to this demographic but also creates digital jobs (Savvy has promised to create 39,000 new jobs), representing a more modern approach than relying on oil extraction.
2. How will the $70 billion be spent? A strategic investment in a comprehensive gaming ecosystem
Saudi Arabia’s investments are well-considered:
- Esports: $1.5 billion was invested in ESL and FACEIT, giving them control over 40% of global esports events (such as the Intel Extreme Masters);
- Mobile games: $4.9 billion was invested in Scopely, the developer of “Monopoly GO!”, $3.5 billion in Niantic (the creator of “Pokémon GO”), and $6 billion in Mubadala Technology, the developer of the popular Southeast Asian game “Mobile Legends”;
- Consoles and intellectual property: $55 billion was invested in EA (including its sports-related IPs like the “FIFA” series), as well as 5% stakes in Capcom (“Resident Evil”) and Nexon (“DNF”), and 6.3% in Nintendo, to strengthen their presence in these areas;
- Domestic infrastructure: They are building the Qiddiya esports city, which can accommodate 73,000 people, and establishing the Savvy Academy to train professionals.
Saudi Arabia aims to dominate the entire gaming ecosystem, from upstream intellectual property to downstream events and infrastructure.
3. More than just making money: Promoting Arab stories in global games
There are 330 million Arab gamers (more than in Western Europe or the United States), yet few games feature their stories. While the United States has “Spider-Man” and Japan has “Onimusha”, China has “Black Myth: Wu Kong”, Arab gamers often play games with foreign narratives. Saudi Arabia wants to change this. For example, Ubisoft initially announced that there would be no sequel to “Assassin’s Creed: Mirage”, but after meeting with Saudi Arabia’s Savvy, they released a free DLC called “Valley of Memories” that sets the story in 9th-century Saudi Arabia. This is the first time Saudi Arabia has used its capital to influence the content of mainstream games, introducing Arab culture to a global audience.
4. Can money solve all problems? Two significant challenges remain
- Cultural values: As a conservative Islamic country, some gaming content (such as violence and LGBTQ themes) may not be suitable for Saudi Arabia. Many of EA’s games may need to be modified to fit local standards. For instance, the cooperation between the European “League of Legends” region and Saudi Arabia was canceled after protests, and the Olympic Committee withdrew its support for Saudi Arabian esports events;
- Building a strong industry: The gaming industry cannot be established simply by acquiring companies. Japan built its success on decades of experience with Nintendo, South Korea on its internet cafe culture and MMO games, and China took 20 years to develop from game distribution to independent development. Although Saudi Arabia has the funds to buy companies, it still lacks its own successful original games. They are bringing in international studios to train local talent, but balancing financial incentives with creative freedom is a difficult task. If the regulations are too strict, no developers will be attracted; if they are too lax, the goal of cultural promotion will not be achieved.
In Conclusion
Saudi Arabia’s $70 billion investment has created a sensation in the gaming industry, but to truly develop a sustainable gaming ecosystem, they must overcome challenges related to cultural values and talent development. Will we see more Arab stories in future games? Only time will tell.