As part of its plans to diversify sources of income away from oil, the Kingdom of Saudi Arabia continues to pump more investments in many sectors, the latest of which is the electronic games sector, to which the Kingdom aims to contribute 50 billion riyals ($13.3 billion) to the country's gross domestic product by 2030.
The electronic games and sports sector is among 13 sectors that the Saudi Public Investment Fund aims to enter, in the context of its strategy based on distributing its investment portfolios in separate promising sectors, as the fund raised its stake in the Japanese video game company “Nintendo” from 7.08 to 8.26%. To become the largest shareholder in the company.
The Saudi Public Investment Fund acquired its first stake in Nintendo - which is based in the Japanese city of Kyoto - last May when it acquired 5.01% of the company's shares, before raising its stake to 7.08% before the last deal in February when its share reached 8.26%.
Nintendo - which is one of the world's top 3 electronic game manufacturers - develops video games and their hardware. It was founded in 1889 by craftsman Fusajiro Yama Oji and originally produced handmade "Hanafuda" playing cards.
In addition to its investments in the Japanese company "Nintendo", the Saudi Investment Fund - through its "Savvi" group - invested $ 265 million in a Chinese electronic sports company, "VSPO".
The deal, which is the largest direct investment in the electronic games sector - according to the Chinese company's estimation - will make Savvi the largest investor in VSPO.
A Global Centre for Electronic Games
The Saudi trend towards entering the electronic games industry and pumping investments into the companies operating in it comes in line with the Kingdom’s strategy that focuses on supporting and developing the electronic games sector as part of its plans to transform into a digital economy. It also aims to localize this industry in the country as part of its plans to diversify its sources of income and not be limited to imports. oil and gas.
The growth of the industry and development of electronic games in Saudi Arabia amounted to about 41.1% on an annual basis, ranking 19th among the largest gaming markets in the world for the year 2021, according to estimates by the Saudi Ministry of Communications and Information Technology.
The Saudi move to pump investments into electronic game companies is also a new step towards leadership and making the Kingdom a global centre in this sector by 2030 in order to achieve the national strategy for games and electronic sports launched by Saudi Crown Prince Mohammed bin Salman last September.
The new Saudi strategy aims to diversify the economy, provide job opportunities in various sectors, and provide high-level entertainment to citizens, residents, and visitors alike.
The Kingdom intends to implement this strategy through 86 initiatives launched and managed by about 20 government and private agencies, launching business incubators, hosting major events for games and electronic sports, establishing educational academies, and developing stimulating regulations that ensure keeping pace with the rapid growth in this sector.
Thriving Economy
These initiatives are divided into 8 axes, including:
- Technology and hardware development.
- Games production.
- Electronic sports.
- Additional services.
- Other enabling axes include infrastructure.
- Regulations.
- Education and attracting talent.
- Funding and financial support.
Commenting on this Saudi trend towards boosting investments in the sectors of electronic games, the Saudi economist Hussam Al-Dakhil indicates that when the Saudi Crown Prince launched the "Kingdom's Vision 2030", one of the pillars of the vision was to achieve a "prosperous economy" with an overarching goal of developing and diversifying the economy.
He added that in 2017, the Public Investment Fund program was launched with the aim of strengthening the fund's position and strengthening its role as the active engine behind the diversification of the economy in the Kingdom.
Al-Dakhil explains that the fund invests in non-oil sectors locally and globally to maximize its assets and increase its returns, especially in new and promising sectors, and seeks to raise the proportion of its assets in these sectors by 21%, pointing out that one of these promising sectors is the gaming sector and electronic sports.
He pointed out that as soon as the Saudi Crown Prince announced several months ago the establishment of the "Safi" group to be the arm of the Public Investment Fund in the electronic games sector, the fund increased its investments in the oldest companies operating in the electronic games sector, including the "Nintendo" company.
A Global Partnership
Al-Dakhil said that the Saudi group “Savvi” has also started investing in other international companies and in other sectors of the same field, such as developing games and in companies specialized in building gaming halls and competitions, enabling investments in the fields of electronic games within the Kingdom, providing the necessary infrastructure, developing skills, increasing opportunities for partnerships, and providing material and advisory support and a suitable environment for players and practitioners of games and electronic sports.
Al-Dakhil stresses the great importance of this sector for the Kingdom in light of its ambitious strategy to become a global centre for the gaming and electronic sports sector by 2030, which includes pumping investments amounting to 142 billion Saudi riyals (about 38 billion dollars) in 4 programs covering various types of investments and acquisitions. That, along with the establishment of 250 electronic games companies in the Kingdom, and raising the sector’s contribution to the gross domestic product to 50 billion riyals ($13.3 billion) by 2030.
Economists pointed out that the Saudi strategy aims to create more than 39,000 direct and indirect job opportunities in the electronic games sector and to produce more than 30 globally competitive games in local studios. It also aims to reach the top 3 countries in the world in terms of the number of professional sports players. e.
It is noteworthy that the Saudi Public Investment Fund has increased its investments in video game companies during the past two years. It has previously invested in Activision, which Microsoft sought to acquire in a historic deal of approximately $69 billion.
The fund owns 37.9 million shares in Activision, according to the latest disclosure last September, equivalent to about 5% of the company's shares.
Sources
EuroGamer: Saudi Arabia reportedly increases Nintendo stake for second time in a month
GulfBusiness: Saudi Crown Prince unveils National Gaming and Esports Strategy
Bloomberg: Saudi Fund’s Activision Bet to Get $1 Billion Microsoft Lift
Saudi Vision 2030
KuwaitTimes: Saudi Crown Prince launches national gaming and esports strategy
Strategic plan for esports development - KBS (PDF)
Saudi Arabia has increased its stake in Nintendo - GamesHub
Saudi's PIF pouring more investments into video games - Economy Middle East