In a notable move, the Public Investment Fund of Saudi Arabia has augmented its ownership of EA shares by an estimated 55%. This development marks another milestone in the nation’s wealth fund’s strategic streak of international investments, which has been channeling growing amounts of capital into the gaming industry in both Western and Eastern markets for several years.
This significant share purchase in EA by the Saudi national fund was first brought to light by Seeking Alpha in the final quarter of 2022. The fund now boasts ownership of approximately 24.81 million EA shares. Given that EA’s current outstanding shares amount to 276 million as of May this year, Saudi Arabia is gradually approaching a 10% ownership stake in the company.
The Saudi Public Investment Fund: An Unstoppable Force
The financial might of the Saudi Public Investment Fund appears to know no bounds. As reported by Bloomberg in April, the country has already invested an impressive $38 billion in the gaming industry. This investment spans a wide range of sectors, from gaming studios and esports to various other related projects.
Renowned studios such as Capcom and SNK, the latter of which is over 96% owned by Saudi Arabia, are part of this investment portfolio. The studio assures that this ownership status will not influence the games it produces.
Why Gaming? A Look at Saudi Arabia’s Economic Diversification Strategy
The question that naturally arises is, why is Saudi Arabia so invested in the gaming industry? From a broader perspective, the country is attempting to diversify its revenue streams beyond oil, a resource that has historically catapulted it into the ranks of the world’s wealthiest nations.
This diversification strategy forms the cornerstone of the Saudi Vision 2030 project. Consequently, the Public Investment Fund has seized the opportunity to acquire shares in a multitude of major companies, such as Uber, Boeing, Bank of America, and several video game companies, including some big names in the industry.
The specific reason behind Saudi Arabia’s investment in gaming can be traced back to its burgeoning tech sector. The country aims to establish itself as a major tech hub in the MENA region and has initiated the construction of a tech city, Neom. With an estimated cost exceeding $500 billion, the objective is to develop a Silicon Valley equivalent in the region, encompassing a prominent tech presence, including the video game sector.
Considering the region has typically been overlooked by both Western and Eastern companies, and with a young population keen to delve into the gaming world both professionally and recreationally, Saudi Arabia’s significant investment positions it as a leading player in the region.
Esports: A Promising Investment Avenue
Esports is another area where Saudi Arabia has invested heavily. Despite the recent economic downturn in this sub-industry due to the global recession and a reliance on venture capital investment, which is dwindling due to unsatisfactory fiscal returns, Saudi investors (and many global ones) view esports as a conduit to connect with the younger generation.
The Controversial Side of Saudi Arabia’s Investment Strategy
However, this investment narrative has a darker side. The proposed tech megacity, Neom, is being constructed on land that has historically been home to the Huwaitat tribe, according to The Guardian. Reports suggest that the Saudi Government is evicting individuals from their homes if they reside within the area designated for Neom’s construction.
Additionally, allegations of “Sports washing” – a form of propaganda achieved by purchasing or hosting sports events or teams – have surfaced. This practice has been a major point of contention in sports like golf and similar claims were made against Qatar during the World Cup.
This form of diversion could steer public attention away from pressing issues like human rights abuses, the reported killing of journalists, and the ongoing war in Yemen. At a time when traditional investment sources are drying up, the allure of a wealthy country ready to finance ventures may be tempting despite these potential ethical concerns.
While there has been some resistance from players and influencers leading to the halting of certain deals in the past, Saudi Arabia appears steadfast in its ambition to become a significant player in the industry. We can anticipate similar deals transpiring in the future.
The Growing Influence of Saudi Arabia in the Gaming Industry
In summary, Saudi Arabia’s major investment in EA, as part of its broader strategy to diversify its income sources, is a development to watch. Similar news is likely to emerge in the coming years. A nearly 10% stake in EA, considering the company’s size and the other gaming interests of Saudi Arabia’s Public Investment Fund, is indeed significant.
The question that remains is what will be the next target for Saudi Arabia’s investment and how the global community will navigate the ethical dilemmas posed by such developments. It’s essential to keep an eye on the unfolding landscape as these actions will undeniably shape the future of the gaming industry.
