Saudi Arabia’s sovereign wealth fund is investing again in the gaming industry, this time for the fourth time this year. One month after investing in Nintendo, the country’s Public Investment Fund (PIF) is purchasing a share in Swedish video game developer Embracer.
The PIF is investing $1 billion (AED3.7 billion) to purchase 99.9 million B shares in Embracer. It is making the investment via its own Savvy Gaming Group, a gaming and e-sports group PIF set up in January.
“The Embracer team has built a truly unique and leading ecosystem of entrepreneurs and creators at a scale which we believe will continue to generate enormous value for the games community in the coming years,” said Brian Ward (below), CEO of Savvy Gaming Group.
Last month the $500-billion sovereign wealth fund acquired a 5.01 percent stake in Japanese gaming company Nintendo as part of Saudi Arabia’s economic diversification.
The Nintendo stake follows the PIF’s recent disclosure of stakes in two other Japanese gaming companies – Nexon and Capcom which the fund disclosed in February.
Lars Wingefors, founder and chief executive of Embracer, said: “Savvy Gaming Group will enable us to set up a regional hub in Saudi Arabia, from which we will be able to make investments across the MENA region, either organically, via partnerships, joint ventures, or via acquisitions of companies led by strong entrepreneurs.”
Nazih Fares, head of communications and localisation at 4 Winds Entertainment, a games publisher, said: “I personally think it’s an investment spree to diversify their portfolio out of oil and energy.
“But when you compare it to the rest of the Gulf especially UAE, the Saudi funds are in general a bit late on making an international impact on their ‘brand’. Look at all the big football and other sport teams sponsored by UAE or Qatari brands, for example.”
He said the rush to get to that level for Saudi Arabia will take longer, but “investing directly in big brands will help catch up on that diversification of revenue generated by those same international companies.”
He added that the $1 billion investment is part of its strategy to have a diverse range of forward-looking shareholders who support its long-term business plans.
“Over the past few years, Saudi-based entities have become one of the most significant investors in the global gaming market, and the games market in MENA is one of the world’s fastest growing, with $5.7 billion in 2021 revenues and more active gamers than either the US or Western Europe.
“The largest country in this market, by far, is Saudi Arabia and having visited Saudi Arabia, I have seen the gaming community and the opportunities firsthand,” said Wingefors (below).
Gaming consumption in Saudi Arabia is estimated to reach $6.8billion by 2030, according to the Boston Consulting Group (BCG).
“These figures point to plenty of untapped potential as more young Saudis pursue careers in game development, management, and esports competition,” stated a BCG report.
Last year, the PIF boosted its stake in US video game maker Activation Blizzard to $15.9 billion.
Matthew Pickering, CEO of Power League Gaming, a gaming and esports agency, said: “The gaming ecosystem in the MENA region is exciting on a number of levels, primarily due the expansion mechanics and growth velocity of the sector – we are experiencing sustained year-on-year growth to the tune of CAGR 15.8 percent.”
Combined with a youthful, hyper-engaged regional population with fast tech adoptions rates and high levels of mobile penetration, and this presents “exciting opportunities for further sustained development and provision of experiences by agencies and publishers alike to deliver value for gamers and brand partners and sponsors alike.”
