Saudi Arabia is trying to enter a saturated video game market worth USD$372bn through its recent acquisition of US based game developer Scopely. The Saudi wealth fund-owned Savvy Games Group bought Scopely for USD$4.9bn on 05/04/2023. The takeover is labelled as the sixth largest gaming acquisition in history.
How did Savvy Games Group become such a large company?
Savvy has been at the forefront of Saudi Arabia’s transition into a global video game hub after its formation in 2011. It has the backing of the Saudi Public Investment Fund, which is worth a staggering USD$620bn, a value equivalent to SAR[i] 2.3tn. This is part of the Crown Prince Mohammed bin Salman’s accelerated efforts to wean the kingdom of its reliance on crude.
Savvy Games Group has been successful in its recruitment and retention of talented employees. The company has a strong culture of creativity and innovation, and it has attracted some of the best talent in the industry.
Savvy Games Group has also been successful in its business strategy. The company has been strategic in its acquisitions and partnerships, acquiring companies that complement its existing strengths and expanding its reach into new markets.
Savvy is now the second largest shareholder[ii] in the Embracer Group after acquiring nearly 100mn shares which is 8.1% in the Swedish company totalling to USD$1bn. Following Savvy’s May investment into Nintendo, it became the fifth largest shareholder in the Japanese gaming giant. The Public Investment Fund has invested an additional USD$3bn in stock across Activision Blizzard, EA and Take-Two in 2021.
Why has Saudi Arabia invested such a large sum of money in the Gaming Industry?
Saudi Arabia is trying to diversify its economy as it relies very heavily on a nonrenewable, finite source of energy. Saudi Arabia is the world’s largest producer of oil and which accounts for 46% of its GDP[iii]. The value of oil exports attributed to more than 70% of all Saudi exports in 2022. The Petroleum Sector accounts for roughly 87% of Saudi budget revenues[iv].
What is Saudi Vision 2030?
After realising this dependency on oil, Saudi Arabia launched “Saudi Vision 2030” in 2016, a programme to reduce Saudi Arabia's dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism. Saudi Vision 2030 comprises more than major acquisitions, many projects have been proposed to urbanise the country and improve its tourism market for all people. Tourism from Hajj and Umrah accounts for 20% of the country’s non-oil GDP.
Some projects include King Salman Park, a proposed large-scale public park and urban district in Riyadh, Saudi Arabia. The Park will be the largest urban park in the world at 16.6 square kilometers,an area five times the size of New York’s Central Park. The Park is estimated to cost USD$23bn.
However its future revenue is unable to be evaluated at this moment. The Park will provide 250 square kilometers of retail space which will boost Saudi’s economy. The Park will add 11.6 square kilometers of green space. Riyadh Art is a project which will transform public spaces and enable artistic expression through community engagement to accelerate the development of the city's cultural economy. The objective of Riyadh Art is to make Riyadh a global top 10 city. The project will generate 23,934 employment opportunities and is expected to bring 1.9mn tourists per year. These factors will definitely make Saudi’s economy less oil-dependent. The four giga-projects of Saudi Vision 2030 will add 70,000 jobs for Saudi Arabia’s citizens.
Footnotes:
[i] SAR - currency symbol standing for the Saudi Arabian Riyal.
[ii] Shareholder - an individual or entity that owns shares or stocks in a company.
[iii] GDP - Gross Domestic Product, and it is the total value of all the goods and services produced within a country's borders over a specific period, usually a year.
[iv] Budget Revenue - total amount of money that a government or organization expects to receive during a specified period, usually a year, from various sources such as taxes, fees, fines, tariffs, and other forms of income.
Bibliography:
Saudi Arabia: share of travel and tourism contribution to GDP 2032 | Statista
Economy of Saudi Arabia - Wikipedia
Saudi Arabia is Making a $38 Billion 'Gaming Hub'
One Of Gaming's Biggest Acquisitions Ever Just Happened - GameSpot
Saudi female gaming market can soar to new heights | Al Arabiya English
Saudi Arabia Is Investing $38 Billion to Become a Video-Game Hub - Bloomberg
