Saudi Arabia’s plan to become the crown prince of gaming

    It may be called the summer that Saudi Arabia ate sports. On June 6th, it was announced that the Saudi-backed LIV Golf was combining with the Professional Golfers’ Association, which was supported by the Saudi Public Investment Fund (PIF) to the tune of over a billion dollars. The kingdom has attracted worldwide superstars such as Karim Benzema, Neymar, and Jordan Henderson to the desert to play their trade, struggling not just under the region’s searing heat but also harsh allegations of sportswashing. For traditional institutions, it was a summer of humiliating disruption in which they may have silently recognized the emergence of a new world order, though they would never confess it.

    The spending binge does not stop with sports. Saudi Arabia has made investments in film in recent years, founding the Red Sea International Film Festival. In what feels like the last boss of late-stage capitalism, the country hosts pay-per-view WWE events. Then there’s video games, a $187 billion worldwide sector into which the monarchy is attempting to muscle its way, albeit maybe not with the same brazenness that it has displayed toward sports.

    Nintendo, Take-Two, EA, and Activision Blizzard have all made minority stakes. These are important chunks of some of the most profitable pies in the industry. The monarchy has bought smartphone developer Scopely for $4.9 billion and esports groups ESL and Faceit for $1.5 billion through the PIF-funded Savvy Games Group (which declined to be interviewed for the story). A additional $13 billion has been set aside “for the acquisition and development of a leading game publisher,” with billions more set aside for minority investments. So oil money is flowing into the video gaming business almost as fast as Saudi Arabia can pump it out of the ground.

    What is the end result of it all? According to Savvy CEO Brian Ward, a former executive at EA and Activision, the country aims to become a gaming “powerhouse,” transforming the kingdom into a hub of development and esports and possibly making Crown Prince Mohammed bin Salman the most powerful, self-proclaimed “gamer” in the world. Ward has stated that this investment is part of Saudi Arabia’s plan for “economic diversification and social transformation,” a massive effort to maintain the kingdom’s economic relevance in a world rapidly transitioning away from fossil fuels while strengthening its political position at home through the age-old play of bread and circuses.

    Above all, Mohammed bin Salman seems intent on putting his nation’s bottomless, oil-gained riches to persuasive use — and the plan appears to be working.

    Savvy Games Group is the jersey sponsor of Saudi soccer club Al-Hilal, which recently signed Brazilian star Neymar. Photo by ATTA KENARE / AFP via Getty Images

    Such massive investment is hardly exceptional in this era of mergers and acquisitions, but “the appetite with which Savvy and PIF has sucked their teeth into this is unprecedented,” says Joost van Dreunen, a New York University professor who published a book about the business of video games. He claims that for the majority of video games’ existence, the larger commercial world disregarded it – that is, until digital distribution blasted access to games wide open. This has resulted in the current strange situation: a nation state with a horrible human rights record, and which executes anyone who tweet critical of it, pushing its way into what remains an often nerdish, escapist pastime.

    “The appetite with which Savvy and PIF has sucked their teeth into this is unprecedented.”

    The rate of investment may be unusual, but neither the goal of transforming the kingdom into a video gaming hub nor the acquisition of a prominent publisher is. van Dreunen cites South Korea’s late-90s investment in internet infrastructure, which led to the country being a new center point for video games in Asia and the home of many esports stars, “like the Alps for the Tour de France,” he adds. Meanwhile, China has emerged as a pivot of overseas development, notably in the creation of complex 3D assets for blockbuster titles such as Horizon Zero Dawn. “The ability to plug into the global economy, which required some investment from the government and some momentum from the market, has led to the emergence of these new hubs that didn’t previously exist,” van Dreunen says.

    If the acquisition of major soccer clubs by petro-states is any indicator, then Saudi Arabia should have no problem picking up a major publisher. Esports is, if not a more complicated question, then a riskier bet — an industry that Wired recently described as “facing an economic downturn and a dampening of hype,” particularly in the US. Covid-19 shut down live, in-person events, viewing figures are declining, and the lofty expectations set by individuals like Steve Bornstein, former CEO of the NFL Network before he became Blizzard’s esports chair, have not been met. According to Mikhail Klimentov, a Washington Post foreign desk editor (and former editor at the paper’s Launcher gaming vertical) who also runs the esports newsletter ReaderGrev, “the bigger problem is that a lot of esports leagues and teams are not monetizable in a particularly robust way … once you start building a bigger infrastructure, once you start hiring people, you lose money really quickly.”

    Because of this notion that the esports bubble is about to burst, Klimentov views Saudi Arabia’s entry into the arena as “impeccable timing.” “I think Saudi Arabia views esports, to a certain extent, as a distressed asset,” he said. “Many of these organizations, infrastructure companies, tournament organizers, and publishers are unable to refuse large sums of money.” If the choice is between not existing and accepting money from a Saudi-backed corporation with a “nice, western face,” as Brian Ward puts it, I believe they will take the money and accept that things have changed [in Saudi Arabia]. They’ll take your assurances.”

    Saudi Arabia is evolving, but not necessarily in a more liberal manner. There is a crackdown on dissent for every social reform, and others say that social reforms are restricted to big cities like as Riyadh. Because the country is in flux, Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Paris, believes that investing in video games and other businesses is basically an issue of “security.”

    Video games present an opportunity to maintain and broker power internationally

    There are two primary facets to this security, according to Chadwick. The first is financial: Saudi Arabia is heavily reliant on oil and gas, which he claims accounts for “40 to 50 percent of Saudi Arabia’s GDP per annum.” As it is, the kingdom is “extremely vulnerable” and must “undergo a period of industrial diversification.” The second factor is political. There are concerns that the kingdom’s large young population — 70% of Saudis are under 35 — is vulnerable to both religious and political extremism. “Essentially, Mohammed bin Salman is negotiating a new social contract within Saudi Arabia,” said Chadwick. “That social contract is: ‘We will cater for whatever demands that you have.'”

    Video games also provide an opportunity to retain and broker influence on a global scale through what Chadwick refers to as “network strategy.” China’s President Xi Jinping visited the Persian Gulf in December 2022, stopping in Riyadh, Saudi Arabia, rather than Qatar, where the World Cup was presently being held. A few weeks later, the monarchy invested $265 million in Chinese esports firm VSPO, its first venture into the country’s games business and, according to Chadwick, an example of “esports as a form of diplomacy.”

    The FIFAe World Cup tournament took place in Riyadh in July. Photo by Joosep Martinson – FIFA/FIFA via Getty Images

    Beyond the competitive crossover in the form of esports, what sports (particularly soccer) have in common with video games are devoted, tribal fandoms. In a RealLife piece, writer and novelist Vicky Osterweil refers to video game players as “goon squads” that “act as volunteer Pinkertons and scabs.” Soccer may be argued to be comparable. Following the acquisition of Newcastle United by Saudi Arabia, fans were seen putting tea towels on their heads, not as a provocation or protest against their club’s new owners, but as a symbol of affection: they had become torchbearers for the Saudi rulers.

    Whether targeting industries with highly mobilized, vocal fandoms is an intentional strategy or not, these kinds of zealous actions will likely be music to the ears of the kingdom that wishes to burnish its global reputation. Like the sportswashing that’s occurring through soccer and golf, the same can be said of video games — call it gameswashing.

    “It’s never just a pure business investment.”

    “Anywhere Saudi Arabia has spent money recently, there are always strings attached.” “It’s never just a pure business investment,” says Ben Freeman, head of the Quincy Institute for Responsible Statecraft’s Democratizing Foreign Policy program. “It’s difficult for me to envision gaming being any other… They are, at the very least, purchasing silence.” Freeman cites the non-disparagement agreement at the heart of the LIV Golf transaction, as well as the self-censorship that always occurs with enterprises controlled by such entities. “If you’re a mid-level manager, or a programmer, you’re probably going to self-censor because you want to avoid an awkward conversation with your boss,” he said.

    Regardless of censorship, self or otherwise, the effects of Saudi Arabia’s financial clout, or at least the promise of it, are already being felt, not least by developers formerly employed by the video game conglomerate Embracer. In May, Embracer CEO Lars Wingefors announced — in highly stressful fashion — that a gigantic deal with an unnamed partner worth some $2 billion had fallen through. As a result, Embracer implemented a “comprehensive restructuring program” which would include the “closing of studios and termination of projects.” Subsequent reporting carried out by Axios Gaming suggests it was Savvy Gaming Group that pulled out of the deal, despite, according to Wingefors, a “really strong commitment” having been made. Because of this gap in funding — money it appears Embracer had already been spending — hundreds of developers (and counting) lost their jobs, including those at the highly regarded, long-running studio Volition, maker of the Saints Row and Red Faction franchises.

    Saudi money, then, is already changing video games just as it is changing global sports and culture. As Klimentov puts it, the “aim is to make themselves inextractable from a lot of industries.” Mohammed bin Salman, famously a fan of the army-building strategy game Age of Empires, is likely more personally invested in this venture than others. But it is borne from the same cold-hearted rationale that saw his kingdom murder Washington Post columnist Jamal Khashoggi, and cause mass starvation and death in Yemen through its military blockade. It is about power primarily — the preservation of it at home, expansion of it abroad, and the further enrichment of a dynasty whose wealth already knows no bounds.

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