You could call it the summer that Saudi Arabia swallowed sports. On June 6th, news broke that Saudi-backed LIV Golf was merging with the Professional Golfers’ Association, funded to the tune of over a billion dollars by the Saudi Public Investment Fund (PIF). In soccer, the world’s most popular and lucrative sport, the kingdom has brought global superstars such as Karim Benzema, Neymar, and Jordan Henderson to the desert to play their trade, laboring not only under the region’s sweltering heat but virulent criticisms of sportswashing. For established institutions, it was a summer of humbling disruption in which they had perhaps quietly sensed, for they would never admit it, the dawning of a new world order.
The spending spree isn’t limited to sports. In recent years, Saudi Arabia has invested in movies, establishing the Red Sea International Film Festival. The country hosts — in what feels like the final boss of late-stage capitalism — pay-per-view WWE events. Then there are video games, a global industry worth $187 billion that the kingdom is intent on muscling its way into, but with perhaps not quite the equivalent, naked levels of aggression that it has shown toward sports.
The minority investments are stacking up now: Nintendo, Take-Two, EA, Activision Blizzard. These are significant pieces of some of the industry’s most profitable pies. Through the PIF-funded Savvy Games Group (which declined to be interviewed for the piece), the kingdom has acquired mobile developer Scopely for $4.9 billion and esports organizations ESL and Faceit for $1.5 billion. A further $13 billion has been earmarked “for the acquisition and development of a leading game publisher” with many more billions reserved for further minority investments. Oil money, then, is coursing through the video game industry almost as quickly as Saudi Arabia can pump it from the ground.
Where is it all leading? 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, in the process, perhaps making Crown Prince Mohammed bin Salman the most powerful, avowed “gamer” in the entire world. Ward has said this investment is part of the Saudi plan for “economic diversification and social transformation,” a gargantuan 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 oldest play in the book: 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.
In this era of mergers and acquisitions, such gigantic investment is hardly remarkable, 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 wrote a book about the business of video games. For most of video games’ history, he says, it was ignored by the wider business world — that is, until the digital distribution blew access to games wide open. This has led to the current bizarre moment: a nation state with an appalling human rights record, and which hands out the death sentence to those who tweet critically of it, forcing its way into what continues to be an often nerdish, escapist pursuit. The dissonance is such that van Dreunen says it reminds him of “real estate companies in China that all of a sudden got all these film ambitions.”
“The appetite with which Savvy and PIF has sucked their teeth into this is unprecedented.”
The rate of investment might be unprecedented, but the actual plan is not: neither the aim to transform the kingdom into a video game hub nor to acquire a leading publisher. van Dreunen points to the way South Korea invested heavily in internet infrastructure in the late 1990s which, in turn, led to it becoming a new focal point for video games in Asia and the home for many esports stars, “like the Alps for the Tour de France,” he says. China, meanwhile, has emerged as a fulcrum of external development, particularly the production of detailed 3D assets for blockbuster titles like 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.”
For this reason — the sense that the esports bubble is bursting — Klimentov describes Saudi Arabia’s move into the arena as one of “impeccable timing.” “I think Saudi Arabia views esports, to a certain extent, as a distressed asset,” he continues. “A lot of these organizations, infrastructure companies, tournament organizers, and publishers are in no position to turn down really big sums of money. If the option is between not existing and taking money from a Saudi-backed company that has a ‘nice, western face’ in terms of Brian Ward, I think they will comfortably take the money and accept that things have changed [in Saudi Arabia]. They’ll accept those assurances.”
Saudi Arabia is indeed changing, but not in a straightforwardly more liberal direction. For every social reform, there is a crackdown on dissent, and some argue social changes are limited to major cities such as the capital Riyadh. The country is in flux, which is why Simon Chadwick, professor of sport and geopolitical economy at Skema Business School in Paris, argues that investment in video games and other industries is fundamentally a matter of “security.”
Video games present an opportunity to maintain and broker power internationally
According to Chadwick, there are two major aspects to this security. The first is economic: Saudi Arabia is hugely dependent on oil and gas, which he says makes up “40 to 50 percent of Saudi Arabia’s GDP per annum.” As it stands, the kingdom is “incredibly exposed” and so needs to “undertake a period of industrial diversification.” The second element is political. There are worries that the kingdom’s big youth population — 70 percent of Saudis are under 35 — is susceptible to both religious radicalism and political radicalism. “Essentially, Mohammed bin Salman is negotiating a new social contract within Saudi Arabia,” says Chadwick. “That social contract is: ‘We will cater for whatever demands that you have.’”
Video games also present an opportunity to maintain and broker power internationally through what Chadwick calls “network strategy.” In December 2022, China’s President Xi Jinping visited the Persian Gulf, calling in at Riyadh in Saudi Arabia rather than Qatar where the World Cup was currently being played. A few weeks later, the kingdom purchased a $265 million stake in Chinese esports company VSPO, its first foray into the country’s games market and an example, says Chadwick, of “esports as a form of diplomacy.”
What sports (in particular soccer) share with video games, beyond this competitive crossover in the form of esports, are committed, tribal fandoms. In an essay for RealLife, writer and author Vicky Osterweil describes such video game fans as “goon squads” who she says “act as volunteer Pinkertons and scabs.” Something similar could be said of soccer. In the aftermath of Newcastle United’s takeover by Saudi Arabia, fans were seen pictured wearing tea towels on their head, not as a provocation or protest at their club’s new owners but as a sign of affection: they had become torchbearers for the Saudi regime.
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 that Saudi Arabia is spending any amount of money lately, there are always strings attached. It’s never just a pure business investment,” says Ben Freeman, director of the Democratizing Foreign Policy program at the Quincy Institute for Responsible Statecraft. “It’s hard for me to imagine that gaming is any different … At the very least, they’re buying silence.” Freeman points to the non-disparagement clause central to the LIV Golf deal as well as the self-censorship that invariably happens at companies owned by such powers. “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 says.
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.