Saudi Arabia’s sovereign wealth fund-backed Savvy Games Group will invest $265mn in Chinese esports company VSPO, in the kingdom’s latest push into the gaming market.
The deal announced on Thursday would give Savvy a minority stake and make it VSPO’s single largest equity holder, the company said.
Saudi Arabia has ambitions to become a top gaming hub and created Savvy to invest in and develop the industry in the kingdom with a war chest of more than $30bn.
The kingdom is trying to reduce its reliance on oil revenues, investing in everything from electric vehicle production to tourism and gaming.
It has set out a target to become one of the world’s main gaming hubs, with the industry expected to contribute 1 per cent to its gross domestic product by 2030.
The deal would “help VSPO continue to deliver on its global strategy and accelerate the growth of mobile esports” with a particular focus on Saudi Arabia, the company said. The deal will be finalised in the coming months subject to regulatory clearances.
Saudi Arabia’s gaming strategy is being bankrolled and led by the $600bn Public Investment Fund, which has been channelling a petrodollar surplus into giga-projects and branching into sectors such as homegrown electric vehicle manufacturing. It has also invested heavily in gaming equities, including a 5 per cent stake in Nintendo and about $3bn in US gaming companies including Activision Blizzard.
Those investments raised eyebrows among some analysts, with speculation that they were influenced by the preferences of Crown Prince Mohammed bin Salman, the country’s day-to-day ruler and chair of PIF. Prince Mohammed, an avowed gamer, also chairs Savvy. But officials have said they were sound and profitable investments for the fund.
Prince Mohammed has been widely criticised in western countries for human rights abuses in the kingdom, which have included decades-long prison sentences meted out over social media posts. But he is popular with young Saudis, who support his social reforms such as more entertainment in the kingdom while ending the dominance of religious police in public life.
“Seventy per cent of the country is under the age of 35 . . . and 68 per cent of the country consider themselves gamers,” Prince Faisal bin Bandar, the head of the Saudi Esports Federation, told the Financial Times on Thursday. “The major aim in everything we’re doing is how we become an additive part of the global industry.”
Global esports revenues stood at $1.3bn last year, up from $996mn in 2020, according to figures compiled by Statista. They are projected to grow to $1.86bn in 2025.