Saudi PIF dominates the gaming industry
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF) spearheads the kingdom’s economic transition from a dependence on oil to a more diversified base. The fund, chaired by Crown Prince Mohammed bin Salman plays a key role in the prince’s vision to transform the kingdom’s economy, attract foreign investment, and more importantly lead the tech renaissance.
PIF is the backbone of Saudi Arabia’s economic transformation plan. Through the acquisition of stakes of largest global companies as markets nosedived during the onset of the pandemic last year, and then sold them a few months later as stocks soared. In parallel, the PIF launched several tech companies in Saudi Arabia, most recently of which, is the Savvy Gaming Group.
The move did not come in a vacuum, it is part of a strategy of building positions in tech companies and especially ones in the video games industry. The Crown Prince believes in the importance of video games and new technologies.
Moreover, PIF more than doubled its stake in the gaming giant, Activision Blizzard to 33.4 million shares compared to 15 million shares at the end of the Q4 of 2020, which led it to a $3.1 billion exposure from $1.4 billion. In 2021, Saudi Arabia’s sovereign wealth fund has increased its holding in American video game company Activision Blizzard by 13.3% to 37.9 million shares, according to a U.S. regulatory filing.
The Public Investment Fund bought 4.4 million shares in the video game maker in the second quarter, according to a Securities and Exchange Commission filing.
PIF announced the launch of Savvy Gaming Group (SGG), chaired by His Royal Highness Crown Prince Mohammed Bin Salman, Deputy Prime Minister, Chairman of the Council for Economic and Development Affairs, and Chairman of PIF.
SGG aims to become the leading games and esports group domestically and internationally and will work to further develop an integrated ecosystem for the sector.
To achieve its ambitious future plans, SGG has acquired ESL, a leading global organizer of entertainment and esports events, and FACEIT, a top digital esports platform, and has merged them to form the “ESL FACEIT Group,” which will help achieve SGG’s objectives in the sector. Closing of the transactions is subject to regulatory approvals.
ESL Gaming operates some of the biggest esports tournaments in the world, it is known for ESL One events in CSGO and Dota 2, as well as the ESL Pro Tour and the Intel Extreme Masters tourney series.
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While FACEIT, the competitive gaming service hosts community-driven events for CS:GO, Dota2, League of Legends, and more.
ESL Gaming was formed in 2020 from the merger of ESL and Dreamhack, both of which were owned by MTG at the time. Craig Levine and Ralf Reichert, co-CEOs of ESL, became co-CEOs of ESL Gaming. Both were major event operators in the space.
Other major esports tournament organizers include Major League Gaming, Gfinity, and Blast Premier. However, none are as big as ESL Gaming, especially once the aforementioned merger took place.
ESL has reportedly sold for $1 billion to Savvy Gaming Group (SGG), while FACEIT platform was acquired for $500 million, sources close to the deal confirmed to Dexerto.
At the onset of SGG’s newest acquisitions, ESL and FACEIT announced they would merge into one entity: ESL FACEIT Group.
The idea is to give teams, players, and publishers “a consistent journey that could take them from casual competitions to arena events on one platform,” the company said.
The launch of Savvy Gaming Group is in line with PIF’s 2021-2025 strategy, which aims to enable promising industries and sectors such as entertainment, leisure and sports, as well as create opportunities for the growth and diversification of Saudi Arabia’s economy, to help achieve the objectives of the Kingdom’s Vision 2030.
Saudi Arabia’s gaming market
Saudi Arabia’s gaming market is estimated at around $1 billion in 2021, more than any other Gulf state, according to market researcher Niko Partners.
In the Arab trio, Saudi Arabia, the UAE and Egypt are expected to have a total of 85.8 million gamers generating $3.1 billion in revenue by 2025, the researchers said.
In a separate report, the Boston Consulting Group said consumption of video games and esports was projected to reach $6.8 billion by 2030, up from $959 million in 2020.
“Despite the Kingdom being a relatively recent entrant to this space, the industry is vibrant and fast-growing,” BCG partner Povilas Joniskis said. “Passionate gamers are primarily powering its growth and popularity at present, and it is more than feasible for them to embark on full-time careers and become involved on the international stage.”
