Saudi Arabia recently announced a $38 billion direct investment into the gaming industry. They’ve mostly done this by buying up between 9-10% of Electronic Arts (EA) for just under $55 billion. The Saudi Arabian government is very much in the midst of a bigger push to increase its soft power. This major acquisition has been instrumental in reframing the country’s international reputation. The investment aligns with the country’s goal of associating itself with entertainment and leisure, countering criticism regarding its human rights record.
The Public Investment Fund (PIF) of Saudi Arabia created this new venture to help diversify its economy. Today, about 40% of its fortune relies on the sale of oil and gas. The kingdom has an incredibly young population with 70% of its people under the age of 35. It seeks to expand into other markets and capture new, vibrant opportunities. This demographic shift points to tremendous growth potential in leisure activities, and as a result gaming is considered one of the hottest industries for investment.
In recent years, Saudi Arabia has faced accusations of “sportswashing,” a term referring to the practice of hosting or sponsoring sporting events to distract from internal issues such as human rights violations. Notwithstanding these assertions, the Saudi government has pressed on with investments in the global sports sector. The Saudi Pro League (SPL) has lured big-name superstars like Cristiano Ronaldo, Sadio Mane, and Karim Benzema. This migration of talent is doing wonders for the league’s international appeal.
The SPL investment serves as a useful case study for the collaboration between the PIF, Silver Lake, and Affinity Partners. This collaboration was established by Jared Kushner, former U.S. The real crowning glory of this consortium is their identifiable high-profile consortium members that they have secured thus far.
Saudi Arabia’s foray into gaming doesn’t stop with EA. The PIF has acquired ownership stakes in companies responsible for popular titles such as Pokémon Go and Monopoly Go. This strategic move seeks to secure a foothold in the gaming market while enhancing the country’s image as a vibrant and fun destination.
Saudi Arabia has previously hosted important competitions, like the Esports World Cup. Today, it is preparing to welcome the 2027 Olympic Esports Games. Taken together, these events represent the kingdom’s determination to make itself a global hub of the thriving gaming industry.
Market analysts have expressed how the purchase of EA signifies a deep, rabid hunger to take over the gaming industry. It illustrates Saudi Arabia’s desire to use entertainment to alter perceptions of the kingdom. As George Osborn, an analyst at financial firm Eurasia Group, told CNBC, “This is huge news in terms of Saudi Arabia’s soft power strategy. EA is the ideal company to help Saudi Arabia project the influence it desires.
The acquisition of EA comes with a pretty hefty premium. This acquisition values the company at $210 per share, a 25% premium over its market valuation prior to the acquisition announcement. This agreement firmly establishes Saudi Arabia as one of the principal shareholders in what has become known as market-disrupting mega-decision-maker Activision Blizzard.
“With this deal, it’s not just a seat at the table anymore – it’s control,” – Osborn.
Industry experts emphasize that control over EA allows Saudi Arabia to steer the gaming business in directions that align with its strategic goals. Osborn elaborates that “When you’ve got control, you’ve got the ability to really drive the direction of that business towards your goal.” This kind of clout is extremely important for countries trying to improve their international standing through soft entertainment.
This investment serves to reinforce a more holistic vision that includes not just gaming but sports and leisure. An unnamed source noted, “It really underlines the commitment in the Middle East to a sports/leisure strategy with an eye on the business opportunities that AI is expected to deliver in terms of increased leisure time.”
Saudi Arabia has been making tremendous efforts to suddenly become a sports and gaming superpower. It does want to change its story on the world’s stage. Critics point out that these investments mostly improve public perception. Yet, they do not address the underlying questions of women’s rights, LGBT rights and the death penalty in the kingdom.
According to Prof. Simon Chadwick legitimacy is key. To have an effective dialogue, countries need to be treated with respect and dignity as legitimate members of the global sporting community. He stated, “What the rulers of Saudi Arabia have realized is if people don’t see you as being a legitimate and trustworthy member of the sporting and business communities, then they don’t engage with you.”
This targeted approach is intended to change the way Americans think about entertainment. Its main emphasis is on reversing the damaging headlines associated with human rights violations. According to many analysts, if Saudi Arabia uses cultural occasions and joyous leisure to rebrand itself it can turn the tide.
“They’re not thinking about the geopolitics. They are just thinking of fun. And this is the genius of Saudi Arabia’s strategy – that the country becomes associated with fun.” – Unnamed source.
Experts are united in the belief that this kind of strategic pivot would position EA for meaningful growth. It could do wonders for other investments under PIF’s command, too. Nick Hurley, a former General Manager of Ruby Ride, described the acquisition’s impact. According to Naqvi, “The EA buyout is the biggest buy-back in Wall Street history ever. It will really turbo-charge EA’s future growth with the capital it’ll provide.”