Saudi Arabia's Public Investment Fund has increased the number of EA shares it owns by roughly 55%. This is the latest in an ongoing streak of international investment by the nation's wealth fund, which has been throwing more and more money at both the Western and Eastern games industry for years now.
This information was first reported on by Seeking Alpha, which discovered that the national fund had purchased a significant number of additional shares in EA in the final quarter of 2022. The fund now owns 24.81 million EA shares. As EA currently has 276 million outstanding shares as of May this year, Saudi Arabia is inching closer to a 10% ownership of the company.
When it comes to the Saudi Public Investment Fund, the money keeps on coming. As of April, the country had invested upwards of $38 billion dollars in the industry according to Bloomberg, spread across investment in studios, esports, and other miscellaneous projects. This includes many studios you'll likely know - including Capcom, and SNK! The latter of which has over 96% of its shares owned by Saudi Arabia, a fact which the studio believes will not affect on the games it makes.
So why is Saudi Arabia so interested in gaming? In an entirely macro sense, the country is trying to diversify its revenue away from oil, a source of income that allowed it to become one of the richest countries in the world. This was all laid out in the Saudi Vision 2030 project. As such, the Public Investment Fund has snatched up shares in numerous massive companies including Uber, Boeing, Bank of America, and yes... a selection of video game companies. Big names too!
But as for why its investing in gaming specifically, you've got to look to the countries growing tech sector. Hoping to become a major tech player in the MENA region, the country has gone so far as to begin construction on a tech city: Neom. Estimated to cost over $500 billion, the goal is basically to create a Silicon Valley of the region. That means a high tech presence, which includes the video game sector. As both Western and Eastern companies have typically ignored the region in the past, and with a young population eager to get into the video game space both profesionally and leasurely, Saudi Arabia throwing money about makes it the biggest player there.
It's for this reason that it's also invested heavily in esports, a sub-industry that has fallen into a bit of a economic winter as of late due to the global recession and an industry-wide reliance on venture capital investment which is drying up due to lacklustre fiscal returns. In the minds of Saudi investors (and many investors gloabally) esports is the way to reach the younger generation. Kids love CSGO knives, Red Bull and chug jugging with their friends on Fortnite, right?
There is, however, a darker side to all this. Neom, this tech megacity that may very well be the countries' crown jewel in the coming years, is being built on land that has been home to the Huwaitat tribe according to The Guardian. The Saudi Government is reportedly evicting people from their homes, if they live within the area Neom is being built on.
Then there are allegations of Sports washing, a term that refers to a form of propoganda accomplished by the purchasing and or hosting of sports events of teams. You may have seen this pop up as a major topic in the world of golf, and similar claims were levied at Qatar during the world cup.
If people are having a good time watching football, golf, and hey, maybe even League of Legends or Rocket League, they aren't thinking about nasty stuff like general Human Rights abuses, the killing of journalists, and the ongoing war in Yemen. Especially at a time when investment from the usual suspects is drying up, the appeal of a wealthy country willing to foot the bill is surely tempting in spite of these red flags. Push back from players and influencers has managed to push back some deals in the past, but Saudi Arabia is showing no sign of easing up on its ambitions of becoming a major player in the industry. Similar deals will surely continue in the future.
So yeah, Saudi Arabia is investing in EA in a major way in an attempt to diversify its income. You should expect to see similar stories pop up in the coming years. A near 10% stake is nothing to scoff at, especially when you consider just how massive EA is, as well as Saudi Arabia's Public Investment Fund other fingers placed firmly in various gaming pies.
What do you think of all this? What company will Saudi Arabia invest in next, and where do you stand on the ethical conundrum at the heart of this issue?