The Saudi Sportswashing in Gaming and Esports Continues
The Kingdom has spent more than $5 billion in gaming so far in 2022, and it’s not slowing down.
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It’s been a busy few months for the Kingdom of Saudi Arabia, which has made billions of dollars in investments in gaming and esports in 2022 alone.
In the past three weeks, the country’s Savvy Gaming Group acquired more than 5 percent of two game publishers, Nintendo and Embracer Group, stakes worth a combined $3.7 billion. Before then, it already owned just under 5 percent of Activision Blizzard, more than 5 percent of Capcom and Nexon, and had spent $1.5 billion to acquire esports tournament organizers ESL and FACEIT.
On the heels of the uproar in professional golf over the Kingdom’s recruitment of some of the most successful players in the world to its new LIV Golf circuit—most notably Phil Mickelson, who’s set to make $200 million for participating—gaming is experiencing something similar.
Game companies are touting that they’ll remain independent of the country’s political interests. Executives of Savvy can vocally distance themselves from the Kingdom all they want, as they have in carefully selected media appearances like this softball interview with Sports Business Journal.
But what’s clear is this: The goal is to rehabilitate Saudi Arabia’s global image by way of sports, gaming is a significant part of that strategy, and no matter which legal entity is writing the checks, the money is all sourced from the same place—in blood.
“This is not going on your iPhone, which might have some parts made in China,” ESPN reporter Kevin Van Valkenberg, my former coworker, said about LIV Golf on Tuesday. “This is not sending a package through FedEx, which might have Saudi investment as being a part of it. This is directly working for the government of Saudi Arabia to clean its reputation globally because of some of the horrible things they have done. There are moral degrees and you have to choose where you are on it, but those things are not equal.”
The gaming community has shunned Saudi Arabia and other Sharia-law governed Middle Eastern countries before.
In July 2020, when Riot Games and BLAST announced partnerships with Neom, a $500-million planned Saudi tourist city built on forcefully-taken Indigenous Huwaitat land, esports fans lost it. Nearly the entire cast of the then-League European Championship spoke out, including color commentator Indiana “Froskurinn” Black, who is gay. In less than a week, those partnerships were terminated.
The same happened in early 2022, when Ubisoft announced that it would travel to the United Arab Emirates this summer for a “Rainbow Six: Siege” Major. Fan backlash, including a 13,000-signature petition backed by influential community members and on-camera talent, nixed those plans. Ubisoft pulled the plug and is now planning to relocate the event to a different region.
The attraction to the Middle East by game publishers comes amid rapid projected market growth in the region, specifically in Saudi Arabia, the Emirates and Egypt. An early 2022 study from Niko Partners estimates there will be 85.7 million mobile and PC gamers in those three countries by 2025, a 20-million-user growth from 2021. The same research said the region will nearly double its revenue in the same timeframe, from a current $1.7-billion spend on gaming in 2021 to $3.14 billion in 2025.
That’s why almost all major game publishers—be it Riot, Activision Blizzard, Ubisoft or others—have expanded their infrastructure around operations in the EMEA (Europe, Middle East and Africa) territory in the past five years.
There’s no doubt gaming will be a big part of youth culture in the Middle East moving forward. The question is how much will it serve as means for an authoritarian government—one that wears a mask of progressiveness while imprisoning and killing dissidents—to change its narrative.
In an economic downturn, the Saudi Arabian government is taking advantage of the games industry and niche sports’ need and lust for money.
In 2021, Formula 1 inked a 15-year deal that will pay $65 million per grand prix and $40 million per year in a sponsorship with the Saudi Arabia government. WWE has continued to expand its footprint in the Kingdom, too, originally hosting two unique events a year there before bringing its annual Elimination Chamber program to the country in February. A boxing match in Diriyah in December 2019 between Anthony Joshua and Andy Ruiz Jr. saw the former earn a career-high £60 million ($72 million).
In a world without significant revenue streams like the NFL or NBA, sports such as wrestling, boxing, racing, and now gaming and esports are cashing in on the seemingly endless pits of Saudi cash.
For ESL and FACEIT, as veteran esports journalist Richard Lewis pointed out in April, the Saudi Public Investment Fund (PIF) acquisition served as a lifeline for a pair of tournament organizers that had been hemorrhaging money for the past decade. The acquirer, PIF-wholly owned subsidiary Savvy Gaming, confirmed to SBJ that the two companies were seeking a special purpose acquisition company route to public listing and approached the Kingdom’s investors to act as a PIPE investor. Instead, Savvy’s CEO, Brian Ward, said Savvy offered to acquire the whole conglomerate.
Savvy and ESL FACEIT continue to claim independence, but it’s all lip service—as are Mickelson’s and other pro golfers’ comments this week. Money talks. Nintendo and Embracer feel the same.
"For Embracer, there is only a handful of players in the world providing this type of sizable long-term equity capital," Embracer CEO Lars Wingefors wrote in a press release.
"Without capital, our journey would notably slow down going forward which could also have many other implications for our businesses. [Savvy] is providing very long-term capital to support our strategy without Embracer having to give up our way of operating or other commercial opportunities."
Nintendo declined to comment on specific shareholders when approached by the press this week.
Often when the anti-Saudi government conversation pops up, there’s a lot of whataboutism.
The most significant country in esports is China, known also for its human rights violations, such as the genocide of the Muslim ethnic minority Uyghur population. So why are we supporting events in China, too? is often asked. Why are we purchasing products that are made there? is another. There’s also frequently a bad faith argument for xenophobia against the Saudi people.
“People love Western culture all over the world,” WWE chairman Vince McMahon said in a March interview with Pat McAfee. “They don’t love our government, but they love Western culture. Just because we as Americans, ‘this is the way we should do this. The whole world should be like us. We know the way and any other way is not the right way.’ Come on. Culture has been around for thousands of years. Long before us.”
It’s not about the people—it’s about how the source of the billions of dollars involved uses its influence elsewhere. When that’s murdering criticial journalists in other countries, planting malware in the phone of one of America’s most successful businessmen, or castrating and beheading queer and trans persons, that’s no longer a difference in opinion.
The sportswashing of Saudi Arabia will continue—and it’s working. Gaming has a choice, though: Do we put up with it and stay silent? Or do we challenge the sellouts?