Saudi Arabia is positioning itself at the forefront of innovation in the digital entertainment industry. Driven by three core strategic aims – economic diversification, digital economy leadership and cultural influence – the Kingdom has deployed substantial investment in order to position itself as a global hub for e-gaming.
A key part of its plans includes creating an ecosystem conducive to developing emerging technologies such as blockchain, with initiatives like NEOM's regulatory sandbox and dedicated gaming district, which has the potential to transform the e-gaming landscape. However, while Saudi Arabia's "digital-first" regulatory approach and infrastructure development offer promising advantages, these efforts face three key challenges, which are high capital requirements, competition for skilled talent, and the need for sustainable ecosystem growth.
The Game Plan
The Saudi gaming market stands as a powerhouse in the Middle East and North Africa (MENA) region, valued at $1.4 billion and growing annually at 22%[i]. With a dominant 40% market share in the regional gaming market – Saudi Arabia leads digital entertainment in MENA, with the sector projected to reach $6 billion in revenue by 2027[ii].
To fuel this growth, the Public Investment Fund (PIF) has pledged $38 billion through its dedicated gaming investment arm Savvy Games Group. This substantial investment has already driven significant acquisitions, such as the $1 billion purchase of ESL Gaming and FACEIT in 2022, as well as stakes in prominent global gaming companies such as Capcom, Nintendo, and SNK, giving the Kingdom access to cutting-edge technologies and industry expertise[iii]. Through these early investments, Saudi Arabia aims to secure a first-mover advantage in the MENA gaming market – setting industry standards and attracting a loyal user base as regional demand for digital entertainment grows.
The Kingdom views gaming as a transformative platform for both economic diversification and cultural influence, drawing strategic parallels to the success of Japan's anime and South Korea's K-pop industries in building soft power. This vision manifests in Saudi Arabia's 2024 events calendar, headlined by the e-Gaming World Cup through July and August, and the World Esports Championship in November. These events serve the Kingdom with the opportunity to engage with global, tech-savvy audiences while building credibility in digital infrastructure and attracting international interest.
Additionally, with initiatives like the Game Changers Programme, Saudi Arabia aims to cultivate local talent, establish incubators and gaming studios[iv], and ultimately create 39,000 gaming-related jobs by 2030[v]. This target supports both economic diversification goals and ensures ecosystem sustainability through a skilled local workforce.
Developing a Blockchain Ecosystem
The integration of Web3 and blockchain technology offers transformative potential for the gaming industry. While platforms like Axie Infinity demonstrated the potential with $1.3 billion in revenues in 2021 through a play-to-earn model enabling players to earn non-fungible tokens (NFTs)[vi], Saudi Arabia pursues a more measured approach. The Kingdom has established robust infrastructure through the Digital Gaming Research Centre at King Abdulaziz City for Science and Technology[vii], the NEOM regulatory sandbox[viii], and three new gaming-focused data centres launched in 2023. The crown jewel of this infrastructure development is the NEOM Gaming and Esports District, designed as a dedicated zone for blockchain gaming innovation[ix].
The regulatory framework supporting these developments focuses on non-cryptocurrency blockchain applications, providing a structured testing environment for Web3 features while maintaining strict security standards and quality control. This framework is complemented by a comprehensive support ecosystem, including Nine66, a Savvy Games Group subsidiary providing developer support, and the Gaming and Esports Centre of Excellence offering technical resources. International gaming academy partnerships further strengthen this ecosystem by building a robust talent pipeline.
Saudi Arabia's positioning in Web3 and blockchain gaming rests on three fundamental pillars: infrastructure investment, regulatory innovation, and financial backing. The infrastructure component includes testing environments and dedicated development zones, while the regulatory framework embraces a "digital-first" approach with clear compliance guidelines. The $38 billion financial commitment underpins these efforts through strategic acquisitions and ongoing development funding.
However, the Kingdom faces several key challenges in realising its ambitions. Technical infrastructure must scale to meet growing computational demands while ensuring network reliability and data centre efficiency. Talent development requires building local expertise while attracting international talent and creating sustainable training programmes. Market evolution presents another challenge, as the Kingdom must adapt to rapid technological changes while maintaining its competitive advantage and ensuring long-term return on investment.
Outlook and Challenges
Looking towards 2025, several key metrics will indicate the success of Saudi Arabia's strategy. These include maintaining the 22% annual market growth rate, the progress towards the 39,000 new gaming-related positions, and the number of successful Web3 gaming projects launched. The Kingdom's methodical approach to building its gaming and blockchain ecosystem, supported by substantial financial commitment and infrastructure development, suggests strong potential for achieving its objectives in the evolving digital entertainment landscape.
Saudi Arabia’s commitment to e-gaming and blockchain reflects a robust strategy for digital economy development, though challenges such as high development costs, evolving security needs, and a potential skills gap remain. By leveraging its early investments, modern infrastructure, and prudent governance, the Kingdom is laying the groundwork for sustainable growth in digital entertainment. If adaptable, this approach could solidify Saudi Arabia’s role as a frontrunner in the global blockchain gaming market.
[i] Intenta (n.d.) ‘Video Game Industry in Saudi Arabia’, Intenta Digital. Available at: https://intenta.digital/gaming-industry/video-game-industry-saudi-arabia/ (Accessed: 14 October 2024).
[ii] Arab News (2023) ‘MENA video game revenues to hit $6bn by 2027’, Arab News, 30 May. Available at: https://www.arabnews.com/node/2313106/media (Accessed: 14 October 2024)
[iii] Saudi's PIF Launches Savvy Gaming Group After $1B Acquisition Of ESL (2022) Forbes, 26 January. Available at: https://www.forbesmiddleeast.com/industry/economy/saudi-pif-launches-savvy-gaming-group
[iv] Game Changers (n.d.) Home, Game Changers. Available at: https://gamechangers.sa/en/Home (Accessed: 16 October 2024).
[v] Nordland, J. (2022) ‘Savvy Games Group reveals $38bn investment strategy to boost Saudi Arabia’s gaming and esports sectors’, Esports Insider, 29 September. Available at: https://esportsinsider.com/2022/09/savvy-games-group-investment-strategy-38bn (Accessed: 15 October 2024).
[vi] McGregor, G. and Gordon, N. (2022) ‘Millions of players in poor countries earned real money on Axie Infinity. Then came an economic crisis and a $620 million hack’, Fortune, 31 March. Available at: https://fortune.com/2022/03/31/axie-infinity-hack-coin-price-crypto-crisis/
[vii] Animoca Brands and KACST forge strategic partnership, will launch Web3 Hub in Saudi Arabia. (2024, March 11). Available at: https://www.animocabrands.com/animoca-brands-and-kacst-forge-strategic-partnership (Accessed: 11 November 2024).
[viii] NEOM (n.d.) ‘Media: Gaming’, NEOM. Available at: https://www.neom.com/en-us/our-business/sectors/media/gaming(Accessed: 15 October 2024).
[ix] NEOM. (n.d.). The Region’s First True Gaming Hub. Available at: https://www.neom.com/en-us/our-business/sectors/media/gaming (Accessed: 12 November 2024).
