Saudi Arabia and UAE emerging as key Middle East gaming markets

Saudi Arabia and the UAE are at the forefront of the gaming industry in the Middle East, with their governments recognising the massive potential the growing market possesses, a study has said.

About 60 per cent of the region’s population consider themselves to be gaming enthusiasts, accounting for half of gaming app downloads, more than the global average of 40 per cent, the Boston Consulting Group said in its latest Game Changer report.

The Middle East is considered a “significant” market for both core and casual gamers, with Saudi Arabia representing about 45 per cent of the sector with a value of more than $1.8 billion, BCG said.

Gamers in the kingdom, the Arab world's biggest economy, are more inclined towards mobile gaming, which accounts for about 65 per cent of market revenue, it said.

“The Middle East is a key player in the global gaming industry, with an impressive penetration rate and a strong commitment from governments to invest in the sector,” said Alexander Schudey, managing director and partner at BCG.

“The region's focus on gaming and the establishment of dedicated gaming hubs makes it an attractive destination for global gaming companies.”

Gaming has become big business globally, gaining traction during the Covid-19 pandemic in 2020, with new-age technology providing both an opportunity to reach a wider audience and develop new titles to cater to consumer demand.

Saudi Arabia plans to develop 30 games and create about 40,000 jobs by 2030, as part of its National Gaming and Esports Strategy.

The programme, unveiled by Saudi Crown Prince Mohammed bin Salman in September, outlines a comprehensive investment programme for the industry and has the ultimate goal of making the kingdom a global gaming centre by 2030.

Riyadh also created the Saudi Esports Federation to hasten the industry's development. Its president, Prince Faisal bin Bandar, was appointed as vice president of the Global Esports Federation in December.

Saudi Arabia's gaming industry received a boost with new funding worth $488 million from the Saudi Esports Federation, the National Development Fund and the Social Development Bank, it was announced at the Leap technology conference in Riyadh in February.

Meanwhile, the number of gaming start-ups in Saudi Arabia almost doubled to 24 in 2022, from 13 in the previous year, driven by incubation programmes, a report by game developer support system Nine66 said in December.

The UAE, the Arab world's second largest economy, aims to attract global businesses and support local talent in the gaming, led by Abu Dhabi Gaming, which is offering strong incentives, and the Dubai Multi Commodities Centre's Gaming Centre.

The region's focus on gaming and the establishment of dedicated gaming hubs makes it an attractive destination for global gaming companies

Alexander Schudey,
managing director and partner at Boston Consulting Group

In December, the DMCC teamed up with Yalla Esports to launch the DMCC gaming centre to support the growth of the industry in Dubai by providing gaming businesses with access to capital and industry talent.

The UAE’s business-friendly environment has led a number of international gaming developers to establish their regional headquarters in the country.

France's Ubisoft, the publisher of the Assassin's Creed games, is based in Abu Dhabi while Chinese gaming company Tencent has set up its regional headquarters in Dubai.

In February, AD Gaming, the organisation responsible for developing the gaming and e-sports industry in Abu Dhabi, teamed up with the Sawa Group, a game publishing and e-sports company, to support gaming in the UAE capital.

Gaming revenue in the Mena region is projected to hit $6 billion by 2027, about double the figure from 2021, the DMCC said in its latest Future of Trade 2023 report last month.

The metaverse – the emerging virtual space where people represented by avatars interact – is also expected to give gaming a boost in the region.

“The Middle East is a unique market for gaming. Governments in the GCC region have invested heavily in the industry and recognised its potential, implementing strategies to attract gaming companies,” BCG analysts wrote in the report.

Mobile gaming, which has registered significant growth in recent years, is expected to continue to lead in the industry, with the widespread adoption of smartphones and the increasing power of mobile computing, BCG said.

This has compelled PC and console game publishers to actively invest in the trend, BCG noted, taking advantage of the sector's accessibility to gamers, the convergence it offers across gaming platforms and the potential of its business model, it said.

The rise of casual games, designed to be played in short periods of time, has driven innovation in the monetisation of mobile games, making them cheaper for a wider audience, the report said.

“Mobile gaming is mostly monetised through advertising, which is technically free for a player, while PC/console games are yet to realise the potential of this model,” BCG said.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

How Alia's experiment will help humans get to Mars

Alia’s winning experiment examined how genes might change under the stresses caused by being in space, such as cosmic radiation and microgravity.

Her samples were placed in a machine on board the International Space Station. called a miniPCR thermal cycler, which can copy DNA multiple times.

After the samples were examined on return to Earth, scientists were able to successfully detect changes caused by being in space in the way DNA transmits instructions through proteins and other molecules in living organisms.

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