Saudi Arabia's Public Investment Fund snaps up 5% stake in Japan's Nintendo

The kingdom continues to strengthen its position in the lucrative global gaming market

Nintendo, the owner of the Super Mario franchise, is the world's second-largest gaming company by market capitalisation, according to Statista. AFP

Saudi Arabia's Public Investment Fund has acquired a 5.01 per cent stake in Japan's Nintendo, boosting its portfolio in the lucrative global gaming sector.

The kingdom's $500 billion sovereign wealth fund bought about 6.5 million shares in the creator of Super Mario and maker of video game consoles, according to a regulatory filing with the Tokyo Stock Exchange on Wednesday.

The investment in the world's second-largest gaming company by market value, makes the fund the fifth-largest shareholder in Kyoto-based Nintendo, according to Bloomberg data.

Nintendo's share price closed 3.5 per cent higher at the end of trading on Wednesday. The Japanese company's stock price is up about 9 per cent since the start of the year.

The investment in Nintendo is the PIF's third in a Japanese gaming company, following deals to acquire stakes of more than 5 per cent in online games makers Capcom and Nexon. The Capcom stake is potentially big, as the company is the owner of some of the biggest gaming franchises, including Resident Evil, Street Fighter and Mega Man, plus Marvel crossover titles.

Saudi Arabia, the Arab world's largest economy, has increased its investment in the multi-billion-dollar gaming industry over the past two years. The industry grew during the Covid-19 pandemic, as people pivoted to home entertainment during lockdowns. The sector has about three billion gamers worldwide, according to gaming data provider Newzoo.

In January, the PIF launched Savvy Gaming Group, which aims to become the leading gaming and eSports group locally and internationally. Gaming consumption in Saudi Arabia is projected to reach $6.8bn by 2030, according to a recent report from Boston Consulting Group.

The fund also took a stake in US company Activision Blizzard, the Call of Duty publisher that Microsoft announced it would buy for $68.7bn in January. Its stake in Activision at the end of the first quarter of this year was worth $3bn, according to the latest regulatory filing.

The PIF also has a stake of about $1.8bn in US video game company Electronic Arts. The fund also has a $1.7bn investment in New York-based Take-Two Interactive Software, a video game holding company that offers its products under the Rockstar Games, 2K, Private Division, Social Point, and Playdots labels.

In February, Saudi-owned MBC Group, the biggest broadcaster in the Middle East and North Africa, formed a joint venture with Neom, the $500bn high-tech mega-city being built in the kingdom, to set up the first AAA games development studio in the Arab world.

AAA is a classification within the gaming industry that labels games produced and distributed by mid-sized or big publishers that usually have higher budgets.

Saudi studios are also seeking to get a larger share of the market by attracting investments. In April, Riyadh-based Spoilz Games raised 2.6 million riyals ($693,000) in a pre-seed investment round that it will use to expand its portfolio.

The gaming industry is forecast to have a $339.95bn market value by 2027, compared to $198.4bn in 2021 and grow at a 9 per cent compound annual rate, according to Mordor Intelligence.

Updated: May 19, 2022, 5:29 AM