The number of games start-ups in Saudi Arabia almost doubled to 24 in 2022 from 13 last year, driven by incubation programmes, a report says.
Most of the companies employ one to five or six to 10 staff, putting them in the independent studios category, Nine66 – an integrated support system for game developers – found in its latest report.
Only six companies employ more than 10 people.
Nine66 is a Savvy Games Group company, which is owned by the kingdom’s sovereign wealth fund, the Public Investment Fund.
It offers infrastructure, skills development, network, capital, publishing, and advisory services to game studios and developers globally.
About 80 per cent of those who have set up a game studio in Saudi Arabia said the experience was “relatively easy”.
There is also a strong collaborative spirit in the kingdom’s gaming industry.
Almost 84 per cent of the respondents have linked up with other local developers at some point, mainly after meeting them at events such as game jams and conferences, or after connecting through social media.
The survey report interviewed 51 game developers from a mix of solo developers, mid-sized teams, and large companies between April and June.
“Mena is one of the fastest-growing regions in the world for games, and Saudi Arabia has huge potential, with a young, highly educated and talented workforce,” said Kadri Harma, chief executive of Nine66.
Nearly 67 per cent of respondents said financial risks and the lack of a safety net were obstacles preventing them from establishing start-ups.
Almost 35 per cent stated that the lack of knowledge of how companies work is a major factor for why developers are unable to start new studios.
Some of the challenges facing local game companies include access to funding, access to local talent, the high cost of living and attracting international talent.
Access to funding has been challenging for some developers as investors either do not fully understand the sector or have been hesitant to invest in gaming companies, the report said.
All game developers interviewed in the report are self-funded, indicating a lack of investor support.
Most developers (65 per cent) have never tried to seek investment. The most common reason was not being ready to pitch their games.
“While local investors are backing up tech start-ups, they do not seem to have found the right entry point for gaming, mainly because there are few companies with proven track records or effective business plans,” the report said.
Ms Harma said: “The report shines a much-needed light on the opportunities and challenges ahead.
“One of our first tasks at Nine66 has been to truly understand the background and nature of the Saudi landscape so that we can focus on improving the needs and priorities that will foster a world-class development community."
The size of the Mena gaming market is projected to increase 19 per cent to more than $5 billion by 2025 from 2019, according to a June report by the consultancy RedSeer.
Saudi Arabia, the Arab world’s biggest economy, wants to become one of the world's major gaming centres.
In February, MBC Group, the biggest broadcaster in Mena, formed a joint venture with Neom, the $500 billion high-tech mega-city being built in the kingdom, to set up the first AAA games development studio in the region.
A month earlier, PIF launched Savvy Gaming Group to strengthen its position in the sector.
In September, Savvy Games unveiled its new investment strategy. It plans to invest 142 billion riyals ($38 billion) across four programmes, each with specific objectives, the Saudi Press Agency reported.
Under the strategy, 250 games companies will be established in the kingdom, which will create 39,000 jobs, and raise the sector’s gross domestic product contribution to 50 billion riyals by 2030.