Saudi Arabia's gaming industry received a boost with new funding worth $488 million, as the kingdom pushes forward in positioning itself as a global leader in the industry.
The financing is being provided by the Saudi Esports Federation, National Development Fund and the Social Development Bank. It targets both the gaming and e-sports sectors, Rawan Al Butairi, the federation's senior director of international affairs, said at the Leap technology exhibition in Riyadh on Wednesday.
“Our aspirations are bold and promises are big, and we matched this by delivering exceptional results in 2022,” Ms Al Butairi said. “We shall do so again in 2023.”
Saudi Arabia's Ministry of Media and the Centre for Government Communication also launched an apprenticeship programme, partnering with 30 companies for training opportunities in 2023, while developer Playhera announced a $100 million cloud gaming platform to support the industry.
Also at Leap, Unity Technologies, the US software development company, announced the first Unity Academy in the Middle East and Africa.
The academy “marks a new era to make Saudi Arabia the leading gaming sector by 2030”, Faris Alsaqabi, Saudi Arabia's Deputy Minister of Future Jobs and Capabilities at the Ministry of Communications and Information Technology, said at Leap.
“This will be driven by the creativity and energy of citizens and gamers, who are at the heart of this strategy.”
The gaming industry in Saudi Arabia, the Arab world's biggest economy, is poised to grow 250 per cent by 2030, with e-sports leading the growth, a recent study from YouGov found.
The growth would mean that its contribution to Saudi Arabia's gross domestic product will have surged about 50 times by 2030 compared with 2022, the London-based market research company said.
Gaming consumption in the kingdom is projected to hit $6.8 billion by 2030, growing at a compound annual rate of 22 per cent, the Boston Consulting Group said in a recent report.
The number of gaming start-ups in Saudi Arabia, meanwhile, almost doubled to 24 in 2022 from 13 last year, driven by incubation programmes, a report from game developer support system Nine66 said in December.
Gaming has become a big business globally, with new technology providing both an opportunity to reach a wider audience and develop new titles to cater to consumer demand.
Revenue in the global games market is projected to grow nearly 15 per cent to $211.2 billion by 2025 from an estimated $184.4 billion in 2022, the latest data by research company Newzoo showed.
Mobile games alone accounted for $92.2 billion, which is about half of the overall figure.
Our aspirations are bold and promises are big, and we matched this by delivering exceptional results in 2022 — we shall do so again in 2023
Rawan Al Butairi,
senior director of international affairs at the Saudi Esports Federation
The Middle East is last among the five regions surveyed by Newzoo, with revenue pegged at $6.8 billion last year, accounting for 6.6 per cent of the global figure. However, it still posted the highest annual growth of 4 per cent in 2022.
The Middle East — along with Africa, the Asia-Pacific and Latin America — will drive the growth in players over the next several years, Newzoo said.
Meanwhile, the global e-sports market is expected to grow to $5.48 billion by 2029, from $1.44 billion in 2022, at a compound annual rate of 21 per cent, data from Fortune Business Insights show.
In September, Saudi Crown Prince Mohammed bin Salman unveiled the National Gaming and Esports Strategy, outlining a comprehensive investment programme for the industry, with the goal of making the kingdom a global gaming centre by 2030.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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.”
