Saubi Arabia buying up EA shares is a bigger deal than you think
The Saudi Arabian Public Investment Fund has increased the number of EA shares it owns by approximately 55%. This is the latest in a continuing streak of international investment by the nation’s wealth fund, which has been pouring more and more money into the Western and Eastern gaming industry for years.
This information was first reported by looking for alpha, which found that the national fund had bought a significant number of additional shares in EA in the last quarter of 2022. The fund now owns 24.81 million EA shares. With EA currently having 276 million shares outstanding as of May this year, Saudi Arabia is inching closer to a 10% ownership of the company.
When it comes to the Saudi Public Investment Fund, the money just keeps coming. As of April, the country had invested more than $38 billion in the industry. according to Bloomberg, distributed in investments in studies, electronic sports and other diverse projects. This includes many studios you’ll probably know about, including Capcom and SNK! The latter has more than 96% of its shares owned by Saudi Arabia, a fact that the studio believes will not affect the games it makes.
So why is Saudi Arabia so interested in gaming? In a completely macro sense, the country is trying to diversify its income from oil, a source of income that allowed it to become one of the richest countries in the world. All this was exposed in the Saudi Vision 2030 Project. As such, the Public Investment Fund has acquired shares in numerous massive companies, including Uber, Boeing, Bank of America, and yes… a selection of video game companies. Big names too!
But as to why you are specifically investing in gaming, you have to look at the countries growing tech sector. Hoping to become a major tech player in the MENA region, the country has gone so far as to start construction on a tech city: Neom. With an estimated cost of more than $500 billion, the goal is basically to create a Silicon Valley of the region. That means a high-tech presence, which includes the gaming industry. With both Western and Eastern companies typically ignoring the region in the past, and with a young population eager to enter the gaming space both professionally and for pleasure, Saudi Arabia is wasting money and making it the gamer. more important there.
It is for this reason that it has also invested heavily in esports, a sub-industry that has lately fallen into an economic winter due to the global recession and an industry-wide reliance on venture capital investment that is drying up due to returns. mediocre prosecutors. In the minds of Saudi investors (and many investors globally), esports is the way to reach the younger generation. Kids love CSGO knives, Red Bull and playing with their friends in Fortnite, right?
However, there is a darker side to all of this. Neom, this technological megacity that may very well be the jewel in the crown of countries in the coming years, it is being built on land that has been home to the Huwaitat tribe according to The Guardian. The Saudi government is reportedly evicting people from their homes, if they live within the area in which Neom is being built.
Then there are allegations of sports laundering, a term that refers to a form of propaganda achieved through the purchase and/or holding of team sporting events. you may have seen this emerge as a major issue in the world of golfand similar claims were raised in Qatar during the world cup.
If people are having fun watching football, golf, and maybe even League of Legends or Rocket League, they aren’t thinking about nasty things like widespread human rights abuses, the murder of journalists, and the ongoing war in Yemen. . Especially at a time when investment from the usual suspects is drying up, the lure of a rich country willing to foot the bill is surely tempting despite these red flags. Pushback from players and influencers has managed to delay some deals in the past, but Saudi Arabia shows no sign of waning its ambitions to become a major player in the industry. Similar offers will surely continue in the future.
So yes, Saudi Arabia is investing in EAs heavily in an attempt to diversify their revenue. You should expect to see similar stories pop up in the next few years. A stake close to 10% is nothing to scoff at, especially when you consider how massive EA is, as well as Saudi Arabia’s Public Investment Fund, other fingers firmly placed in various gaming pie.
What do you think of all this? What company will Saudi Arabia invest in next, and where does it stand on the ethical conundrum at the heart of this issue?