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The Saudi wealth fund-owned Savvy Games Group acquired US-based games developer Scopely for $4.9bn in the kingdom’s latest gaming investment.
The acquisition announced on Wednesday is still subject to regulatory approval. Savvy, which is owned by the sovereign Public Investment Fund and chaired by Crown Prince Mohammed bin Salman, has a war chest of more than $30bn.
The country is trying to reduce its reliance on oil revenues, investing in everything from electric-vehicle production to tourism and gaming. It has set out a target to become one of the world’s main gaming hubs, with the industry expected to contribute 1 per cent to its gross domestic product by 2030.
The acquisition of Scopely is Savvy’s third major investment this year, after it acquired esports platform Vindex and a stake in esports agency VSPO. Los Angeles-based Scopely was founded in 2011 and publishes free-to-play, social games such as Yahtzee With Buddies, Stumble Guys and Marvel Strike Force.
Savvy chief executive Brian Ward said: “As an autonomous operating company under the Savvy umbrella, Scopely will benefit from Savvy’s long-term patient financial backing to deliver on its strategy to grow and deepen existing franchises.”
Saudi Arabia’s gaming strategy is being bankrolled and led by the $600bn Public Investment Fund, which has been channelling a petrodollar surplus into giga-projects. It has also invested heavily in gaming equities, including a 5 per cent stake in Nintendo and about $3bn in US gaming companies, including Activision Blizzard.
Those investments raised speculation that they were influenced by the preferences of Prince Mohammed, the country’s day-to-day ruler and chair of PIF. But officials have said they were sound and profitable investments for the fund.
In an interview in February, the head of the Saudi Esports Federation, Prince Faisal bin Bandar, said a majority of Saudis identified as gamers.
“Seventy per cent of the country is under the age of 35 . . . and 68 per cent of the country consider themselves gamers,” he said. “The major aim in everything we’re doing is how we become an additive part of the global industry.”
Andrew Uerkwitz, analyst at Jefferies, suggested that PIF was trying to “emulate” the strategy of Tencent, the gaming giant in China that has acquired majority ownership in some private studios and also purchased small stakes across the sector, including in Take Two Interactive, Ubisoft and Activision.
PIF has also, in recent years, purchased stakes in Ubisoft, EA, Take Two, Nintendo and Activision. Scopely, Uerkwitz said, marked PIF’s first all-out acquisition attempt in the gaming world.
“This is their first big step into mobile gaming, as part of their broader strategy laid out a year ago,” he said.
“Gaming in the Middle East is really big,” he added. “They want to own potential upside from that — they want to own the large player base in the Middle East and they want to bring jobs and awareness.”
M&A volumes in the global gaming sector have spiked since the onset of Covid-19 as the number of gamers boomed. New policies such as Apple’s privacy push have also enhanced the value of scale for advertising purposes. Dealogic, a data provider, shows an average of $62bn of M&A deals in the past three years, almost four times the $16bn average in the three years from 2017 to 2019.
Global esports revenues stood at $1.3bn last year, up from $996mn in 2020, according to figures compiled by Statista. They are projected to increase to $1.86bn in 2025.
Additional reporting by Patrick McGee in San Francisco
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