The Kingdom of Saudi Arabia has been aiming to diversify its economy away from oil and foster cultural vibrancy by investing in various sectors as part of the Saudi Vision 2030 initiative. Esports, a highly popular yet historically less lucrative field, presents a unique opportunity for Saudi Arabia to position itself at the forefront of youth entertainment, with greater potential for success and fewer competitors than in its previous efforts to break into traditional sports industries. 

The rise of the online gaming economy 

Betting on a presently relatively unprofitable but wildly popular field serves as a risky venture that has strong potential to pay off substantially in the future. In addition to fiscal advantages, top-down control over the traditionally grassroots industry of esports would provide a strong soft-power resource tapping into a large and growing young audience with which they would be able to shape the cultural narrative surrounding their country with little pushback. These Saudi investment initiatives follow a multi-pronged approach to centralize and co-opt the esports industry at every level, from competition to organization and distribution, effectively granting Riyadh full control of the industry.  

Esports has historically had very small profit margins, with major teams and tournament organisers relying on limited advertising revenue, primarily provided by esports-focused sports betting sites and small competitive gaming-focused services. Tournament operators do not have access to broadcast revenue due to relying on free streaming services for distribution, completely removing the largest income source for traditional sports. This places esports as a prime industry for a single well-funded entity to disrupt, with such an entity being able to effectively centralize the entire industry around itself and be able to reach a vast and enthusiastic core audience for a fraction of what it would take to replicate in more established entertainment industries. While Riyadh isn’t the only party vying for control over this industry, it is by far the largest and is competing with firms with limited interest in the industry as opposed to specific esports communities. 

Esports as an investment & Saudi’s stake in the game 

The Savvy Games Group (SGG) was established in 2021 by the Saudi Public Investment Fund as part of the Crown Prince’s Saudi Vision 2030 initiative for economic and cultural diversification. Through this subsidiary, the PIF has been purchasing significant amounts of shares in high-profile game development firms and acquiring others entirely, with the acquisition of mobile gaming giant Scopely for $4.9 billion being the most notable. Along with the broader games industry investment push, the Savvy Games Group has taken a strong interest in the esports industry. ESL Gaming, the longest-running esports event organiser, and FACEIT, the most popular tournament hosting platform, were both acquired by SGG for a reported sum of $1.5 billion despite historical combined yearly revenue for these companies being in the $100 million per annum ballpark, thus heavily anticipating explosive growth in the coming years or suitably valuable soft benefits. 

Levelling up soft power: the fragmented influence on esports fans 

The Esports industry is inherently fragmented because esports fans generally being fans of a particular game rather than esports as a whole–there is much less crossover between interests than traditional sports fans. Riyadh has undergone significant efforts to place itself at the centre of the esports landscape, organizing events such as the Esports World Cup in Riyadh in 2024 featuring tournaments for 24 different esports directly funded by the Public Investment Fund (PIF). An esports event of this unprecedented scale encapsulates the Saudi strategy of top-down control through sheer volume of investment. Of note is the Saudi partnership with the International Olympic Committee for the first planned Olympic Esports Games in 2027, with this collaboration underscoring the IOC’s recognition of both Saudi and Esports as a significant and growing force in the world of international competition and its potential for profitability.   

Saudi initiatives also extend to competing in esports themselves. Team Falcons is at the forefront of the overt Saudi astroturfing project to manufacture Riyadh’s image as an esports superpower, which can be amplified by leveraging ESL and FACEIT as the main distribution methods of esports events to place Saudi projects and teams front and centre. Funded by Riyadh, Team Falcons has entered every major esport by enticing high-profile players through high salaries and transfer bonuses to create “super teams” meant to dominate, with varying degrees of success. When not initially successful, Team Falcons teams are afforded much more time and financial resources than any existing esports organization could provide, essentially allowing them to brute-force their way to the top.   This approach offers Saudi Arabia the most cost-effective way to maximize global visibility, allowing Riyadh to shape its international image more effectively than traditional sports investments, which have yielded mixed results. 

The esports industry presents many opportunities and challenges for any single entity attempting to enter it from the top down. Attempts have been made in the past to centralize and inject large amounts of money into this industry by outside parties in the past, which have ended in disappointing returns for investors and greatly harmed whatever esports communities involved themselves with these projects, as censorship and corporatization would drive away existing fans and fail to create new ones. The most high-profile example of this is Blizzard Entertainment’s Overwatch League for the eponymous game Overwatch, which secured television broadcast deals and major sponsorships from companies of the calibre of Coca-Cola and Kellog’s in 2018.However, the league collapsed in 2023 with extensive litigation due to this shutdown involving cancelling contracts with these sponsors and broadcasters among many others. This event killed any corporate or broadcaster interest in the broader Esports scene to this day. While the PIF does not have the same priorities as previous investors due to it being a robust sovereign fund that could absorb the potential losses of this investment underperforming, it does place the field at risk of another corporate squeeze that could collapse the entire industry. 

The future of esports under Saudi influence 

Economic incentives to control esports are not compelling on their own, with future profitability being difficult to ascertain, so one must look beyond them to guess at Riyadh’s intentions for an esports industry under their control. The Saudis have been accused of “sportswashing” their national image before the international community, seeking to hide moral failures within their regime through involvement in popular sports. This has only found limited success, as traditional sports are an extremely lucrative industry with existing, well-funded centralized structures that can assert themselves and push back against the Saudi narrative. Control of esports would let Riyadh jump this hurdle, giving the Saudis access to a very valuable soft power resource with a young, rapidly growing global audience. 

Aaron Jauregui is a software engineer at Canonical and holds a Bachelor of Advanced Computing degree from the Australian National University. Aaron is an active participant in the esports community and utilises his technical expertise to analyse the intersection of technology and rise of competitive gaming as a global industry.  

This article is published under a Creative Commons License and may be republished with attribution.