The fans flooded through the streets of Riyadh, Saudi Arabia, by the thousands, kept cool by mist machines in the 110-degree heat. A 30-foot-tall replica gold trophy towered over onlookers at the city’s center. For a moment, covered in beams of brightly colored light, a country defined by tradition looked futuristic.
It was the inaugural Esports World Cup, a coming-out party for Saudi Arabia’s growing video game industry. As part of its plan to diversify its economy from oil, the Saudi government has said it will invest $38 billion in video games by 2030 through its Public Investment Fund, known as the PIF, a wealth fund that manages $700 billion.
The wealth behind that commitment was on full display in Riyadh, the Saudi capital, in July, but the country’s influence in video games now extends far beyond its borders. In what has been a financially difficult year for the industry, which has seen mass layoffs, many of the world’s largest video game companies and influencers have quietly partnered with the oil-rich Saudis.
Through acquisitions, a company funded by the PIF called Savvy Games Group now owns 40% of the total esports market share, a spokesperson said. (Esports are video games played by professional gamers in competitive tournaments.) The PIF and its subsidiaries have spent roughly $6 billion buying up game companies and $14 billion on stock investments.
“They’ve used unlimited resources to pretty much make whatever they want to happen, happen,” said Rod Breslau, a gaming and esports analyst.
Some critics have labeled the investments “games washing,” an attempt to polish the country’s reputation and human rights abuses with entertainment and tourism, as it has been accused of doing with its professional golf and soccer leagues. Some gamers have denounced the country’s involvement and vowed to boycott its events. And it can be jarring for visitors to see women — some of them in elaborate costumes — working at a conference in a country where women’s rights have historically been, and continue to be, very restricted.
But as Saudi money becomes ubiquitous in the esports world, avoiding it has become increasingly difficult.
“We’ve gotten to the point where if you draw the line and say, ‘I’m not working for a Saudi-owned company’ or ‘I’m not going to Saudi Arabia,’ your career in esports would probably be very short lived,” said Parker Mackay, an esports broadcaster who resigned from his position on an awards panel in June after it partnered with a Saudi-funded organization.
Along with buying up game publishers and hosting extravagant esports tournaments, the Saudi kingdom is building a gaming city with its own esports district 30 miles west of Riyadh called Qiddiya. Its companies have partnered with video game giants such as Sony and Activision Blizzard, which is owned by Microsoft, and media companies such as Rolling Stone and CNN.
Leaders of Saudi gaming organizations have pushed back on criticism of the kingdom’s financial interest in gaming.
“Three years ago, I would have had my own prejudices as well, thinking about what Saudi is and what it is not,” said Ralf Reichert, CEO of the Esports World Cup Foundation. “Ultimately, everyone needs to judge it on their own, and I just invite people to come and see it.”
Once a country that effectively banned movie theaters and strictly restricted tourism, Saudi Arabia has poured wealth into sports and entertainment at a staggering rate. Notably, the 38-year-old Crown Prince Mohammed bin Salman is an avid gamer.
The PIF is heavily invested in publicly traded video game companies. Its stock portfolio includes a $3.4 billion investment in Electronic Arts, $1.7 billion in Take-Two Interactive and $5.2 billion in Nintendo, according to data from Nasdaq. Its 8.3% stake in Nintendo makes it the Japanese company’s largest outside investor, according to Japanese regulatory filings. The fund also had a $3.3 billion investment in Activision Blizzard before it was acquired by Microsoft.
In 2021, the PIF created Savvy Games Group to spearhead its planned $38 billion investment in the industry. The fund recruited Brian Ward, a former director at Electronic Arts and vice president at Activision Blizzard, to be the company’s CEO.
As part of the government’s plan to create 250 video game companies and 39,000 new jobs on Saudi soil, Savvy Games Group and other PIF-funded companies have recruited top game developer talent from the United States and Asia. In June, Saudi Arabia’s U.S. embassy launched an exchange program to connect young Saudi game developers with Americans.
Savvy Games Group has already acquired a number of key industry players, most notably Electronic Sports League, which is to esports what the PGA Tour is to golf, and Scopely, the game studio behind Monopoly Go. The company also acquired Faceit, a digital esports platform, combining it with its other esports properties into Electronic Sports League Faceit Group, or EFG.
In January, Activision Blizzard partnered with EFG to revive the esports circuit for its popular game Overwatch, which had shuttered a few months earlier.
In May, EFG provided funding for Rolling Stone to create a new gaming desk.
Rolling Stone did not respond to a request for comment.
In Riyadh at the Esports World Cup, gamers competed for a share of a $60 million prize pool, the largest for an event of its kind.
The tournament is meant to be “a lighthouse in the world sports calendar,” Reichert said.
The eight-week event was organized by the Esports World Cup Foundation, a Saudi nonprofit.
The foundation has leaned on big-name partnerships to spread its influence. In March, Sony became a founding partner of the tournament and is set to produce an Esports World Cup documentary. In June, Warner Bros. Discovery partnered with the foundation to stream the event on CNN. Hours before the tournament’s opening ceremony, two dozen of the most followed gaming influencers posted links to its livestream on social platform X with the hashtag #EWCPartner.
Some esports teams are trying to make a social statement while still accepting Saudi cash. Team Liquid, an esports team known for promoting diversity and inclusion in the sport, wore jerseys with a Pride logo during competition. Its leaders had mulled over what it meant to play in Riyadh in the weeks leading up to the tournament.
“Participating in a region of the world with a pretty egregious track record of human rights is difficult,” said team co-CEO Steve Arhancet. Arhancet, who is gay, said he took a trip to Riyadh on his own before deciding whether to compete in the tournament.
Some influencers tried to justify their participation to their fans on social media.
Joshua Howard, a sportscaster for the tournament, said his 10-day contract with the Esports World Cup will account for 20% to 30% of his annual earnings.
“When you see an opportunity come along that way, it’s really hard to say no, and I don’t begrudge anyone for saying no or being upset that I’m here,” Howard said.
This article originally appeared in The New York Times.
Get more business news by signing up for our Economy Now newsletter.