A record buyout of Electronic Arts deepens Saudi Arabia’s soft power push into gaming

A consortium led by Saudi Arabia’s Public Investment Fund has agreed to acquire video game maker Electronic Arts for $55 billion. It is the biggest ever leveraged buyout.

So what? The deal is part of a multibillion-dollar spending spree that has seen the kingdom invest heavily in sports, entertainment and tourism. These investments are aimed at

• diversifying its economy away from oil under its Vision 2030 reforms;
• improving the international image of a regime marred by human rights abuses; and
• boosting the domestic popularity of its de facto leader, Mohammed bin Salman.
  

Several pies. Saudi Arabia is now a major player in global sports, having acquired Newcastle United, started the LIV Golf franchise, and won the right to host the 2034 men’s football World Cup. Last week it launched Riviera Content, with plans to finance and produce films in the kingdom, as well as a target to open 600 museums in the next five years.

Front and centre. But gaming is where it dominates. Saudi Arabia hosts the annual Esports World Cup with a $70 million prize pot that rivals Wimbledon. With stakes in Nintendo, Take-Two Interactive and Activision Blizzard, the kingdom’s PIF already owned 40 per cent of the global market before the EA deal, part of a pledge to invest $38 billion in gaming by 2030.

Comparison. This dwarfs the £305 million deal to acquire Newcastle and the roughly $5 billion it has spent on LIV Golf since 2021. Whereas those deals drew widespread accusations of ‘sportswashing’, Saudi Arabia’s push into gaming has received less scrutiny.

Big picture. Qiddiya City, a tourism megaproject being built outside the capital Riyadh, aims to attract 10 million visitors a year to its esports and gaming district. It is a key plank of the kingdom’s national gaming strategy, under which the kingdom will “incubate” 250 video game companies that it hopes will contribute $13.3 billion to the economy.

Logical step. PIF already owned 10 per cent of EA, one of the world’s biggest gaming companies, which makes EA Sports FC (formerly FIFA), The Sims and Battlefield. Increasing this stake will help its strategy by bringing considerable technical expertise to the kingdom.

Bedfellows. PIF’s partners in the EA deal are Affinity Partners, owned by Donald Trump’s son-in-law Jared Kushner, and private equity firm Silver Lake.

Ties that bind. With Kushner’s involvement, the takeover of EA draws Saudi Arabia closer to the Trump administration. It was announced one day after the Trump Organization, run by the US president’s children, sealed a deal to build a $1 billion ‘Trump Plaza’ in Jeddah.

Concerns. Some gamers worry that Saudi Arabia’s new part-ownership of EA will lead to the censorship of games featuring LGBTQ content. These include

• The Sims, one of the first mainstream games to feature same-sex romance;
• Dragon Age, which allows players to create transgender characters; and
• Apex Legends, a shooter with queer characters.

Laugh it off. The buildup to an international comedy festival in Riyadh will not have allayed these concerns, with contracts for performers reportedly including clauses that ban criticism of the Saudi royal family. One comedian disappeared from the line-up after he made a joke about the killing of journalist Jamal Khashoggi in Saudi Arabia’s Istanbul consulate in 2018.

Flipside. Saudi Arabia is making some efforts to modernise. In recent years it has diluted the powers of its religious police and allowed women to drive, but women still need male permission to marry and are legally required to breastfeed their children unless they are unable to do so.

Human rights abuses persist. The US state department’s most recent annual report on Saudi Arabia cited reports of

• torture;
• extrajudicial killings; and
• the use of counterterrorism laws to restrict free expression.

What’s more… a recent drop in oil prices has squeezed the finances of Saudi Arabia, which is running up huge debts to diversify its assets. The EA deal is another canary in the coal mine.