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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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Can E-Sports Help Gulf Countries Diversify Away From Oil?

  • Saudi Arabia and Abu Dhabi seek to become global centres for competitive video games.
  • Growing interest in e-sports dovetails with ongoing economic diversification strategies.
  • The Gulf seized opportunities to expand the sport sector during the Covid-19 pandemic.
  • International collaboration provides an avenue to nurture local e-sports talent.
E-sports

As Gulf countries implement plans to diversify their economies and create jobs, they are increasingly investing in the growing industry around competitive video games known as electronic sports (e-sports).

In February the gaming unit of Saudi Arabia’s Public Investment Fund, Savvy Games Group, purchased a $265m stake in China’s Tencent Holdings-backed e-sports company VSPO, becoming its largest equity holder.

Savvy Games Group also increased its share of Japanese gaming giant Nintendo to 8.3%, after purchasing a 5% position in the company last year, making it the largest outside shareholder. Last year it bought a $1bn stake in Swedish gaming company Embracer Group, the equivalent of 8.1% of the company’s shares.

These significant deals speak to the Kingdom’s ambitions to become a global centre for gaming and e-sports. Last year Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud launched the National Gaming and Esports Strategy, in line with the country’s Vision 2030, which aims to create 39,000 new jobs in the sector and contribute $13.3bn to GDP.

Abu Dhabi is similarly delving into the sector through its initiative AD Gaming. In February it signed a partnership agreement with Chinese game publishing and e-sports company SAWA Group, which specialises in the localisation of global video games, and is set to bring its established game library to Arabic speakers across MENA through its partnership with AD Gaming.

The MENA gaming market is expected to be worth $5bn by 2025.

Attracting global audiences

The region’s foray into e-sports is part of a concerted effort to invest in sport and entertainment by creating unique content and staging high-profile events that are attractive to a global audience and encourage international visitors, in turn supporting the tourism and hospitality sectors.

The cancellation of sporting events in Europe and Asia during the Covid-19 pandemic offered Gulf countries an opening to host prestigious international athletic competitions.

Bahrain, Saudi Arabia and the UAE all hosted events – from Formula 1 (F1) racing to the Ultimate Fighting Championship and Indian Premier League cricket – while Qatar hosted the 2022 FIFA World Cup as well as an F1 race in 2021; another is planned for October this year.

The pandemic also prompted Gulf countries to launch new sporting ventures, including the LIV Golf tour, an eight-tournament breakaway from the US Professional Golfers’ Association backed by the Public Investment Fund. LIV executives believe that its innovative team concept could turn a profit in as little as five years.

E-sports aims for a similar path of growth, with Crown Prince Mohammed bin Salman citing “providing world-class entertainment” as an avowed goal of the Kingdom’s strategy for the sector, which is popular with the region’s young, internet-savvy generations. More than 20m people are expected to be part of the country’s gaming community by 2025.

In November Dubai launched the inaugural Dubai Esports Festival (DEF), a 12-day event that featured tournaments in popular games such as Minecraft and Honor of Kings. The event convened leading gamers, celebrities and industry professionals, competing for $2m in total prize money. DEF helped Dubai welcome a record 14.36m international visitors in 2022.

DEF also saw the announcement that the Dubai Multi Commodities Centre (DMCC), the UAE’s largest free-trade zone, would launch the DMCC Gaming Centre to support the growing e-sports industry. The DMCC is already home to 50 gaming companies, from game developers and producers to e-sports teams and tournament organisers, but the Gaming Centre will provide greater space for collaboration and host regular games and tournaments.

The Qatar Esports Federation, in partnership with Doha-headquartered Quest Esports opened a similar gaming facility in November to coincide with the World Cup. The Gaming District in downtown Doha seeks to build on the momentum of holding five local network tournaments as well as online matches last year for popular games including Fortnite, CS: GO, PUBG Mobile, Dota 2 and FIFA.

Building synergies and local talent

Collaboration and education are at the core of Gulf countries’ push into e-sports.

AD Gaming has partnered with US company Unity Technologies, whose software has been used to create more than 70% of the top-1000 mobile games and over 60% of all augmented reality and virtual reality content available today.

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AD Gaming has also established a Train the Trainer programme and offers standalone courses that have trained more than 50 professors and 500 students across universities and other academics institutions in the UAE to develop the next generation of game developers, players and professionals to steward the industry.

Many such training initiatives in the Gulf predate the pandemic. The Saudi Esports Federation established an e-sports academy to train professional players and develop the industry in 2017.

Bahrain has also been investing in game development through local accelerators such as Flat6Labs, which partnered with gaming community Unreal Bahrain to offer a bootcamp to train local talent, while Bahrain Polytechnic offers a game development course.

By Oxford Business Group

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