Why did Saudi Arabia just spend billions on a video games company?
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Why did Saudi Arabia decide to spend $55 billion on Electronic Arts?
This is The
Guardian.
Today, Saudi Arabia splurges billions on a video games company. Saudi Arabia's Crown Prince Mohammed bin Salman is known for many things. The war in Yemen, allegedly ordering the murder of a journalist, the mass arrests of his own citizens. But there's something else you might not know about him. Apparently, he really loves video games. Rumour has it that his favourite games are League of Legends and Age of Empires. Which is where you literally build empires. Of course.
I don't think we should downplay the fact that he is a gamer. And I think that is important because not only did it make him passionate, but it also made him knowledgeable about the sector.
And this might help explain a multi-billion dollar deal announced this month, which will see Saudi Arabia become a major investor in one of the world's biggest games companies.
Electronic Arts, or EA. The deal finally got done. The EA Sports business has officially gone private. It's been bought out by those investors, including Saudi Arabia's Public Investment Fund. We'll have a look at what that means.
So what's really behind this deal? From The Guardian, I'm Annie Kelly. Today on Focus, why are authoritarian regimes so into video games? Keith Stewart, you are an author and you're a journalist who writes about video games for The Guardian. As someone who obviously knows the industry inside and out, can you just remind listeners who maybe aren't gamers themselves, and I am including myself in this, just, you know, how big an industry is this? How popular and lucrative is
gaming? Oh my goodness, it is gigantic. So there are rough estimates that the industry globally every year makes around $200 to $350 billion. Good grief. So if we compare that to maybe the film industry and we combine film box office with sales of DVDs and Blu-rays, that comes to usually around about $110 to $115 billion a year. So the games industry is possibly double that. It's an enormous industry. I
mean, that's wild. And how many people do we know play games? What's the percentage of the population?
We can only ever make rough estimates, but most of the companies that do this kind of statistical analysis in the industry reckon it's probably around 3.5 billion people play video games on
a regular
basis. And a lot of those people might not think of themselves as gamers, but they might be playing puzzle games on their New York Times or Guardian website, or they might be playing Candy Crush on their phones. So they're technically gamers, even if they don't acknowledge it. So, you know, at least a third to maybe even a half of people on the planet playing video games.
How big is the global video‑games market and why does it matter to investors?
The value it has to countries is enormous. Like it brings hundreds of millions into the UK economy, hundreds of millions into the US and China and the other big games producing nations.
And you know, some of these gaming companies are real household names by now, aren't they? They're brands that are known by multiple generations of the same families. We're here today to talk about one of these really big companies in this space, Electronic Arts or EA. So I was just wondering if you could tell me, you know, how big are they and what kind of a part do they play in the industry?
Electronic arts are actually one of the key instigators of the video game industry as we know it. They were formed in 1982. And their model at the time was kind of inspired by United Artists and the film industry where lots of film creators got together and made a studio that they wanted to represent the art and culture of films rather than commerce. And electronic arts was very much kind of based around that. principal. The founder, Trip Hawkins, was really interested in portraying video games as an art form rather than just something that you put kids in front of to keep them quiet for
an hour.
Last year, their revenue was $7.5 billion, which is quite
a
respectable figure. And this is considering that the video game industry has had some significant problems over the last couple of years. They had lots of famous games, obviously the FIFA franchise.
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Chapters
8 chapters
1
Why did Saudi Arabia decide to spend $55 billion on Electronic Arts?
0:00–3:19
2
How big is the global video‑games market and why does it matter to investors?
3:19–5:55
3
What is Electronic Arts’ history and why is it such a strategic target?
5:55–9:15
4
How is the $55 billion leveraged buy‑out of EA structured and who are the key players?
9:15–12:17
5
What are Saudi Arabia’s soft‑power goals behind buying EA and its sports franchises?
12:17–14:54
6
How has Saudi Arabia already been investing in the gaming and esports sectors?
14:54–18:38
7
What cultural and political risks arise from Saudi ownership of games like The Sims and EA Sports?
18:38–23:11
8
How are other authoritarian states using video games for geopolitical influence?
23:11–27:45