Saudi Arabia gaming consumption to hit $6.8bn by 2030

Gaming consumption in Saudi Arabia, the Arab world's largest economy, is projected to reach $6.8 billion by 2030, according to a Boston Consulting Group report.

Along with eSports, the sector – a growing powerhouse with about three billion active participants globally – is poised to generate substantial revenue, high-quality jobs and various reputational benefits in the kingdom, where consumption is expected to grow at a compound annual rate of 22 per cent through 2030 from $959 million in 2020, the consultancy said.

“From a Saudi standpoint, these growth projections undoubtedly bode well for the local gaming and eSports community. Despite the kingdom being a relatively recent entrant to this space, the industry is vibrant and fast-growing, nevertheless," said Povilas Joniskis, a partner at BCG.

Gaming has become big business, with new-age technologies providing both an opportunity to reach a wider audience and develop new titles to cater to consumer demand. The latest report from gaming data provider Newzoo showed that the industry is projected to generate total revenues of about $180bn in 2021, up 1.4 per cent from 2020.

Console and PC platforms are expected to see slight declines, but the mobile segment is likely to record another growth year, with revenues up 7.3 per cent year on year to $93.2bn, accounting for 52 per cent of the overall market, the group said.

The eSports segment, meanwhile, had its biggest year in 2021, with a viewership of 465.1 million people, up 6.7 per cent year on year. Raising investments remains a vital part of the business model for teams and organisations, BCG said.

Revenue for eSports is expected to jump almost 50 per cent to $1.62bn in 2024 from more than $1.08bn last year, according to Statista.

A milestone for eSports was when FaZe Clan announced in October that it would go public through a special purpose acquisition company, or Spac, at a $1bn valuation, the first time an eSports organisation raised capital from the public market, making it the first eSports unicorn.

Even venture capital funds, which traditionally stay away from the gaming segment, are taking notice. The top 15 VC funds dedicated to gaming now have almost $2.8bn in assets under management, according to December data from advisory company Games One.

And in a sign of a heated battle in the industry, Microsoft last week announced it was buying Call of Duty maker Activision Blizzard in a $68.7bn all-cash deal, making it the third-largest gaming company in the world.

Saudi Arabia is currently home to 23.5 million gaming enthusiasts, which is about 67 per cent of its population, according to the BCG report. Moreover, 90 per cent of gamers – about 21.1 million – already play eSports titles on a semi-pro or amateur basis, with about 100 professional eSports players pursuing this as a full-time career.

But while there is much potential in the Saudi gaming industry, a number of challenges await because the ecosystem is in an early development stage compared with other international markets, BCG said.

These include a lack of funding to compete full time, scarcity of local competition, no clear pathway for gamers to become professional and social stigma associated with choosing a career in gaming and eSports.

"Passionate gamers are primarily powering its growth and popularity at present, and it is more than feasible for them to embark on full-time careers and become involved on the international stage. Yet first, key barriers concerning aspiring Saudi competitors and professionals must be overcome," Mr Joniskis said.

This, however, provides an opportunity for the government to capitalise on the widespread popularity for gaming and translate the current high level of consumption intensity to a corresponding production intensity.

“When examining gaming and eSports in Saudi Arabia, we see interest in the industry growing among the government and less traditional business players alike,” Mr Joniskis said.

“By focusing on areas for improvement and approving the necessary investments across specific segments, the kingdom’s economy, reputation, jobs market and talent pool – all stand to reap the rewards.“

BCG highlighted the role of the gaming and eSports industry in Riyadh's future-focused Vision 2030 development programme, and the government is taking notice, throwing more support to organisations.

Riyadh-based Manga Productions, a part of the Misk Foundation that was founded by Saudi Crown Prince Mohammed bin Salman, provides funding and financial support, as well participating in education and talent attraction efforts.

The Ministry of Communications and Information Technology and the DigiPen Institute of Technology, a game design academy, recently teamed up to launch the Game Changers programme, designed to provide “unique career pathways for entrepreneurs in the Saudi game industry” and increase the number of independent game company start-ups.