Saudi Arabia is accelerating plans to transform itself into a hub for gamers with its blockbuster deal to take Electronic Arts Inc. private.
In addition to an existing $5 billion equity stake it is rolling over into the new entity, the kingdom’s Public Investment Fund is providing more fresh capital than partners Silver Lake Management and Jared Kushner’s Affinity Partners to buy out the other public investors, according to people familiar with the matter.
That’s made it the largest contributor to the $36 billion in equity being put in to finance the deal, the people said, asking not to be identified discussing non-public information.
The transaction is the latest win for Saudi Arabia’s Crown Prince Mohammed bin Salman, a video-game fan who is partial to Microsoft Corp.’s He’s focused on gaming as part of a national strategy to provide tens of thousands of new jobs and diversify the kingdom’s economy away from oil.
Mohammed, who chairs Saudi Arabia’s Public Investment Fund, has already invested some $30 billion in the industry, according to market researcher Aldora. That includes building up a stake in Nintendo Co. and acquiring the publisher of the hit game .
The kingdom also constructed a sprawling city that’s home to four different gaming arenas as part of that effort.
“Their overarching strategy is to bring jobs to Saudi Arabia — that’s a generational move over the next 20 years,” said Michael Pachter, an analyst with Wedbush Securities Inc.
Electronic Arts, whose hits include the football franchise, the shooting series and the soccer game, “checks all those boxes,” Pachter said.
The Electronic Arts deal comes after the prince announced in May that he would boost investment in the US to $1 trillion in the coming years as part of a push to deepen trade ties between the kingdom and the world’s largest economy.
The company, based in Redwood City, California, earned $1.12 billion on sales of $7.46 billion in its latest fiscal year. A highly anticipated new game is set for an Oct. 10 release.
If consummated, the deal would be the largest leveraged buyout in history. JPMorgan Chase & Co. is providing $20 billion in debt financing.
Saudi Arabia first invested in Electronic Arts in 2021, when it acquired a $1.1 billion stake in the company. The kingdom bought more shares, bringing the value of its holding to $4.8 billion as of Sept. 26, according to data compiled by Bloomberg. The PIF’s portfolio also includes positions in gamemakers Embracer Group AB, Take-Two Interactive Software Inc. and Nexon Ltd.
The PIF has been shifting from minority stakes in gaming businesses to direct ownership. The prince founded Savvy Games Group four years ago, with the goal of building up the country’s gaming infrastructure. Savvy, owned by the PIF, started out making acquisition in esports, where professional gamers compete before fans both live and online.
In 2023, Savvy acquired mobile game maker Scopely for $4.9 billion. The timing was perfect as Scopely was just launching , which would go on to become a global hit. Earlier this year, Scopely paid $3.5 billion for the games business of Niantic, including the smash .
While those deals have made the kingdom a powerhouse in games played on mobile devices, the PIF lacked the same kind of presence in titles for consoles and personal computers.
Savvy Games Chief Executive Officer Brian Ward highlighted that gap in an August interview with Bloomberg News.
“There isn’t sort of an obvious solution there otherwise we would’ve already done something, but I think we can’t ignore that part of the market,” Ward said.
A close relationship with Savvy could be beneficial for Electronic Arts, which has made missteps in mobile, including what some analysts have viewed as a disappointing acquisition of Glu Mobile in 2021.
“It makes a lot of sense to have EA more closely aligned with the Saudi Arabian strategy to bring that expertise into the country and to make sure local developers can access it,” said George Osborn, who writes the Video Games Industry Memo newsletter.
The video-game business is far from a sure thing. Sales have been soft after the boom that came during the pandemic with so many people stuck at home. Electronic Art shares barely moved over the seven years prior to a runup that began this year.
The company has endured several rounds of layoffs and all but gutted one of its studios, BioWare, after a disappointing attempt to reboot its franchise.
Saudi’s Finances
A recent drop in oil prices has put pressure on Saudi Arabia’s finances. With its budget in deep deficit, the kingdom has turned to raising billions of dollars through bond sales in order to fund its ongoing economic transformation.
That’s what’s made the deepening bet on gaming all the more significant.
Sports are a key prong of Saudi Arabia’s strategy to diversify. The country invested in sports talent for teams, broadcasting rights and bids to host some of the world’s biggest soccer and golf events. A big stake in Electronic Arts could help the PIF build out technology supporting its sports ambitions.
The deal “makes sense with the PIF especially because we’ve see the Saudi Pro soccer league get some investment and make waves at a global scale,” says Andrew Marok, an analyst at Raymond James. “ naturally dovetails with an effort like that.”
The PIF has created the Qiddiya Esports and Gaming District, where it hopes to attract more than 10 million visitors a year by the end of the decade and incubate dozens of video game developers. Earlier this year, the International Olympic Committee announced the first edition of the Olympic Esports Games will be held in 2027 in Riyadh.
In July, the city hosted the second of its Esports World Cup competitions, where a record $70 million in prize money was handed out. A smiling Prince Mohammed was right on stage during the closing ceremonies, shaking hands with the winners.
