Saudi Arabia’s acquisition of Electronic Arts (EA) will force the global gaming industry to confront how power, capital and culture converge.
The $55 billion purchase is not the only noteworthy aspect of the deal. The buyer is the elephant in the room that must be addressed.
Saudi Arabia’s Public Investment Fund (PIF) is not renowned for seeking short-term returns. They always play the long game, regardless of which sector they enter.
Their heavy investment into video game development is unlikely to generate as much political debate as their previous forays into football, golf and boxing.
However, the takeover is a significant shift for the global gaming industry, as it changes who now shapes its future.
Saudi Takeover is a Challenge to Gaming’s Big Guns
Gaming power previously rested in the hands of publicly listed publishers who answered to shareholders or with major conglomerates geared towards securing quarterly earnings.
Saudi Arabia will not play by the same rules. With no short-term market pressure, EA will invest in long-term platforms, new technology and global infrastructure.
That long-term focus is a double-edged sword. On the one hand, it can allow more creative freedom and ambition. However, it also raises questions about where priorities lie in decision-making. EA controls some of the most popular licensed properties in entertainment.
Conversations about how these games represent leagues, athletes or social themes will now be analysed from a geopolitical angle. The industry has never previously had to deal with this.
The deal shows just how highly gaming is valued economically. What many people used to consider an adolescent pastime activity is now one of the most profitable global entertainment sectors.
Saudi Arabia’s interest reflects that valuation. The Middle Eastern nation has been diversifying its economy to mitigate the long-term projected decline in oil revenues.
Experts have forecast that the country will reopen conversations around gaming’s sister industry, iGaming, as part of its diversification strategy.
Citizens already visit trusted comparison platforms to find online casinos in Saudi Arabia. The laws of the land frown on gambling, but that has not deterred interest in casino games. It is a similar story with associated verticals such as sports betting.
EA will serve as a gateway into eSports, streaming, merchandising and live events. The Kingdom’s keen interest in competitive gaming is particularly worth noting, particularly given the lucrative crossover into the betting industry.
Cities and governments are constantly battling to influence the industry by vying to host tournaments, teams and leagues. Having a publisher whose games dominate competitive gaming is a considerable advantage for Saudi Arabia in the battle for influence.
They can synchronise game design, competitive formats and event hosting, reshaping the eSports calendar worldwide and raising the stakes for rivals in other regions.
The Saudis Must Not Ignore Public Optics
While EA already dominates the top end of the market food chain, Saudi investment has the potential to shake up the global gaming sector.
Smaller studios and independent publishers may be at the mercy of a wealthy owner who does not care about the effect of their actions on the bottom line. Licensing negotiations, revenue splits and distribution decisions could become more centralised, limiting experimentation.
Regulators must ensure that this new behemoth does not stifle competition, especially in sports gaming, where EA is already a dominant force. Public optics are extremely important. Gaming companies have traditionally been neutral – a clean slate without any attachments to politics.
Unfortunately, that position will be hard to maintain the more people discuss this deal. Developers, players and partners will need to respond to ethical questions they never previously had to address.
EA also has its own reputation to maintain when audiences become more aware of who funds the content they consume. Despite the concerns, the deal offers several exciting positives.
The capital injection will spur innovation in artificial intelligence-powered gameplay, immersive worlds and cross-platform engagement. The deal can help EA launch the next phase of interactive entertainment and set the standard for the rest of the industry.
It will ultimately give developers access to better tools, larger budgets and more ambitious projects.
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