This week, NEOM investment fund (NIF), the investment arm of Saudi Arabia's futuristic megacity The Line, and Animoca Brands announced a partnership to push forward Web3 initiatives in the oil-producing country.
The $50 million commitment to purchase Animoca shares as convertible notes and shares on the secondary market also includes plans to build a hub in The Line for the blockchain company and its subsidiaries.
With the gaming industry rising to become the top earner of the entertainment sector, the investment advances the Kingdom's economic diversification strategy. It also helps set the stage for it to become a global gaming powerhouse.
Oil is not a long-term solution
When oil prices began to plunge a decade ago, Saudi Arabia's ruling elite drew an ambitious plan for the country to maintain its prosperity by diversifying its economy.
In 2016 Vision 2030 was announced, and since then the government has been promoting private entrepreneurship, reducing the cost of business, and improving inclusion laws. Saudi sovereign funds have also been making billion and million-dollar investments in new economic sectors of activity, such as renewable energy, minerals, tourism, and tech.
The $220 billion global gaming market is an industry in which the Kingdom has been keen to invest. In an interview regarding Aminoca Brands' plans for Saudi Arabia, co-founder Yat Siu noted that "there are very few places in the world that we've seen such a hunger and desire to sort of be at the cutting edge."
Earlier this year, the Public Investment Fund committed $38 billion to the video-gaming industry, fueling Crown Prince Mohammed bin Salman's ambitions to develop 30 Saudi top-tier games before 2030.
NIF first tried to venture into the gaming sector in a 2020 partnership with the League of Legends EMEA Championship (LEC). However, the plans fell through due to backlash from the community over the country's human rights record.
A new narrative for Saudi Arabia
In erecting the 170km straight line of 500 meters high skyscrapers that The Line will become, Saudi Arabia wants to build a sustainable, tech-centred megacity with global impact. While the foundations are currently being excavated on (or more accurately in) the ground, the NEOM fund plans the future of the megacity's daily activities.
The Saudi Arabian gaming industry's annual revenue is $1.8 billion, with almost 60% of its young, tech-savvy, and wealthy population playing games regularly. Due to the size of the gaming industry at home and abroad, the memorandum of understanding now signed with Aminoca is a sound strategic economic decision.
In line with previous partnerships, the agreement also helps to define the Middle Eastern Kingdom as a cultural powerhouse in the gaming industry, creating a narrative for the country that goes beyond oil.
As the IMF noted when analysing the country's economic diversification efforts: Away from oil, Saudi Arabia thrives.