Saudi Arabia Invests $38B in Blockchain Gaming and Web3 to Diversify Economy

Saudi Arabia has intensified efforts to diversify its economy under the ambitious Vision 2030 initiative, moving away from reliance on oil revenues.

In a push to diversify the economy, the kingdom has embraced emerging technologies like blockchain and artificial intelligence (AI), while tapping into booming markets such as electronic gaming.

While the nation has yet to make a significant mark in global game development and AI, the current wave of investment in the gaming sector could surpass expectations, according to Web3 experts.

Yat Siu, co-founder of Animoca Brands, remarked, "Based on our work and communications, Saudi Arabia is very interested in Web3."

With the kingdom's collaborations with entities like The Sandbox and even Animoca, Siu sees Saudi Arabia diving into the new iteration of the Internet. He stated:

"I think Saudi Arabia understands the principles of Web3 gaming—something we've proven asset ownership will be the future of gaming."

Benefiting from a young population keen on technology, Saudi Arabia, along with the United Arab Emirates (UAE), is driving the gaming market's growth in the Middle East. According to a Boston Consulting Group report, the kingdom accounts for 45% of the region's gaming market, valued at over $1.8 billion, proudly standing as one of the largest gaming revenue generators in the region, per studio All Correct.

In 2017, the kingdom established the Saudi Esports Federation to manage and develop the country's gaming industry.

Bloomberg reported in April that Saudi Arabia, through the Public Investment Fund, invested $38 billion in this sector, positioning itself potentially as a global gaming hub.

While Saudi Arabia grasps the "high-level concept" of Web3 and its potential alignment with esports—where teams can own stakes in the games they play—Siu noted uncertainties remain due to a lack of clear rules regarding cryptocurrencies and other virtual assets:

"Cryptocurrency is still being explored. I think Saudi Arabia is optimistic about how to address this issue. But they haven't figured it out yet." In places like Hong Kong, Japan, and the UAE, there's more clarity on what you can do with Cryptocurrency and Web3. You can map out a strategy.

While it remains to be seen how Saudi Arabia's Web3 games will look, Siu pointed out that the kingdom is exploring different markets and learning.

"That's why they're talking to us. Because they want to know what best practices are and how they can learn," the CEO explained. "There are very few places in the world where we've seen such desire and desire to achieve such a leading position."

"You may feel the desire to make progress and lead in Saudi Arabia. I think it's unique," added Siu.

How can gaming drive the adoption of Web3?
While opposition from traditional gaming communities and developers continues, Siu asserted that successfully transitioning users to Web3, whether in gaming or not, must be accompanied by financial literacy.

Siu said: "You really can't become a true Web3 user if you don't have at least a certain level of financial literacy beyond the ability to have a bank account."

Gamers in Saudi Arabia. Source: Allcorrect game content studio
Animoca's co-founder affirmed that most Web2 users are not investors because they are primarily laborers rather than knowledgeable investors in Web3.

"What we see is the path to widespread adoption of Web3 not just giving Web2 users a wallet. The hardest part is how to make them realize what they currently have is a potentially valuable asset and it can do many things as well as maintaining various network effects."

Meanwhile, Mythical Games CEO John Linden believes he's seen the application of Web3 in gaming, albeit at a slower pace. I think we're seeing some good signs. We see people introducing the concept of Web3. They understand the concept of buying and selling assets.

Veterans in the gaming industry have pointed out that Web3 should enhance user experiences rather than just provide them with a means to generate income:

"Web3 game developers must focus on new gaming models. When you start doing that, it will introduce a creative economy, digital supply chain, guild ownership rights, and the ability to present your own theories in the game itself."
Linden added, "Those are principles I think gamers will follow.

Mythical Games' CEO predicts that the Web3 gaming segment could attract 50 to 100 million players in the next two years, with their own titles targeting 10 million by the end of 2023.