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Brian Ward, CEO of Savvy Games Group, has taken the lead in helping Saudi Arabia’s attempt to move beyond its reputation for human rights abuses and being an oil nation to being a visionary technology leader bankrolling the game industry.
This tension between the past and the future is ever-present in Saudi Arabia, where companies like Savvy Games Group — owned by the Public Investment Fund of Saudi Arabia — are trying to change perceptions through games while remaining cognizant of the kingdom’s appetite for measured change.
Ward believes people have to see the change happening in society on the ground in Saudi Arabia in order to understand how quickly things can happen under the new regime that is mostly supportive of the game industry. There is perhaps no other country where the clash between tradition and modernity — something my world history professor talked about so long ago — is so stark.
The change and the deals have been happening at a dizzying rate. It’s like a big game of Monopoly, and the playing board of the game industry is set up on a global scale.
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Savvy Games Group acquired Los Angeles-based mobile game publisher Scopely for $4.9 billion in April, and it bought a $1 billion stake in Sweden-based game publisher Embracer Group. It also acquired ESL Gaming and FaceIt in esports to create ESL FaceIt Group. And the Saudis have also bought stakes in Capcom, Nexon and Nintendo this year, building on stakes it acquired previously in Activision Blizzard, Take-Two Interactive and Electronic Arts. That has made the gaming world take notice.
Savvy’s big stakeholder, the Public Investment Fund (run by the Saudi Arabian government) is flush with cash from the oil boom and it has set aside $37.8 billion to build up Saudi Arabia’s presence in the global games industry – with $13.3 billion of that earmarked for acquiring a major publisher. That’s more money than anyone around the world is earmarking for gaming investments and acquisitions.
It’s a sign that the government is serious about weaning the country from oil. The Saudi Vision 2030 is a government program launched by the Kingdom of Saudi Arabia to diversify economically, socially and culturally, in line with the vision of bin Salman. The Saudis announced it in 2016, but the country remained about 74% dependent on oil exports as of 2021. The country understands that the oil economy could dry up in the next 27 years, and it has to have other jobs ready — and they are trickling in so far.
For the games industry, this influx of Saudi money into games is not without controversy, as the Saudi funding is controversial and the company has only been at it since November 2021. Critics say that the regime of Mohammed bin Salman Al Saud doesn’t respect human rights. As crown prince and prime minister, he was connected to the killing of Washington Post journalist Jamal Khashoggi in 2018 via alleged killers who had ties to the crown prince.
Accepting funding from the Saudis under such a regime represents a moral quandary, as the Saudis have become a big source of funding in their efforts to diversify beyond their dependence on oil, which the world is in the process of moving away from in pursuit of clean energy. Saudi defenders say that all major sources of money in the world are tainted in some way, and accepting money from the Saudis does not mean you have to accept interference from the Saudis or embrace their agenda.
Ward pointed out in an interview with GamesBeat that the country is undergoing change when it comes to women’s rights and other freedoms, and it is serious about creating transformative results when it comes to diversity and new jobs associated with game studios.
Still, given the fact that being gay is illegal in Saudi Arabia, The Last of Us Part 2 was banned in the country for having gay women in its leading roles. Ward has said the company aims to become a great games company and is not tied to a specific political agenda and he is not there for an “image makeover project.” While change may be happening, it’s not happening fast enough for critics.
I caught up with Ward in an interview at the company’s booth at the Gamescom expo in Cologne, Germany.
Here’s an edited transcript of our interview.
Brian Ward: Sorry I wasn’t able to meet before.
GamesBeat: You guys were busy buying somebody.
Brian Ward: That was a hectic time.
GamesBeat: How are things going since then? Especially with acquiring Scopely.
Ward: Very good. We’re obviously delighted to have closed the transaction with Scopely. Their Monopoly Go product is fantastic. It’s doing very well. The people are working super hard on integration. They’ve been a pleasure to work with in that regard. So far we’re delighted.
GamesBeat: On things like esports, I wonder how much focus you have on MENA (Middle East/North Africa) versus the wider world.
Ward: We’re pretty globally focused. The live attendance on all the majors this year has been up. The viewership, the hours watched have been up. There have been some hiccups in the sector generally with publisher spend on esports this year, but overall the business has been doing great. We’re focused on MENA, of course. The EFG folks are in the middle of executing on Gamers8. There are plans for that tournament to be bigger and more robust next year. There’s a lot going on. The conference next week will be a good one.
GamesBeat: Is that a first for them, or have they been doing them before?
Ward: This is the second version of Next World Forum. Gamers8 started during COVID as Gamers Without Borders, for charity relief. This is the second version of both the G8 and the NWF.
GamesBeat: Is there a feeling of progress as you come out of COVID? Esports had to take some huge hits during that time. It transformed a lot as well.
Ward: I think we’re beyond COVID. The capital markets, the economic situation last year and coming into this year, caused some publishers to pull back on their esports spend, which affected a couple of pieces of the business, but overall attendance is up. Viewership is up. There seems to be as much engagement as there was before from a fan point of view.
GamesBeat: For Saudi gamers and Saudi esports fans, how would you describe the market?
Ward: When we invested in EFG, it seemed that coming out of COVID – that was nearly two years ago now – it was an inflection point where engagement had changed or accelerated because of COVID, and there would be some consolidation in esports. There would be some dynamics that would sort themselves out, whether it’s the relationship between players and teams and publishers and where the power base really sits. A lot of that still has to get sorted out. Team economics are not universally great.
GamesBeat: The game industry itself, where do you see the trends developing?
Ward: We’re super excited, especially on the heels of closing Scopely. We’re excited about mobile-first cross-platform opportunities. Scopely is also making great progress in direct payments. That’s an interesting economic lever for us. For Savvy, we now have a great anchor in mobile. We’re looking forward to figuring out how we can facilitate, like we’re doing with Scopely, some partners in PC and console.
GamesBeat: You’re still looking around for opportunities?
Ward: This year we haven’t been looking at as many opportunities. We’ve been focused internally on making sure we have the right leadership team in place. Scopely is a big acquisition. The integration is fairly involved. We’re focused on making sure that we’re putting some investment professionals in place, so we don’t rely on external advisors as much. We’re focused internally on our structure and governance and operating model, more so than looking for additional investments.
GamesBeat: Were there some things that made you think that the period in which you were buying assets there – was that fortuitous in some ways? When there are downturns in the economy, prices for acquisitions are lower. It’s a good time to buy. Did that matter to you? If you have strategic imperatives to move into a business fast, you probably don’t care as much about the economic situation.
Ward: That’s true. It’s very difficult to time the market. It’s been fortuitous that valuations have come off a bit and those people with capital to employ have been in a market where it’s been more difficult for people to find as many varied sources of capital as there were two years ago. That’s advantageous to us. But we haven’t pulled on that lever very hard. This year we’ve been focused more internally.
GamesBeat: For games it seems like there was a lot of pressure on valuations, after some very big excitement in 2021. Everybody thought that usage was going to go up forever. Is there a level-setting that you see that still reflects favorable trends?
Ward: Overall, I think the trends are super favorable for the long term. We don’t get too excited about this year versus last year or 2022 versus COVID. Long term we think this is probably the best entertainment business to be in. Yes, there’s some sort of reconciliation. Figuring out where usage and engagement will land after COVID. But that will settle.
GamesBeat: I listened to Take-Two’s earnings call. It was interesting to hear Strauss Zelnick answer a question about games and Hollywood, all the synergy happening right now. Someone asked why they aren’t doing more of that. He said, “We came from movies. It was a very hard business. There were many failures.” For years everyone saw that the big opportunity was in games, so why would they go back in a big way? Although he did say that they’re working on a Borderlands movie and some other projects. They’re participating in that. But he felt like it was a no-brainer that gaming is still the more interesting business.
Ward: It’s kind of the flip side of the trend from 20 years ago, where movies became games. Now it’s games becoming movies.
GamesBeat: Do you think about that as an opportunity as well?
Ward: Not yet. We’re not focused on that at the moment. I still view us as a startup. We have maybe a couple hundred people in Saudi Arabia and 4,000 worldwide. We still have a lot of things to do in terms of building a games business. We have a pretty good esports business.
GamesBeat: Are you focused on building a larger local staff?
Ward: Very much so. The studio, which is now renamed Steer Studios, has done a super job. They now have about 80 people on two or three mobile teams, and 80% of them are Saudis. We’re highly focused and highly incentivized against building out the local ecosystem.
GamesBeat: How does that mix in with the Scopely business? Is it alongside Scopely?
Ward: Scopely is very interested in the MENA region and expanding beyond their traditional markets. We expect that they’ll be looking at opportunities in MENA and Saudi specifically.
GamesBeat: How do you look back after some years on the issues around human rights that people have had with Saudi Arabia, whether or not they want to do business there? How is that turning out?
Ward: My standard answer to this, or part of my standard answer, is for folks to take the time to understand what’s going on there and how far this social transformation and economic diversification project is coming in the last five years. A tremendous amount of progress has been made toward Vision 2030 and all of this transformation. It’s exciting. We’re super happy to be part of it, part of this long-term journey.
GamesBeat: Is there some sense of mission attached to that connected to Savvy?
Ward: This is what really attracted me to this position and got me to move to Riyadh. I understood a bit about Vision 2030 and the economic diversification, social transformation aspect. But once I saw, once I visited for the first time and saw what that meant on the ground, I could see that this is kind of like China 35 years ago. The pace of change is astonishing. It seemed to be a unique opportunity to take part in something worthwhile. That’s why I went there, and I think a lot of the people we’ve hired and who have moved there are inspired by the same opportunity.
GamesBeat: The flow of money into games, do you have any general observations about that? Is there some history to that flow? I just remember that when I joined VentureBeat 15 years ago, I thought I would stop covering games. There was a focus on venture capital for (tech), and there was (virtually) no venture capital for games. I thought I’d end up covering tech more than games. But here we are 15 years later and GamesBeat is very big.
Ward: You would know far more about this, but the level of engagement and the fan base and reach now of games, for those of us who’ve been doing this almost 30 years – I remember thinking, “Wouldn’t it be great if we were eventually bigger than the music industry?” Now we’re bigger than those guys and the movies and somebody else put together. When you think about 3.2 billion people on the planet playing games on a regular basis, it’s astonishing.
GamesBeat: Saudi Arabia is also into building new cities and new structures. Do you have some sort of dream for that? How would building cities with games in mind happen?
Ward: As you know, Vision 2030 encompasses all of those things. The giga-projects at NEOM and Qiddiya, which have significant – I mean, Qiddiya is essentially an entertainment-based city being built just west of Riyadh. We have a big part to play in the game section of that city. NEOM has a big games component to it as well. All these things are tied together under not only Vision 2030, but the national strategy for games and esports. Saudi, to my knowledge, is the only country on the planet that’s announced a national strategy backed by the government for our sector. All of these things are interconnected in some pretty major ways.
GamesBeat: The one hiccup that we’ve seen lately is whether or not you were going to do the investment in Embracer. I don’t know how you would signal to the rest of the market what that means. That particular deal is one that maybe wasn’t going to happen. Is there any change in strategy?
Ward: We don’t have a change in our strategy. Our strategy has been consistent for the last two years. When we made our initial significant investment in Embracer, we had great faith in the leadership and the long-term strategic vision for Embracer. That hasn’t changed either. We’re very happy with our investment in Embracer over the long term.
GamesBeat: The interest in doing large deals, is that still part of what you want?
Ward: I think Scopely is the sixth-largest M&A deal in our industry’s history. We’re still interested, and we’ve deployed maybe 25% of the capital designed to be allocated to us over the long term. We still have a significant part of our mandate to fulfill.
GamesBeat: Do you have an interest in making sure you’re not perceived as investing at valuations that are too high, or throwing too much money at your targets?
Ward: We employ a lot of excellent and well-paid advisors to give us good opinions on these things. We trust the advice they give us. We think we’ve done deals that have been very beneficial to Saudi and fair to both parties. If we looked at the transaction value on Scopely today we’d be very pleased with how that’s working out, given our mission. It’s long term. People probably thought Amazon paying a billion dollars for Twitch was crazy at the time.
GamesBeat: The good old days, when prices were low. For women in Saudi Arabia, do you feel like there are real opportunities for change for them?
Ward: This is the thing that surprised me. I didn’t have any personal knowledge or experience of the region. To see firsthand what was going on there in relation to opportunities for women, just generally speaking, was a real eye-opener. In a studio, which has nearly 80 people so far – this is a development studio. Almost 30% of that workforce are women. At any studio anywhere in the world that would be a pretty remarkable number. There’s an equally high percentage of women in the Saudi workforce generally. It’s exciting. That’s one thing I’m really happy about.
When the Scopely guys came to visit, around the time of the closing, or just prior to the closing, we had a lunch for Scopely leadership and all of the local women employees in Saudi. The Scopely folks said they were blown away by the level of energy, enthusiasm, knowledge, and professionalism in that group. One of them said he wished he could bottle up that energy and take it back to California.
GamesBeat: U.S. money has been going all over the world for decades. I suppose you could put an interpretation on that money. When China was also in the position of being able to finance a lot of the world, I think people wondered if they have a philosophy that also gets exported along with those investments in all those companies. Do they run these companies in a Chinese way? What is your own view as far as the next entity that really has the opportunity to invest all over the world? Is there a philosophy you’d like to export, but also maybe one that stays at home in Saudi Arabia as well?
Ward: There isn’t a philosophy, other than we’ve always intended to be and have been consistent in communicating this – we’ve been given carte blanche to operate like a true games company, consistent with the values of our industry, what people consider to be important. That’s been true. That was one thing I was pretty alive to when I first thought about the opportunity, because to your point, Chinese companies tend to operate – not all of them, but they tend to operate in a Chinese way. Western companies operate in a western way. But I can’t say there’s any defining set of values around being a Saudi games company. We’re just trying to be a games company, period.
GamesBeat: One interesting data point, maybe, that I was thinking about now. I wrote a profile on this guy named Amir Satvat who works for Amazon. He’s kind of a quant. During the big layoffs that started happening in the fall, he started scraping all the game industry sites for job openings. He aggregated them into a spreadsheet on LinkedIn and made it available for everyone to look at. Here’s all the jobs. He came up with 732 companies and 14,000 jobs that are open. The fun part was that he’s noticed that for the last six weeks or so, that number has been steady. He sees that as a stabilization happening over a relatively short amount of time. Before that openings were tending to go down. Does that mean anything to you, that the collective number of jobs in the game industry is starting to go back up?
Ward: I’m not an expert by any stretch. I would anticipate that most of the post-COVID reconciliation of how many users there are, the engagement level and so forth has sorted itself out in terms of how many people we need to meet demand. We should start to be back to business as usual. That’s what I would expect.
GamesBeat: There’s AI as well. Nobody knows what that’s going to mean. I talked to a professor a few weeks ago who was saying that we could have a 10% boost to world GDP by 2032 with all the AI advances happening now. That’s $11 trillion. That’s happening. He thinks there’s going to be more change in the next 10 years from AI than in the last 150 years of industrial revolution. One of his guys looked at a typical 2,000-person enterprise and found that jobs in that enterprise would probably be done with one-third to two-thirds fewer people. All these things seem to suggest we’re about to be in another time of change. We thought there was change already in the last few decades, but there’s more coming.
Ward: But isn’t that one of the best things about our industry, the constant change and development and evolution of it? I think AI is going to add a lot of jobs. There will be shifting in who does what. Did we need less artists when SpeedTree was introduced? No, we needed more. More tools mean more stuff gets done. That’s the way I view it.
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