Navigating the Sands of Opportunity: Learnings from my Saudi Arabian Journey in the Games Business

Introduction

In February 2022, a random meeting in the airplane flying back to Amsterdam from PGC in London, turned into an offer to build a publishing operation in Riyadh, Saudi Arabia.

No stranger to the MENA region after having worked and travelled the region quite a bit in the past 15 years, this sounded like an intriguing challenge. Projects I worked on over the years included advisory roles in Dubai, strategy advisory in Qatar, and many speaking engagements at events in Oman, Jordan and beyond.

These experiences instilled a curiosity and interest in the region in me and allowed me to understand the potential MENA has for our industry. However, my path never led me to Saudi Arabia before and it seemed daunting based on the little I knew about the country and its people.

Forget everything you know and start with a blank slate.

That was my mantra when I came here to an initial visit in June 2022. The reality is that there is barely any insight available online about what is happening in daily life and business in the Kingdom. It’s hard to figure this out remotely, and the best and only way is to come here and build your opinion on the spot.

This article tries to shed some real light on what it means to live and work in the KSA and give you my views of what the business environment looks like, and the opportunities in the games industry that are arising here. For anyone thinking of doing business here or even moving, this might be helpful and get you started easier.

I do not want to look at this under the aspect of politics, but rather my personal experience of living and working here as a foreigner. There is much about Saudi that we don’t know, and have skewed views on, and the massive positive shifts that happened here in society, women’s rights, and general opportunities for the Saudi people. This, as well as the aspects that are still very different from the Western World deserve a book of its own.

In addition, it’s worth mentioning that I am writing this with me being a man, and I am aware that women can have a different experience and impressions.

This is a longer text, because I want to share as much potentially interesting as possible, so I structured it into different topics. It can only be a snapshot and starting point though, and there is much more in the details.

Saudi Arabia and its economy in a nutshell

Saudi Arabia's economy, ranked in the top 20 largest economies by GDP, and the world's largest oil exporter, holds a pivotal position in the global business landscape, significantly influencing energy markets and economic trends worldwide.

Its economy is characterized by its substantial oil reserves, which have historically provided the backbone for its wealth, fiscal budget, and international trade relations. In recent years, under its ambitious Vision 2030 plan, Saudi Arabia is actively working towards diversifying its economy beyond oil, targeting sectors such as tourism, entertainment, finance, and technology to reduce its oil dependency and develop a more sustainable and diversified economic base.

This diversification strategy includes attracting foreign investment, developing public-private partnerships, and enhancing the role of small and medium-sized enterprises (SMEs).

The Kingdom is keen on attracting foreign investment and has implemented reforms to improve the ease of doing business, including streamlined regulatory procedures and enhanced legal frameworks.

The economic environment is characterized by substantial government investment in infrastructure projects, such as NEOM and other giga projects, and initiatives to develop the non-oil economy, including renewable energy, mining, and logistics. However, businesses navigating this market face considerations related to cultural norms, labor laws, and the need to adapt to a rapidly evolving regulatory landscape.

Billions of dollars are earmarked to build the ecosystem for games, with large amounts already invested in strategic placements like ESL, Scopely and others. The primary focus, at least right now, revolves around these big strategic deployments of capital and e-sports. Navigating what is there and what not is not trivial, and again, things move and change quickly here.

?Law and Business

Saudi Arabia is a Muslim country, with its customs and daily life deeply influenced by Islam. The laws are based on Sharia law, the Islamic legal system derived from the Quran and Hadith, governing not only religious rituals but also aspects of daily life, including finance, marriage, and criminal justice. Unlike Western laws, which are based on secular legal principles and often shaped by legislative processes and judicial precedents, Sharia law integrates religious teachings with legal norms, leading to significant differences in legal frameworks, particularly in areas related to personal status, inheritance, and the role of religion in public life.

In business, Sharia law influences commercial practices by emphasizing ethical transactions, prohibiting interest (riba) in financial dealings, and mandating the sharing of risk and profit in investments, principles that differ markedly from Western models which allow for interest-based lending and prioritize shareholder profit. Furthermore, Sharia-compliant businesses must adhere to specific ethical guidelines, including avoiding investments in industries like alcohol and gambling, showcasing a fundamental difference in the approach to business ethics and investment criteria compared to Western legal systems.

There are more and more clear regulations put in place, which makes it easier to navigate this realm, but changes are fast, sometimes random, and not always documented in English. You must be on top of this and get local help from a legal firm or consulting company.

?Culture and Etiquette

Saudi culture is heavily influenced by Islam. Like everywhere in the Arabic world people in general are very friendly, open, curious, and interested, and genuinely want to show you their country and what they do.

Like everywhere else, respect for the Saudi traditions, culture and religion goes a long way, and is the basis for opening opportunities for you here. No, you don’t have to wear a Thobe (the long, flowing garment that men wear) or an Abaya (the over garment women typically wear), but you can! It is not considered cultural appropriation, but rather taken as a respectful nod to Saudi traditions and will spark positive conversations.

Addressing individuals by their formal title followed by their surname shows respect and is a good practice until you are invited to use their first name. When addressing a member of the Saudi royal family, it is important to adhere to formalities and show respect. Use the title "Your Royal Highness" followed by their specific title (e.g., "Prince" or "Princess") and their full name upon your first reference, and you may use just "Your Royal Highness" in subsequent references. Always wait for them to extend their hand first if a handshake is appropriate, and maintain a respectful posture, avoiding overly casual language or behavior to honor their status and the cultural context.

Business casual is entirely OK in everyday life situations and meetings, long sleeves and pants or longer dresses show respect. Men’s shorts are casual, rarely worn in public, and not acceptable in a work setting. If you are entering government buildings and meetings a more formal attire is appropriate, and if you are attending official functions dress like you would in similar situations in Europe or the US.

It is important to know that you should never offer a handshake to a woman here by yourself but let them initiate it if they chose to do so. It will get you and your opposite in an awkward situation if you do. Instead, you can place your right hand over your heart and express your respect in that way. In addition, respect personal space, especially with women, and in general be mindful and read the room if you are not sure.

Networking and Building Relationships

Forging business relationships is personal here. You won’t be able to get anything substantial off the ground remotely. People genuinely want to get to know you, and build relationships over several meetings, before entering into any kind of deal. This builds trust, so I can only encourage you to visit any of the countless events going on here for our industry, investors, and the digital world in general. Naming them all would be too much, but LEAP, which is happening in Riyadh in March is one of the best starts you can have, providing a good meeting system to start from scratch.

Being honest and straight forward is important, and really a key to any business dealings in my books anyway. So, this fundamental rule applies as always.

Saudi Arabia thinks big. The plans they have and the initiatives they are pushing forward might sound like utopia, but you need to understand that the horizon of the initiatives here are far reaching, and fully supported by the government and its vast resources. Keep an open mind, and try to think big, but do not overvalue what you can bring to the table for the sake of keeping up appearances.

The Games Market and State of the Industry

As of 2023 the games market in Saudi Arabia was one of the fastest growing markets in the Middle East, with the country's video game industry valued at approximately $1 billion.

With over 65% of the population under the age of 30 and a high smartphone penetration rate exceeding 70%, the kingdom has become a hotspot for mobile gaming, contributing significantly to the sector's growth.

Government initiatives, such as the Saudi Arabian Federation for Electronic and Intellectual Sports' plans to invest billions into the gaming sector, further highlight the country's commitment to becoming a global gaming hub.

The goal is not just to build the industry and ecosystem but to provide opportunities for the local population and job opportunities for young Saudis.

The games industry is at an early stage here, with roughly 60 teams creating games, at an ever-growing pace. These range from solo developers to incorporated companies with 20 staff and beyond (among them the highly talented teams of Spoilz Studio and TakaHouse ). However, the pace the ecosystem is progressing is not comparable to anywhere else in the world, as a massive number of programs and subsidies is igniting a wave of young developers and teams to enter the industry. Saying that, it will take time to see the first AA or AAA title coming out of KSA.

Education in games, as a vital aspect of a developing ecosystem is still in its beginning, with a heavy focus on incubator and accelerator programs. Efforts to strengthen the educational landscape for games on an academic level are under way (with DigiPen Institute of Technology being at the forefront of this in many ways), but I am not aware of any specific programs.

However, initiatives like the ones driven by Nine66 and their Nine66 World are focusing on cooperating with large international players in the space, bringing their learning solutions and expertise to the audience here.

Setting up a business in the KSA

Setting up a company in Saudi Arabia involves several steps for both local and foreign investors. Types of entities range from a limited liability company (LLC) to a joint stock company or a branch of a foreign company (with multiple options here again, which can have an impact on your access to local subsidies and grant programs).

The next step involves obtaining the necessary approvals and licenses, starting with the Ministry of Investment for foreign investors, which includes the issuance of an investment license.

Following this, you must register with the Saudi Arabian General Investment Authority (SAGIA), the Ministry of Commerce, and other relevant authorities for specific industry licenses. Additionally, registering with the Chamber of Commerce, the Ministry of Labor, and the General Organization for Social Insurance is essential to ensure compliance with labor laws and social security requirements.

The process is made easier through the Saudi government's efforts to attract investment, including the introduction of online platforms like the 'Merass' system, which simplifies the registration and licensing procedures for businesses.

However, I highly recommend you get local help and contacts, as these will make it a lot easier to navigate the process and accelerate it significantly. As mentioned, doing this remotely is not advised, you need to be here, also because a lot of documentation must be hand signed in originals.

Tax implications need to be considered. Personal income tax is zero, but there is a corporate tax, as well as withholding tax and VAT, depending on the type of business and transaction. Get local help with these intricate and complex matters.

Talent and Staff

There is a lot of local talent here. Young Saudi people, extremely passionate about games, wanting to make their mark and build a career in the industry. Largely though, they do not have a lot of experience in the industry, but their drive and willingness to learn is immense.

If you are thinking of setting up a studio or publishing operation here, you must know that your top senior staff probably will come from outside the Kingdom for now. Finding that combination of experience, willingness to go on a Saudi adventure, and cultural fit is not easy, and you should not underestimate the time it takes to find that talent.

Remote work is not unknown here. I am a big believe in providing that freedom to employees, but would always encourage a mix, especially when starting up something new (in that case skewing towards on location first). This will help with the good amount of mentoring and training for the younger employees that just enter the industry. It is important to not underestimate this effort.

Job openings for games will get you hundreds of applications, not always qualified, so make sure you utilize a good HR system (my go to solution is always BambooHR ), and make sure to filter diligently. Personally, I found extremely talented and hardworking local talent, that exceeded our expectations in every way.

LinkedIn is a good way to look for talent, although there are local job portals as well that can be helpful. HR talent, also experienced, is easily found in the country, so hiring someone local will give you the insight into this topic easily.

For highly specialized functions like data analytics where you want at least some games experience we utilized recruiting agencies active in the region, which will be helpful and cut down on the time it takes to hire. Of course they come with a cost. They also will be helpful in tapping into talent in other parts of the region like Jordan and Egypt where there is a developing games industry landscape with experienced talent.

Investment Landscape

A massive amount of capital is going into the games industry ecosystem in Saudi. Games is at the forefront of many initiatives and investments the government is supporting.

However, finding that investment and these programs, especially for foreign companies is not straight forward.

There is a healthy ecosystem of Venture Capital that has been around for years. These firms and funds are interested in games, but their willingness to take bigger bets and risks is just developing, and also not satisfied with the relatively young industry here.

Private equity is equally showing interest, and there are some companies that are funded independently of the government like Sandsoft which shows significant traction and investment.

We saw a need to provide capital on the very early stages of a game companies journey, besides the official programs in place, and founded the Riyadh Angel Syndicate in 2023. We want to provide opportunities for global and local startups to access capital and knowledge at a very early stage, and at the same time provide investment opportunities for local Saudi investors. This will enable them to take smaller bets in an industry they are not fully familiar with, expose them to the structure of deals in our industry, and hopefully increase their willingness to take bigger bets in games businesses in the future.

There are many grant programs and subsidies in place, and this sector is growing and developing continuously. Navigating those programs is hard and requires help. Repeating myself, the best way to dig into this topic is to come here, meet people and start conversations. It’s also hard to give detailed advice here, because a lot of deals are custom, depending on the size and stage of the company, and not necessarily public. The Ministry of Investment (MISA), the Ministry of Culture, Ministry of Communications and Information Technology and Ministry of Commerce are good starting points. The Misk Foundation, National Development Fund and others are also worth mentioning.

Network with foreigners and companies that are here already to get the inside coop, and also talk to your Embassy in the Kingdom for contacts, introductions and information on the programs available.

As a side note, if you are looking for investment from Saudi, you will often find that private capital wants to be deployed in the country, not elsewhere, unless it is on a highly strategic and high value level like the investments from the PIF (Public Investment Fund).

Looking Ahead

The market for games will continue to grow in the Kingdom. Driven by the young population, a general passion for interactive digital experiences, and the heavy focus of the government initiatives in long term initiatives building the games industry in the country, this should remain a growing market for the years to come.

In essence:

There are massive opportunities in games that are being supported on a large scale, including capital, and the KSA is supporting investment from the outside as well as companies setting up shop here.

The landscape is not easy to navigate, and you will need to spend time here to dig into it.

I can only encourage you to have a look and figure out if this is the place to be for you. I believe now is the time, since there is a massive wave building, and you can still be one of the early ships riding it.

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Let me know if this was helpful, and please share your own experiences and insights, so we can all learn a little bit more about this unique country and what it offers for our industry.