The kingdom is currently diversifying its economy away from oil and turning to new opportunities, such as gaming and Web3.
Saudi Arabia has ramped up its economic diversification efforts driven by its ambitious Vision 2030.
In a bid to diversify its economy away from a dependence on oil, the kingdom has embraced emerging technologies, such as blockchain and artificial intelligence (AI), and tapped into booming markets like gaming.
But while the country has yet to leave a significant mark in the global game and AI development, the ripples of its investments in the gaming sector could extend far beyond — at least, that’s what Web3 experts say.
“Based on our work and communications that we have, Saudi [Arabia] is very, very interested in Web3,” Animoca Brands co-founder Yat Siu told Cointelegraph.
“I think Saudi [Arabia] understands the principle that Web3 gaming or blockchain gaming — the one that we actually prove the owner assets — is going to be the future of gaming.”
Thanks to the interest of its young, tech-savvy population, Saudi Arabia, along with the United Arab Emirates, is driving the growth of the Middle East’s gaming market. According to a Boston Consulting Group report, the kingdom represents 45% of the sector in the region, with a value of more than $1.8 billion. It also boasts one of the largest game revenues in the area, according to game content studio Allcorrect.
In 2017, the kingdom established the Saudi Esports Federation to regulate and develop the country’s gaming industry.
Bloomberg reported in April that Saudi Arabia, through its Public Investment Fund, invested $38 billion in the sector as it looks to become a global gaming hub.
Although the Saudi government understands the “high-level concept” of Web3, its potential, and how it can align with esports — where teams can own stakes in games they play — Siu said it remains unclear what its integrations to gaming would be due to the absence of clear rules on cryptocurrency and other virtual assets:
“Cryptocurrency is something that is still to be explored. It’s being investigated. I think [Saudi Arabia is] quite forward about how to deal with it. But they haven’t come up with anything yet.”
“In places like Hong Kong, Japan and the UAE, there’s much more clarity as to what you can do with crypto and Web3. You can map out a strategy,” Siu added.
While it remains to be seen what Saudi Arabia’s Web3 gaming applications would look like, Siu noted that the kingdom is looking at other markets and learning.
“That’s why they’re talking to us. Because they want to know what the best practices are and how they can learn,” the executive explained. “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.”
“You can feel sort of the desire to have progress and to lead in Saudi Arabia. I think that’s kind of unique,” Siu added.
While pushback from the traditional gaming community and developers persists, Siu claims a successful conversion of users into Web3, whether it’s in gaming or not, should come with financial literacy.
“You can’t really be a true Web3 user if you don’t have at least a certain level of financial literacy that goes above and beyond having a bank account,” Siu said.
The Animoca co-founder claimed that most Web2 users are not capital investors because they’re mostly labor people compared to Web3 people who understand investing.
“What we found is that the path to Web3 mass adoption isn’t giving [Web2 users] just a wallet. That’s actually the easiest part. The harder part is how to make them aware that what they now have is an asset that has potential value, and it could do things and has different network effects that need to be maintained as real value.”
Meanwhile, Mythical Games CEO John Linden told Cointelegraph that he already sees Web3 adoption in the gaming sector, albeit at a slower pace.
“I think we’re seeing some [adoption] already. We’re seeing people that they’re introducing the [Web3] concept. They do understand the concept of buying and selling assets,” Linden said.
The gaming industry veteran pointed out that Web3 should enhance user experience and not just give them the means to generate income:
“[Web3 gaming developers] have to focus on new game models. When you start doing that, it introduces creator economy, digital supply chain, ownership of guilds and the ability to come up with your own theory within the game itself.”
“Those are principles I think gamers will attach to,” Linden added.
The Mythical Games CEO projects that the Web3 gaming segment could onboard 50 to 100 million players in the next two years, with their own titles targeting 10 million by the end of 2023.