Saudi Arabia now owns 5.01% of Nintendo, making it the fifth-largest shareholder in the Kyoto-based company, according to a Bloomberg report. The Financial Times estimates the Saudi investment to be worth $2.98 billion.
The purchase was made by Fundo de Investimento Público, a sovereign wealth fund that makes investments on behalf of the kingdom. The PIF is controlled by the controversial Crown Prince and effective ruler of Saudi Arabia, Mohammed bin Salman. A Nintendo spokesperson told Bloomberg that he learned of the investment through news reports and would not comment further.
This is the latest, most important and biggest in a series of investments made by Saudi Arabia’s PIF into the video game industry, which has had a particular focus on Japanese companies (in part due to the weak yen). Earlier this year, it acquired a 5% stake in Capcom and Nexon (which is South Korean but trades on the Tokyo Stock Exchange). In late 2020, PIF made a $3 billion investment in smaller stakes in American game publishing giants EA, Activision Blizzard and Take-Two. A subsidiary of the Crown Prince’s foundation also owns nearly all of Metal Slug and The King of Fighters developer SNK.
So what’s going on, and why does it matter?
The PIF exists to increase the wealth of the Saudi regime and help insulate the Saudi economy as the world moves away from oil as an energy source. Oil and gas account for 70% of Saudi Arabia’s exports and half of its gross domestic product, according to OPEC.
Video games are a prominent area of investment for PIF, although far from the only one. One of his biggest investments is a $3.5 billion, 5% stake in Uber. It has smaller stakes in Disney, Facebook and Boeing. In 2021, PIF led a consortium that bought Newcastle United Football Club from the English Premier League.
Analysts differ on the motives for PIF’s investments in video games. Some suggest it’s pure speculation, betting on the wave of consolidation that’s rolling through the gaming industry right now. (PIF is expected to profit from its Activision Blizzard shares if the $70 billion acquisition of Microsoft goes through, though it is a courageous investor who sees Nintendo as a takeover target.) Others think Saudi Arabia is interested in building their own content industry and are interested in learning from companies in this industry. Another theory is that investments are a kind of financial public relations or money laundering, aligning the undemocratic and repressive state more closely with the global culture.
Most companies would be hesitant to embrace such an alignment, however, and the specter of Saudi Arabia exerting its influence on the global cultural landscape is worrying. Bin Salman has been blamed for the murder of dissident Washington Post journalist Jamal Khashoggi. And under his rule, Saudi Arabia continued its grim record of human rights abuses. Corporal punishment, torture and the death penalty are in regular use in the country; there are constant repressions of protest, dissent and freedom of expression; women are discriminated against and LGBTQ people are criminalized and persecuted.
This article is a translation of the article written by Oli Welsh to the website Polygon.
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