Esports has rapidly expanded as a global industry, valued at over $1.38 billion in 2022. Despite the sector’s rapid growth over the previous decade, there was a cooling of investor interest at the end of 2022, with many esports teams struggling to make a profit. Despite what has been dubbed the “esports winter,” several Gulf countries still see esports as not only a viable investment but also a way to diversify their economies and engage their large youth populations.

According to a report by Niko Partners, the esports industry in the Middle East and North Africa defied global trends in 2023, with esports-related revenue increasing by nearly 8% to almost $2 billion. This growth is expected to continue through the end of the decade. More than half of that revenue was generated by Saudi Arabia, which has moved quickly into the esports sector, and about one-third by the United Arab Emirates.

Saudi Arabia and the UAE have emerged as key players in the growth of esports in the region, investing heavily in esports infrastructure, teams, and even arenas. While video games have been big business for many years, esports brings the allure of highly competitive teams and live events coupled with potential merchandising opportunities. Compared to investing in traditional video game infrastructure, esports also has the potential added benefit of attracting large numbers of young people into supporting a nationally branded enterprise with international significance. Popular esports events attract massive crowds both in purpose-built arenas and through livestreaming.

The Gulf countries have young populations, with an average age of 27 and over 20% under 15. Demographics are one driver of the region’s interest in esports, alongside increasing access to the internet and gaming technology. The region’s young population, often seen as a challenge by outside observers, provides a deep talent pool and a ready-made audience for esports. The proliferation of affordable gaming consoles and personal computers has made competitive gaming accessible to millions of Arab youths. Major esports events, such as the Intel Extreme Masters and ESL One, have made stops in Gulf cities, showcasing the region’s potential as a formidable player in the global esports arena.

In Saudi Arabia, the government’s Vision 2030 initiative, aimed at diversifying the economy and promoting cultural development, has highlighted esports as a means of engaging the country’s young people and fostering investment and innovation in the digital sector. This includes the massive more than 5,000 seat Qiddiya City esports facility that hopes to bring in up to 10 million visitors yearly as it regularly hosts tournaments and events. The kingdom has invested heavily in esports infrastructure, developing top-tier global competitions, such as the first Esports World Cup to be held in Riyadh from July 4 to August 25. Backed by Saudi Arabia’s Public Investment Fund, the Esports World Cup will feature 19 different video games with the largest total prize pool in esports history at over $60 million. The event will also crown a Club Champion, the winner of the aggregate of the cross-game competition in individual game results among all the participating organizations. During the LEAP 2024 technology conference in Riyadh in March, Saudi Arabia’s National Development Fund, in collaboration with the country’s Social Development Bank, announced the establishment of two esports-focused funds. As part of the Gaming and Esports Financing Program, these funds will provide $120 million for gaming and esports through equity investments. Saudi Arabia’s first big splash in the esports scene was in 2022 when the Savvy Gaming Group purchased large tournament organizers ESL Gaming and FACEIT for a total of $1.5 billion.

Similarly, the UAE has positioned itself as a leading destination for esports in the Middle East. Dubai has emerged as a regional hub for gaming and esports events, with Abu Dhabi also making significant investments. Dubai has hosted events including the Dubai Gaming Festival, Middle East Games Con, and IGN Convention. The city’s vibrant gaming community and modern infrastructure have attracted gamers and industry professionals from around the world. UAE government support for esports includes initiatives such as the Dubai Electronic Sports Championship, which aims to nurture local talent and promote the growth of the industry in the region.

Not to be outdone, Abu Dhabi recently announced the development of a $1 billion professional gaming training facility on its own island. True Gamers, an esports lounge network, will invest $280 million in the project, which will include an esports arena and a luxury hotel, that, according to True Gamers, will provide an “immersive esports experience.” Plans for the island also include a digital technology and innovation workspace, a complex of training and meeting spaces, and an arena for hosting multiformat events and exhibitions. The project aims to position Abu Dhabi as a leading esports destination in the region. While construction continues, Abu Dhabi will host the Blast Premier World Final, an international tournament with a $1 million prize, for the second time. Abu Dhabi has even recently integrated its stand-alone esports initiative, Abu Dhabi Gaming, with the Department of Culture and Tourism.

As with Saudi Arabia, this massive investment in esports aligns with Abu Dhabi Vision 2030, the government’s blueprint to ease reliance on fossil fuels and develop a more sustainable, knowledge-based economy. In that sense, the Gulf states’ interest in esports represents part of their commitment to a broader strategy of transitioning from oil-dependent economies to economies that leverage their human capital, computing technology, and high-speed internet.

Other Gulf countries, such as Bahrain, Kuwait, and Qatar, have also made inroads into esports. Bahrain has invested in bootcamps to train local esports talent, and the Bahrain Polytechnic school offers courses in game development. Qatar’s Esports Federation opened a gaming facility, and the Gaming District in Doha holds tournaments for popular games such as Dota, Counter-Strike: Global Offensive, FIFA, and Fortnite. Moreover, Qatar’s Investment Authority bought a minority stake in Monumental Sports & Entertainment, the U.S. owner of Team Liquid, a major global esports franchise. Kuwait hosted the third Gulf Cooperation Council games in May 2022 that featured esports for the first time.

While the investment prospects in esports flagged over the past few years globally with major franchises having financial challenges, the withdrawal of major sponsors such as BMW, and a declining viewership, the Gulf countries continue to see value with the announcement of major projects in the sector. It remains to be seen if one or all of the Gulf countries can create a space that can overcome these challenges. The combination of youth draw and technological innovation in esports makes it an incredibly attractive combination for regional players that long to diversify, while encouraging their young people to invest their futures in work that’s local and outside the energy sector that still dominates their economies.