Saudi Arabia now owns 5.01% of Nintendo, making it the Kyoto company’s fifth-largest shareholder, according to a Bloomberg report. The Financial Times calculates the Saudi investment to be worth $2.98 billion.
The purchase was made by the Public Investment Fund, a sovereign wealth fund that makes investments on behalf of the kingdom. The PIF is controlled by Saudi Arabia’s controversial crown prince and effective ruler, Mohammed bin Salman.
A Nintendo spokesperson told Bloomberg that it had learned about the investment from news reports and would not comment further.
This is just the latest, most high-profile, and largest in a series of investments made by Saudi Arabia’s PIF in the video game industry, which has had a particular focus on Japanese firms (due in part to the weak yen). Earlier this year, it acquired 5% stakes in Capcom and Nexon (which is South Korean, but trades on the Tokyo stock exchange). In late 2020, the PIF made a $3 billion investment in smaller stakes in American games publishing giants EA, Activision Blizzard, and Take-Two. A subsidiary of the crown prince’s foundation also owns almost all of Metal Slug and The King of Fighters developer SNK.
So what’s going on, and why does it matter?
PIF exists to increase the wealth of the Saudi regime, and to help insulate the Saudi economy as the world transitions away from oil as an energy source. Oil and gas account for 70% of Saudi Arabia’s exports and half 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 its largest investments is a $3.5 billion, 5% stake in Uber. It owns smaller stakes in Disney, Facebook, and Boeing. In 2021, PIF led a consortium that purchased Newcastle United Football Club, of the English Premier League.
Analysts differ on the reasons for PIF’s video game investments. Some suggest they are pure speculation, gambling on the wave of consolidation rolling through the games industry at the moment. (PIF stands to make a profit on its Activision Blizzard shares if the $70 billion Microsoft acquisition goes through, though it’s a brave investor who sees Nintendo as an acquisition target.) Others think that Saudi Arabia is interested in building its own content industry and is keen to learn from companies in this sector. Another theory is that the investments are a sort of financial PR or whitewashing, aligning the undemocratic and repressive state more closely with global culture.
Most companies would hesitate to welcome that alignment, however, and the spectre of Saudia Arabia exerting its influence on the global cultural stage is a worrying one. Bin Salman has been held responsible for the murder of dissident Washington Post journalist Jamal Khashoggi. And under his rule, Saudi Arabia has continued its dismal record of human rights abuses. Corporal punishment, torture and the death penalty are in regular use in the country; there are constant crackdowns on protest, dissent and freedom of expression; women are discriminated against, and LGBTQ people are criminalized and persecuted.