Brian Ward, the chief executive of Savvy Games Group – a Saudi Arabia-backed video game and esports company – is technically based in Riyadh but doesn’t spend much time there.

“I think I spend most of my time on a British Airways airplane flying somewhere,” Ward said.

In late September, that somewhere was in Los Angeles, where Savvy Games has two outposts – Scopely, a gaming company in Culver City and esports tournament company ESL Faceit Group.

Scopely was acquired by Savvy in July of last year for $4.9 billion, while ESL was bought in January 2022 and merged with Faceit, another esports tournament provider.

At the time that Savvy started to look at Scopely, there were less than a handful of gaming companies that were at scale, mobile first, free to play and live services businesses that were actionable, or available to be acquired, Ward explained.

Most gaming companies were already part of larger enterprises and so there was a short list of scaled enterprises of that type, he said.

“Scopely was the only one that was actionable, at scale, with multiple franchises that had done over $100 million in lifetime revenue – this was before the launch of Monopoly Go – and had a technology platform that was unique in the marketplace driving retention, monetization and community engagement,” Ward added. “Those were the main factors (to why we wanted to buy the company).”

Monopoly Go is a mobile game developed over seven years by Scopely and released in April of last year.

Michael Pachter, the managing director of equity research at Wedbush Securities in Pasadena said that at purchase price of $4.9 billion, Savvy paid about 2 1/2 times the trailing revenue of Scopely, which he said was at about $2 billion while Monopoly Go by itself has revenues of about $2.5 billion.

“Savvy got that for $4.9 billion which is a phenomenal deal, and they are minting money on that acquisition,” Pachter said. “They picked the right guy at the right time. So, props to Brian Ward and his team.”

Building infrastructure for the company

Since the Scopely deal closed in July of last year, Savvy has spent a lot of time building its infrastructure.

“What we needed to do in addition to the integration of Scopely into Savvy was to build out Savvy’s capabilities, not because of Scopely but just in general,” Ward said.

That included taking a fresh look at the company’s strategy, refining details around its operating model and hiring the rest of the leadership team and the people underneath those functional leaders, he added.

“That was the major thing that we spent the last six months of 2023 on, after the close of the Scopely acquisition in July,” he said.

But right now there are no other changes planned, said Ward, adding that he hopes Scopely continues to do what it has done well the past 13 years with as little interference required as a result of Savvy’s ownership.

“I think that has been the case so far,” Ward said.

Operationally, he said that Scopely’s management would probably say that they have been left alone and the day-to-day lives of the employees haven’t changed much since the acquisition closed.

“I know they haven’t lost any people as a result of our ownership,” Ward continued. “That is a good sign because we want to stay out of their way and gives them as much independence and autonomy to continue doing all the great things they have been doing which is the reason we bought them in the first place.”

Big investors

Savvy is owned by Saudi Arabia’s Public Investment Fund, which is controlled by its chair, Mohammed bin Salman, who’s both the prime minister and crown prince of Saudi Arabia. The fund has about $620 billion of which $38 billion has been provided to Savvy, founded in Riyadh in January of 2022.

Both the fund and Savvy have invested in U.S., European and Japanese video game companies. It is part of bin Salman’s attempt to diversify the country’s economy away from petroleum.

Two years ago, for instance, the fund invested in Capcom Co. Ltd., Nexon Co. Ltd. and Nintendo Co. Ltd., all at a 5% stake for a combined amount of nearly $1.5 billion. Also in 2022, the Electronic Gaming Development Co., a subsidiary of the Mohammed bin Salman Foundation, acquired a roughly 96% stake in Japanese game developer SNK Corp., known for the King of Fighters and Samurai Shodown game franchises.

And in late 2020, the fund invested more than $3 billion in three U.S. based gaming companies: Activision Blizzard Inc. in Santa Monica, Electronic Arts Inc. in Redwood City and Take-Two Interactive Software Inc. in New York City.

In June of 2022, Savvy invested $1 billion into Swedish game developer Embracer Group.

Ward said more acquisitions are on the table and that Scopely is a big part of that as the subsidiary considers what will be the next addition to its portfolio.

“What we are looking for together with their leadership and expertise is another genre leading games title or a team that is capable of making a genre leading title in a genre that we do not already have a presence in,” Ward said. “Whether that is in the Los Angeles area or somewhere else remains to be seen but that is what they are focused on.”

Wedbush’s Pachter said that “genre could be anything.”

It could mean the types of games that Savvy wants to put out to the public or it could mean they are looking at PC and console developers as opposed to the mobile space where Scopely has been dominant.

There have been other sales in the sector. Earlier this year, Gearbox Entertainment Co. was sold to Take-Two for $460 million.

Take-Two is the publisher of Gearbox’s most popular game franchise, Borderlands, so it made sense for the company to want to buy it, Pachter said.

More consolidation ahead in the industry?

Ward expects more consolidation in the gaming industry, saying that he is hearing from bankers that more private equity firms are getting involved in the industry.

“Which is a good thing for developers and publishers that are looking for long-term capital providers,” Ward said. “The best (game) franchises come from not the huge companies but from creative teams that are starting out. Great teams, eventually, attract the right capital and the right long-term capital strategic partners.”

Pachter said that Ward was on the right track.

There has been consolidation in movie studios and in television networks, and games is next, he said.

“It is earlier in its life cycle than movies and television but it’s not brand new,” Pachter added. “And I think that private equity is starting to understand that it is something we actually engage in, that it is what consumers actually do is play games.”

The opportunity is pretty big and everybody is looking at it, he continued.

“It’s a buyer’s market,” Pachter said. “Savvy’s is in the right place right now.”