The Saudi government continues to push into the world of video games, with its latest investment being $1 billion into Embracer Group, the European giant that owns Borderlands studio Gearbox. Embracer CEO Lars Wingefors has now responded to the criticisms of this deal, which was led by the kingdom’s Public Investment Fund (PIH) and specifically its Savvy Gaming Group (SGG) division.
Wingefors said in a statement that he received “many questions” about the deal, prompting him to share background and context around the decision to take Saudi Arabia’s money.
“I understand and respect that there are different views on this topic. I don’t claim to have the right answers, but I want it to be clear that this decision was not taken lightly,” he said.
Wingefors started off by confirming that Embracer will remain in control of its own destiny and is “built on the principles of freedom, inclusion, humanity, and openness.” Taking $1 billion from SGG “will not change this in any way,” Wingefors said. He added that SGG will own “slightly more ” than 5% of Embracer’s voting power and 8% of its total capital. He said SGG invested in Embracer because the investment fund supports Embracer’s “vision, strategy, and leadership, not to change it.”
Wingefors said he aims to be communicative and transparent, but also remarked that this ambition is “increasingly difficult” in “matters such as this.”
People are criticizing Embracer’s decision to take the $1 billion from SGG in part because of Saudi Arabia’s position on human rights. In 2018, US-based journalist Jamal Khashoggi, who criticized Saudi Arabia’s government, entered the Saudi consulate in Istanbul and never left. The CIA later concluded that Saudi Crown Prince Mohammed bin Salman ordered Khashoggi to be killed.
Wingefors defended Embracer’s decision to take Saudi Arabia’s money by saying, “We need to look ourselves in the mirror; we are a public company and already have many hundreds of institutions from all parts of the world as shareholders, including investors from the Middle East and Africa (MENA) and Asia region. Many of them have participated in the capital raising during the past years.”
The executive said SGG and its parent company PIF already has “sizeable ownership” in other gaming companies, and that SGG has “genuine” ambitions to support the “global ecosystem” for gaming. PIF recently invested $3 billion into Nintendo and also holds positions in Activision Blizzard, EA, and Capcom.
“SGG is providing a sizeable, truly long-term capital investment to support our strategy and our management so that we may continue the successful growth of our commercial businesses. My values as a Swedish entrepreneur are unwavering. We are a value-based company, and our commitment to a decentralized operating model that empowers great people to make their own decisions will always remain,” Wingefors said.
The executive went on to say that one of his jobs as CEO of Embracer is to “make the difficult and complex decisions that I believe are in the best interest of our stakeholders including our employees, our customers, the gaming and entertainment industry and our shareholders.”
Wingefors said taking money from Saudi Arabia helps Embracer remain independent. The type of long-term investment that Saudi Arabia is making in Embracer is essential for Embracer’s ongoing business, Wingefors said.
“For Embracer, there is only a handful of players in the world providing this type of sizable long-term equity capital. Without capital, our journey would notably slow down going forward which could also have many other implications for our businesses,” he said. “SGG is providing very long-term capital to support our strategy without Embracer having to give up our way of operating or other commercial opportunities.”
Wingefors said Embracer has “learned and discussed difficult topics involving non-gaming issues relating to Saudi Arabia,” though he did not name any outright. In total, Wingefors believes this deal with Saudi Arabia will lead to net positives.
“I truly believe in inclusion and the change that can be affected by opening our content to new markets. By bringing more of our products to the MENA region, we have the opportunity to build local connections, support entrepreneurs, employ a diverse group people in our whole ecosystem, promote growth and bring the world closer together through gaming,” he said.
As for whether or not SGG will get a board seat at Embracer, Wingefors said shareholders will ultimately decide. SGG is headed up by CEO Brian Ward, who claims the company is “not part of the Saudi state.”
“Brian has a deep industry knowledge that is valuable to Embracer, and I would be supportive if he personally would like to contribute to the board at a later date as long as he is committed to the time needed,” Wingefors said. “If not, I look forward to building a strong relationship with SGG regardless. Ultimately this will be a matter for him and the shareholders at the AGM or at a later meeting.”
The PIF is also the backer of LIV Golf, the new professional golf tour that is generating a lot of debate, discussion, and controversy.