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Saudi Arabia is investing in a three-year-old start-up that designs digital theme parks within shopping centres, in the Gulf kingdom’s latest move to break into the technology and leisure industries.
Riyadh Season, a government-backed entertainment initiative under the auspices of the sovereign wealth fund, has provided most of the $55mn of debt and equity raised by HyperSpace. Riyadh Season is led by Turki al-Sheikh, who chairs the General Entertainment Authority.
Shopping centres must find that “cool factor” to draw consumers in, Alexander Heller, co-founder and chief executive of HyperSpace, told the Financial Times. “Today, within that ecosystem, you’re looking at something that’s much more experience driven.”
Saudi Arabia is seeking to reduce its dependence on oil revenues and is investing in other areas, such as electric vehicle production, sports teams and tourism. It has set out a target to become a global gaming hub, and this year spent $4.9bn to acquire the US-based games developer Scopely.
The country is spending heavily on deals to pursue these goals, but there are questions about whether it can attract foreigners in large numbers. Saudi Arabia, which is not a traditional tourism destination, wants to lure 100mn visitors annually by the end of the decade.
HyperSpace creates elaborate parks that feature a mix of digital and physical entertainment including gaming, an attraction for Saudi Arabia’s relatively young and digitally savvy population. Nearly half a million enthusiasts paying $34 each have flocked to its first location in Dubai, a 40,000-square-foot park, since it opened there nine months ago.
The Riyadh-based company plans to expand in Saudi Arabia and beyond to the US. “There’s a big focus on expanding the business” to the rest of the world, Heller said.
Riyadh was a uniquely attractive partner, Heller said, given the importance of shopping centres to Saudis, who are also highly engaged in social media. HyperSpace is keen to be behind the push to attract consumers back to shopping malls, which have been hit by a rise in online shopping.
“We saw an opportunity in the location-based entertainment space and how that fit into the future of the retail ecosystem,” he said.
Galaxy Interactive, a New York-based venture capital firm focused on gaming, led the latest funding round, which includes other international investors.
HyperSpace plans to open a park in Riyadh in six weeks and another one in Dubai over the next few months.
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