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Saudi Arabia is investing in a three-year-old startup that designs digital theme parks in shopping malls, the Gulf kingdom’s latest push into the tech and leisure industries.
Much of the $55 million in debt and equity raised by HyperSpace came from Riyadh Season, a government-backed entertainment project under the auspices of a sovereign wealth fund. The Riyadh quarter is led by Turki al-Sheikh, chairman of the General Entertainment Authority.
Alexander Heller, co-founder and chief executive of HyperSpace, told the Financial Times that shopping malls must find the “cool factor” to attract consumers. “Today, in this ecosystem, you’re looking for something more experience-driven.”
Saudi Arabia is seeking to reduce its reliance on oil revenue and is investing in other areas such as electric vehicle production, sports teams and tourism. It has set a goal of becoming a global gaming hub and this year spent $4.9 billion to acquire American game developer Scopely.
The country has invested heavily in deals to achieve these goals, but questions remain about whether it can attract large numbers of foreigners. Saudi Arabia is not a traditional tourist destination and hopes to attract 100 million tourists a year by the end of the century.
HyperSpace creates carefully designed parks that blend digital and physical entertainment, including games, that appeal to Saudi Arabia’s relatively young and digitally savvy population. Since it opened in Dubai nine months ago, nearly half a million enthusiasts have paid $34 each to flock to its first Dubai park, a 40,000-square-foot park.
The Riyadh-based company plans to expand outside Saudi Arabia and the United States. “We’re very focused on expanding” to other parts of the world, Heller said.
Heller said Riyadh was a unique and attractive partner given the mall’s importance to Saudis, who are also highly engaged in social media. HyperSpace is keen on a push to lure consumers back to shopping malls, which have been hit by the growth of online shopping.
“We see the opportunity in location-based entertainment and how it fits into the future of the retail ecosystem,” he said.
New York-based gaming-focused venture capital firm Galaxy Interactive led the latest funding round, with other international investors also participating.
HyperSpace plans to open a park in Riyadh within six weeks and another in Dubai in the coming months.
Svlook
