The Gulf Cooperative Council (GCC) region is rapidly adopting Deep Tech in the entertainment sector, led by KSA, UAE, and Qatar, investing substantially in industries not dependent on oil revenues. Deep Tech involves highly advanced technology being used to solve society's problems. Some examples include Artificial Intelligence (AI), AR/VR, Robotics and Vision & Speech Algorithms.
The region is following the examples of tech integration in entertainment projects in the West and is already seeing some successes. However, challenges remain, such as talent wars and the need for more immersive content. The stakes are high, but so is the innovation potential.
However, the region must not lose sight of its larger goals in this journey. The aim is not merely technological advancement but creating an entertainment industry that resonates with the region's unique culture and values. In doing so, the GCC can provide immersive, engaging entertainment experiences that respect consumer privacy and truly serve its people.
Setting the scene: Current economic and business overview
The sky above the Arabian Peninsula has never looked so electrifying; a wave of tech innovation is launching it into a new era. As the Kingdom of Saudi Arabia (KSA) surged ahead with GDP growth of 8.7% in 2022, the highest among G20 countries, the GCC region is well on its way to becoming the epicentre of growth and innovation.
Issam Abu Suleiman, regional director at the World Bank, forecasted that
GCC will achieve double the global level of economic growth in 2023
with KSA and UAE as key contributors. The driving force behind this growth is the significant investment in technology. Historically, the UAE and Qatar have been the technology investment hubs of the region, but KSA is now emerging as a frontrunner through its ambitious giga-projects like NEOM, Qiddiya, and The Line. According to a KPMG study, a staggering 22% of Saudi companies are adopting cutting-edge technology in their operations, compared to a global average of just 10%.
The GCC nations, traditionally dependent on fossil fuels, are diversifying with significant investments in the entertainment sector using Deep Tech.
Saudi Arabia leads the charge, committing USD 64 billion towards entertainment development by 2025. Flagship projects like NEOM Entertainment and Qiddiya are employing deep technologies such as Artificial Intelligence, Augmented Reality/Virtual Reality, Robotics, and Vision & Speech Algorithms to create immersive experiences. Given these goals, the MENA region is seeing a rise in demand for deep technology. As GCC nations embark on this journey, they are positioning themselves as transformative forces in the global entertainment landscape.
Research & Markets findings suggest that the deep technology market in MENA will grow at an impressive CAGR of 47.8% till 2026, with KSA and UAE leading the charge. This is further supported by
KSA's commitment to invest USD 500 billion over the next decade in deep technology
through the PIF. And they have the road map to see it through to the finish line.
Exhibit 1: Sector-wise integration of deep Tech in GCC
Success in the entertainment industry in the GCC region has been about more than simply importing ideas from the West. Local players have been able to masterfully adopt concepts, designs, and business models from developed markets such as the US, Europe, and Singapore and meticulously tailor them for the local audience. UAE's playbook is a testament to this strategy, with the successful introduction of theme parks like Atlantis Aquaventure and VR World, which have their origins in the US but have been localised through brilliant execution, top-notch Western operators, and the latest technology. Take, for example, Aquaventure's implementation of ProSlide's innovative kids and family slides technology.
Exhibit 2: The Sea World Abu Dhabi experience
The newly opened Sea World Abu Dhabi on Yas Island, the world's largest marine life theme park, is another success story in the UAE, using drone technology to create mesmerising synchronised performances. Similarly, Riyadh has successfully brought London's Hyde Park Winter Wonderland, complete with innovative attractions like the region's largest ice-skating rink, showcasing the use of the latest technology and design techniques.
Technology is revolutionising the entertainment industry. Consider films like 'Avatar: The Way of Water', which has pushed the boundaries of what is possible in filmmaking. By utilising innovative 3D cameras for underwater visual effects, specifically Deep X technology by Pawel Achtel, state-of-the-art computer-generated imagery (CGI), and virtual reality (VR), this film has created unprecedented and immersive experiences for audiences.
In the streaming world, Netflix stands out in its unparalleled success in the use of Machine Learning, data science, and AI tools for personalised content selection, pre-production location scouting, personalised thumbnails, and high-quality streaming.
The heart of Netflix's recommendation system lies in...
its two major algorithms: collaborative filtering, which predicts future behaviour based on similar rating histories, and content-based filtering, which recommends videos similar to a user's previous likes based on product information.
Exhibit 3: Creating the magical world of Avatar 2
Further afield, the media and entertainment industry are also venturing into the AI space, with Channel 1 News in the US introducing a generative AI news presenter for business news. While it stirred the industry, viewers found the AI anchor resembled more of a 'video game character' than an actual person, highlighting the ongoing challenges of refining AI.
On the other side of the spectrum, musicians are turning to AI-based tools for song composition assistance. Tools like 'Soundraw' allow users to produce songs by combining AI-generated phrases, and websites like 'These Lyrics Do Not Exist' provide AI-generated lyrics based on prompts.
Holographic concerts have become increasingly common in the concert world, using AI, CGI, and Machine Learning to enhance hologram characteristics and sounds. A notable example is the Whitney Houston holographic concert, which ran from Feb 25th, 2020, to Jan 1st, 2023, offering a unique experience to ticket holders paying an average of USD 40.
Exhibit 4: Generating lyrics through a tool 'These Lyrics Do Not Exist'
Now that we have established the implementation of Deep Tech across the world, we will dive into how such tools are being used in the GCC to create projects beyond anything we have seen before, like the ambitious giga projects of NEOM and Qiddiya.
These projects are setting a new standard in the realm of entertainment. NEOM aims to become a leading media hub, incorporating the latest in gaming, screen production, and digital publishing under its Entertainment & Culture initiative. Meanwhile, Qiddiya, a giga-project, infused Deep Tech into its entertainment and hospitality sectors in 2019.
Moreover, we will also explore how the region is taking serious steps to advance the quality of education by incorporating the tools we have discussed in this report.
NEOM, setting sights on revolutionising the sector, is carving a niche as an integrated media hub, embracing cutting-edge developments in gaming, screen production, and digital publishing as part of its Entertainment and Culture initiative.
Under the leadership of Wayne Borg, NEOM's Media Managing Director, the project is charting a 'digital-first' course. By harnessing the power of Artificial Intelligence and Augmented Reality/Virtual Reality technologies, NEOM seeks to create an immersive and futuristic media space. One of the innovative steps is the incorporation of AR technology in virtual set production, significantly reducing the high costs associated with constructing physical sets.
NEOM is not stopping there. The project is taking a giant leap into the future by integrating flying cars into its urban fabric. NEOM has invested a staggering USD 175 million in German aircraft manufacturer Volocopter. According to Volocopter's CEO, Dirk Hoke, this marks the first instance of a city being purposefully designed with flying cars in mind. These groundbreaking initiatives represent a visionary leap into a future where technology and entertainment converge to redefine our experiences.
Exhibit 5: NEOM's vision of everyday taxis
Luxury is also in focus, with the planned Four Seasons on Sindalah resort, where the latest construction technology will transform the desert and beach landscape into a luxury marina, yacht club, 9-hole golf course, and dining destinations. Bart Carnahan, President of Global Business Development and Portfolio Management at Four Seasons Hotels and Resorts, views this as a blend of the Red Sea's natural wonders with future-forward technologies.
Qiddiya, another giga-project, will heavily integrate Deep Tech in entertainment and hospitality. In 2019, Qiddiya signed Samsung as their primary technology sponsor to implement Deep Tech in their projects, including the amusement park Six Flags, which is
2.5 times larger than Disney World.
Their water park will feature seven world-first rides in terms of scale and technology, using the latest tech to save water and capture rainwater for site irrigation.
During the pandemic, schools in the GCC and globally shifted to online teaching, highlighting the challenge of maintaining student engagement. Innovative teaching methods emerged, blending education and entertainment through EdTech. In the UAE, with a planned USD 23 billion investment in the National ICT space, 288 active EdTech startups are leveraging AI, VR, blockchain, and IoT to create immersive learning experiences.
Apps like Mathmateer help kids learn math through interactive alien-fighting games. UAE's 'Edutainment Centres' like Dig It, Kidz Palooza, and Little World Discovery Center offer children engaging, technology-enhanced experiences while educating them on various topics.
Exhibit 6: Kid enjoying the edutainment experience in Dubai
And this is just a glimpse of the potential of integrating technology with entertainment and hospitality in the KSA and the UAE.
Mapping out the GCC entertainment landscape: Trends, challenges and solutions in Deep Tech integration
Deep technology's rise in the entertainment sector of the GCC region comes with a unique set of challenges and opportunities. The impact of these trends and how companies address them will shape the future of the entertainment industry in this region.
One significant issue the GCC faces is a lack of talent in Deep Tech. Despite the UAE's efforts to establish itself as an AI powerhouse, the region has struggled to source qualified personnel. A study by the Institute of Engineering and Technology revealed that in 2021,
9 out of 10 engineering-focused firms in Dubai faced recruitment challenges,
with 54% experiencing a skills shortage and 97% requiring training for their goals. The COVID-19 pandemic has exacerbated this, as many foreign workers left the country post-lockdown. To combat this talent shortage, companies should explore unconventional channels. For instance, Saudi Arabia hosted the Global Artificial Intelligence Summit in Riyadh, attracting worldwide AI talent and tech students. Such events can serve as excellent recruiting grounds for Deep Tech firms.
AI is increasingly employed in the GCC's entertainment sector to create immersive content that holds viewers' attention.
Companies are using a 'big data approach'
to test multiple features and determine what resonates most with consumers. Qatar-based startup Sponix Tech exemplifies this trend by developing AI and ML-based solutions to enhance fan engagement at large sporting events. Their SPov Immersive Replay allows fans to experience a match from a player's perspective, offering unique instant replays and social media marketing content. Entertainment and leisure companies should collaborate with innovative AI startups like Sponix Tech to boost user engagement and retention.
The rise of Deep Tech has led to increased user engagement and personalised content, but it has also raised serious privacy concerns. A report by the World Economic Forum revealed that 47% of people across six countries have avoided tech-related services due to insufficient user controls. To address these concerns, Saudi Arabia has proposed the Personal Data Protection Law (PDPL), which aims to safeguard personal data. However, as Deep Tech continues to evolve and gather more intimate data, privacy regulations will become increasingly challenging to enforce. Regulators must receive ongoing training to stay up to date on the rapidly changing Deep Tech landscape and craft laws that reflect these developments.
The GCC region stands on the precipice of a technological revolution in the entertainment industry. The imperative now is not merely to follow global trends but to become a trendsetter. The GCC needs to break free from dependence on imported technology and foster a culture of home-grown innovation and creativity.
The success of this bold vision hinges on attracting top-tier talent. By offering compelling incentives such as lucrative compensation packages and golden visas, the GCC can become a magnet for the best minds in the industry. Further, nurturing an innovation-centric ecosystem will provide fertile ground for the germination of pioneering startups.
Certainly, the GCC faces challenges, including the tech talent crunch and data privacy concerns. However, with proactive measures such as comprehensive data protection laws and AI summits, the GCC is already showing resolve to overcome these hurdles.
About the Authors:
Mustafa Fahim, CFA works as Manager, Advisory at ValuStrat's Riyadh office. He has 6+ years of experience working in investment banking, corporate finance and tech roles at reputed organizations in the MENAP region.
Khurram Merchant, CFA is Managing Director, Advisory and leads ValuStrat's Advisory division. Over his 10+ years with ValuStrat, he has worked with hundreds of ValuStrat's most reputable clients, including public sector entities, ministries, conglomerates, corporates, real estate developers, financial institutions and SMEs.