This paper analyzes the rapidly growing video game production in the Middle East. It is based on interviews with 10 major Arab and Iranian game producers and on content analyses of 80 games developed in the Arab world and Iran between 2005 and 2011. The research methodology encompasses recent trends in Middle Eastern studies, cultural studies, and game studies. Substantive portions of the materials considered in this paper were gathered during fieldwork trips to Egypt, Syria, Lebanon, and Iran. Video games represent a mainstream media and a popular leisure time activity for Middle Eastern youth. They exhibit strong popular appeal and economic relevance, contrasted by a lack of culture prestige and scientific coverage. Until recently, games of American, European and Japanese origin dominated the Middle Eastern markets. Today, the global video game production is increasingly challenged by local independent entrepreneurs as well as state-subsidized companies. We are in crucial need of critically understanding the political, economic, and cultural dimensions of video game development in the Middle East, particularly the role of the state in this cultural production. This paper identifies the key challenges game producers in the Middle East face and analyzes the adaptation strategies the producers use in order to overcome them. The challenges are organized around two sets. The first set is related to the role of the state, namely to lax or nonexistent copyright protection, regulation of cultural production, and media control. The second set is more broadly defined and deals with the social and cultural aspects influencing video game production in the region; namely cultural communication patterns, cultural identity, and religious values. Essentially, this paper argues that there exists a set of concerns that most of the producers in Iran and the Arab world share and that fundamentally shape their production strategies, namely emphasis on self-representation and respect for their religion and culture. Nevertheless, given the fact that the genres, patterns, and game mechanics the Iranian and Arab games appropriate almost invariably follow their Western counterparts, what emerges from the Middle Eastern game production is a story of cross-cultural exchange, where “authenticity” as well as “hybridity” is simultaneously construed and contested. From a broader perspective, this paper aims to transcend the media-centric logic that typically dominates discussions of new media in the Middle East and to establish a framework for theorizing video game development in the region in its broader political, social, and cultural contexts.