This Lord is Very Scientific-Chapter 638 - 570: A New Legend! Powerful Aid!
(Anti-theft, release tomorrow.) Abstract: With the progress of technology and the coverage mode of smart networks, the recent rise of the gaming industry has been evident to the public, and the methods of game dissemination are no longer confined to rigid promotional models. The influence of games has gradually expanded to all aspects of life. Correspondingly, game companies need to continually integrate resources, innovate, upgrade, and improve performance in line with the high-speed development of the times. A diversification strategy precisely caters to the planning needs and development goals within the gaming industry. In the context of economic globalization, diversification strategy, as the preferred development model for enterprises, is also applicable to game companies. This paper explains the impact of diversification strategy on game company performance through the case of Sanqi Mutual Entertainment Company.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy adopted by enterprises during operation to occupy and explore new markets, and to avoid risks encountered in operating a single business. It involves strategic planning in a targeted and prepared manner to enter new business fields. Applying diversification strategy in game companies can effectively improve company performance, bringing a process of transformation from quantitative to qualitative for the development of game companies.
1. Macroscopic background of diversification strategy
In 2021, with the effective control of the pandemic by the government, people's lives returned to normal, and the economic and cultural sectors also showed a promising recovery outlook. On April 30, 2021, according to data published by the National Bureau of Statistics, the development of the national cultural industry had basically returned to pre-pandemic levels[1]. This is very favorable news for the gaming industry, which holds a large share within the cultural industry. Although the coming of the pandemic did not significantly affect the gaming industry, the inability to conduct offline activities always impacts game companies' performance. The warming of the cultural industry implies that the significant development and prosperity of the cultural industry can promote and lead more game companies on a path of sustainable development[2].
From the outbreak of the pandemic last year to the current stabilization, the government has introduced policies supporting the development of the cultural industry from various aspects such as finance, system, and economy. Although the pandemic halted people's movements, it could not control the speed of online network dissemination. The emergence of more and more new media during the pandemic prevention period has boosted the development of the cultural industry. However, the competition environment within the cultural industry has become extremely fierce as enterprises attempt to squeeze into the online market. Many traditional offline enterprises could not withstand the pandemic's impact and were eliminated by society during this period. However, numerous successfully transformed cultural industries emerged during these short two years, with most relying on the accelerated transformation and upgrading powered by diversification strategy. They also harvested substantial gains during the pandemic prevention period when residents' consumption levels significantly increased, obtaining more diverse development models and income channels. For instance, the transformation made by Sanqi Mutual Entertainment during the pandemic prevention period is worth emulating by most game companies[3].
2. Brief analysis and classification of diversification strategy
(1) Brief analysis of diversification strategy
Diversification strategy was proposed by Igor Ansoff, the father of strategic management. In his book "Corporate Strategy," he mentioned the classification of diversification strategy. This world-affecting strategic model is involved in the management governing policies of many countries, so today every small and large enterprise is seeking a foothold according to the development model of diversification strategy[4].
(2) Classification of diversification strategy and its meanings
Diversification strategy is classified into four types: horizontal diversification, vertical integration, concentric diversification, and holistic diversification. The meanings derived from these four different diversification strategy modes also vary. Horizontal diversification refers to enterprises utilizing the original conditions provided by the market to produce new products that meet users' new demands, thereby driving market consumption. Vertical integration is when enterprises derive longitudinally based on their development status, penetrating into other market fields through the product industry chain to seek new consumers. Concentric diversification focuses more on innovation within existing technology, requiring the production of new products within the existing production scope, achieving transformation through existing technology. Holistic diversification emphasizes expanding the scope of operations, requiring enterprises to connect with related raw materials, technology, and market factors to expand the scope of business[5].
3. The impact of diversification strategy on game company performance
Throughout the operations of all game companies, the impact of diversification strategy on game company performance is divided into changes in the operating mode and shifts in strategic planning. From these two changes, effects gradually emerge, driving performance improvement. The influence of diversification strategy is multifaceted. This paper will analyze and study the impact of diversification strategy on game company performance using Sanqi Mutual Entertainment Game Company as an example[6].
(1) Change in operating mode
Currently, the main operating scope of Sanqi Mutual Entertainment Game Company is very broad, which is also the advantage brought by the diversification strategy. The company's business involves not only the operation of interactive entertainment but also encompasses the development and publication of mobile and web games under the banner of Sanqi Mutual Entertainment Game Company. In recent developments, they keep innovating along with the times' technology, expanding the market to include film and animation ACG content. They are also shaping the market cultural industry chain of Sanqi Mutual Entertainment Game Company in music, VR technology, and various entertainment businesses such as live streaming.
Sanqi Mutual Entertainment Game Company was founded in 1995. However, the initial development path was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and its industry chain did not initially involve the operation of games or other entertainment industries, always under the risk of being swallowed by the market. However, with the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. But with later mismanagement and market contraction, Sanqi Mutual Entertainment finally did not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired a 60% stake in Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although it was nominally an acquisition, it was an opportunity for Sanqi Mutual Entertainment to seize. Under multi-faceted cooperation, the two companies completed asset restructuring across various industries. It is worth mentioning that the strategy Sanqi Mutual Entertainment operated had already shown promise by this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural and creative company before acquisition to a dual-main-business listed company moving forward with advanced manufacturing and modern cultural creativity. Corresponding company operational strategies of Sanqi Mutual Entertainment also changed, with the scope of business originally covered by the cultural and creative industry
