This Lord is Very Scientific-Chapter 642 - 574: The School of Physics and the Idealist School
(Anti-theft, will release tomorrow.) Abstract: Accompanied by technological advancement and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to the populace. The dissemination methods for games are no longer restricted to rigid promotional models, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate and iterate, and improve performance as time progresses swiftly. The diversification strategy perfectly matches the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, diversification strategy, as the preferred mode of corporate development, is equally applicable to game companies. This article exemplifies 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
Diversification strategy is a market strategic method adopted by enterprises during the operation process to capture and develop new markets. It is also used by enterprises to avoid risks encountered in operating a single business, strategically planning to enter new business fields with purpose and preparation. Practically applying the diversification strategy to game companies can effectively enhance company performance, leading them through a process from quantitative change to qualitative transformation.
1. The Macro Background of Diversification Strategy
Entering 2021, under the effective control of the pandemic by the state, people's lives have resumed normalcy, and economic and cultural landscapes show a great revival. On April 30, 2021, according to data disclosed by the National Bureau of Statistics, the development of the national cultural industry has basically recovered to pre-pandemic levels [1], which is very favorable news for the gaming industry—heavily weighted in the cultural industry—even though the arrival of the pandemic did not greatly affect the gaming industry, the inability to conduct offline activities has consistently impacted game company performance. With the recovery of the cultural industry, this signifies for most game companies that the grand development and prosperity of the cultural industry can drive more game companies onto a path of sustainable development [2].
From the outbreak of last year's pandemic to the current stabilization, the state has introduced relevant policies from multiple aspects such as finance, institutions, and finance to support the development of the cultural industry. Although the pandemic has hindered people's travel, it cannot control the propagation speed of the online network; more and more new media have emerged during the pandemic prevention period, driving the development of the cultural industry. However, due to each enterprise wanting to squeeze into the online market, the competitive environment within the cultural industry is extremely fierce. Numerous traditional offline enterprises couldn't withstand the impact of the pandemic and were eliminated by society. Yet during this brief two-year period, many successful transformations within the cultural industry have emerged, relying chiefly on the diversification strategy mode to accelerate transformation and upgrades. Same during the pandemic prevention period with significantly increased resident consumption levels, achieving fruitful outcomes with more diversified development modes and funding income channels. The transformation made by Sanqi Mutual Entertainment during the pandemic prevention period serves as a lesson for most game companies [3].
2. A Brief Analysis and Classification of Diversification Strategy
(1) A Brief Analysis of Diversification Strategy 𝓯𝓻𝒆𝙚𝒘𝓮𝙗𝓷𝒐𝓿𝙚𝒍.𝙘𝓸𝙢
Diversification strategy was proposed by the pioneer of strategic management, Igor Ansoff. In his book "What Is Corporate Strategy," he mentioned the classification of diversification strategy. This strategic mode, which influences the world, is involved in the management guidelines and policies of multiple countries. As a result, today, every large and small enterprise is striving for a foothold according to the diversification strategy's development mode [4].
(2) Classification and Meaning of Diversification Strategy
The diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The four different modes derived from the diversification strategy each have different meanings. Horizontal diversification refers to creating new products that can satisfy the new demands of users by utilizing the original conditions provided by the market, thereby driving market consumption; vertical integration is the vertical derivation of enterprises according to their development situation, infiltrating product industry chains into other market fields to seek new consumer targets; concentric diversification focuses more on the innovation of existing technologies, requiring the production of new products within the existing production scope, achieving this through the metamorphosis of existing technologies; overall diversification focuses more on expanding changes in the business scope. Enterprises need to link raw materials, technologies, markets, and other factors related to their products for business scope expansion [5].
3. The Impact of Diversification Strategy on Game Company Performance
It can be said that in the operation process of all game companies, the impact of diversification strategy on game company performance is uniformly divided into two parts: changes in operational mode and strategic planning transfer. Effects gradually manifest from these two parts to drive performance enhancement for companies. The impact 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) Changes in Operational Mode
Currently, Sanqi Mutual Entertainment Game Company's main operational scope is quite extensive, which is also attributable to the advantages brought by the diversification strategy. The company business not only involves interactive entertainment operations, but also integrally manages the research, development, and publishing of mobile and web games. Moreover, in recent years, keeping pace with technological advancements, constantly innovating to widen market presence, it extends layout into film and anime second-dimension; further shaping its market culture industry chain in music, VR technology, and various live broadcast and other pan-entertainment businesses.
Established in 1995, Sanqi Mutual Entertainment Game Company did not have a smooth development path in the early stages. The predecessor of Sanqi Mutual Entertainment Game Company was a small-scale enterprise. Initially, Sanqi Mutual Entertainment's industry chains did not involve the operation of games or entertainment industry and always bore the risk of being engulfed by the market. However, relying on the steady development of a singular industry, Sanqi Mutual Entertainment Company was listed in 2011. Despite poor operations and market contraction in later stages, Sanqi Mutual Entertainment did not escape the fate of acquisition.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Despite being acquired nominally, for Sanqi Mutual Entertainment, this was an opportunity worth grasping for development. Through multi-faceted collaboration, the two companies completed asset restructuring across various industries. It is worth mentioning that the strategy continuously operated by Sanqi Mutual Entertainment at the time was already beginning to show its potential. Sanqi Mutual Entertainment transformed from a single modern cultural creativity company before acquisition to now a dual-main business listed company advancing modern production manufacturing and modern cultural creativity in parallel. Correspondingly, Sanqi Mutual Entertainment's company operational strategy also underwent changes, with previously covered business scope of cultural creative industries evolving.
