This Lord is Very Scientific-Chapter 652 - 584: Lin Ke’s 1st Disciple!
(Anti-theft, will release at the time.) Abstract: Accompanied by technological advancements and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to the public. The propagation method of games is no longer restricted to rigid promotional modes, and the influence of games has gradually expanded to all aspects of life. Correspondingly, gaming companies need to continuously integrate resources, innovate, iterate, and improve performance with the rapid development of the times. Diversification strategy precisely meets the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, diversification strategy, as the preferred mode of enterprise development, is equally applicable to gaming companies. This paper elucidates the impact of diversification strategy on game companies' performance using Sanqi Mutual Entertainment Company as an example.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy tool that enterprises adopt during the operational process to seize and explore new markets and is a strategic plan used by enterprises to avoid risks encountered during the operation of a single business and to enter new business fields with targeted preparation. Applying diversification strategy to gaming companies can effectively enhance company performance and bring about a transformation from quantitative changes to qualitative changes in game company development.
1. The Macroeconomic Background of Diversification Strategy
Entering 2021, under effective control of the pandemic by the state, people's lives are back on track, displaying a favorable trend of economic and cultural recovery. On April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the nationwide cultural industry has basically returned to pre-pandemic levels[1]. This is highly beneficial news for the game industry, which occupies a significant proportion of the cultural industry. Although the pandemic did not have a major impact on the gaming industry, the inability to conduct offline activities always affects game company performance. The warming of the cultural industry means a great development and prosperity that can drive more gaming companies onto the path of sustainable development for most gaming companies[2].
From the outbreak of last year's pandemic to the current stabilization, the state has issued relevant policies from multiple aspects such as fiscal, institutional, and financial to support the development of the cultural industry. Although the pandemic has halted people's travel, it cannot control the speed of online network dissemination. Increasingly more new media have emerged, driving the development of the cultural industry during the pandemic prevention period. However, as each enterprise wants to squeeze into the online market, the competitive environment among cultural industries is very intense. Many traditional offline enterprises could not withstand the pandemic impact and were eliminated by society. But in these short two years, many successful transformation cultural industries have emerged, and these enterprises mostly relied on diversification strategy models to accelerate transformation and upgrades. During the pandemic prevention period, they have also had substantial gains, obtaining more diversified development modes and income channels. For instance, the transformation made by Sanqi Mutual Entertainment Company during the pandemic prevention period is worth learning by the majority of gaming companies[3].
2. Analysis and Classification of Diversification Strategy
(a) Analysis of Diversification Strategy
Diversification strategy was proposed by the ancestor of strategic management Igor Ansoff. In his book "Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model has been involved in management guideline policies of multiple countries, such that today, every enterprise, big or small, seeks a place according to the development model of diversification strategy[4].
(b) Classification and Meaning of Diversification Strategy
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and holistic diversification. The meanings of the four different models derived from diversification strategy each have distinct differences. Horizontal diversification refers to enterprises utilizing the original conditions provided by the market to produce new products that meet new user needs, thereby driving market consumption; Vertical integration is the vertical derivation by enterprises according to their own development, penetrating the product industry chain into other market fields to seek new consumer targets; Concentric diversification focuses more on innovation of existing technology, requiring production of new products within the existing production range, realizing transformation through the metamorphosis of existing technology; Holistic diversification focuses more on changes in expanding the operation scope, requiring enterprises to connect with factors such as raw materials, technology, and market related to their own products to expand the operation scope[5].
3. The Impact of Diversification Strategy on Game Company Performance
In the operational process of all gaming companies, the impact of diversification strategy on game company performance is uniformly divided into two parts: changes in operational mode and shifts in strategic planning. From these two parts of the transformation, effects gradually arise, driving the performance improvement of the company. The impact brought by diversification strategy is multi-faceted. This paper will take Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on game company performance[6].
(1) Changes in Operational Mode
Currently, the main operational scope of Sanqi Mutual Entertainment Game Company is very extensive, which is also the advantage brought by relying on diversification strategy. The company's business not only involves interactive entertainment operations, but Sanqi Mutual Entertainment Game Company also undertakes the development and distribution of mobile games and web games. In recent years, during development, it continually innovates by keeping up with technology of the times, expanding the market layout to encompass film and animation, and second-dimension culture, also creating the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music and VR technology, and various live streaming and other pan-entertainment businesses.
Founded in 1995, Sanqi Mutual Entertainment Game Company did not have a smooth development road in the early stages. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially not involved in the operation of games and other entertainment industries within its industrial chain, at any time facing the risk of being swallowed by the market. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011, yet along with subsequent poor operations and market contraction, Sanqi Mutual Entertainment still could not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of shares in Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Despite being acquired nominally, this was a development opportunity worth seizing for Sanqi Mutual Entertainment. Through multi-side cooperation, the two companies completed asset restructuring of various industries. It is worth mentioning that the exhibition strategy that Sanqi Mutual Entertainment has always operated showed potential at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before being acquired to today's dual-main business listed company in advanced production manufacturing and modern cultural creativity, corresponding to changes in the company's operational strategy. The scope of business originally covered by the cultural creative industry
