This Lord is Very Scientific-Chapter 661 - 593
(Anti-theft, will be published later.) Abstract: With the progress of technology and the coverage pattern of intelligent networks, the rise of the game industry in recent years has been evident to the public. The promotion method of games is no longer confined to rigid propaganda 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 update, and improve performance as the era develops rapidly. The diversification strategy perfectly meets the planning needs and development goals within the game industry. In the context of economic globalization, the diversification strategy, as the preferred mode of corporate development, is also suitable for game companies. This article uses Sanqi Mutual Entertainment Company as an example to explain the impact of the diversification strategy on the performance of game companies.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company 𝐟𝐫𝕖𝗲𝘄𝚎𝗯𝕟𝐨𝕧𝐞𝚕.𝕔𝕠𝐦
Diversification strategy is a market strategy means adopted by enterprises during the operation process to occupy and explore new markets more. It is also a strategic plan used by enterprises to avoid risks encountered during the operation of a single business and to enter new fields of business with target and preparation. Applying the diversification strategy to game companies can effectively improve company performance, bringing a process of transition from quantitative to qualitative changes for the development of game companies.
1. Macro background of the diversification strategy
Entering 2021, under the effective control of the pandemic by the state, people's lives have returned to normal, and the economy and culture are showing a great recovery trend. On April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the national cultural industry has basically recovered to the level before the pandemic [1]. This is extremely advantageous news for the game industry, which makes up a large proportion of the cultural industry. Although the pandemic did not cause much impact on the game industry, the inability to carry out offline activities always affected the performance of game companies. The warming of the cultural industry means that the large-scale development and prosperity of the cultural industry can facilitate more game companies to embark on a path of sustainable development [2].
From the outbreak of the pandemic last year to the current stability, the state has introduced relevant policies to support the development of the cultural industry from financial, institutional, and financial aspects. The pandemic blocked people's travel plans but couldn't control the spreading speed of the online network. More and more new media appeared, driving the cultural industry's development during the pandemic prevention period. However, as each company wants to squeeze into the online market, the competitive environment within the cultural industry is very fierce. Many traditional offline companies have been eliminated by society due to the pandemic's impact. Still, in these short two years, many cultural industries have successfully transformed. These companies mostly relied on the diversification strategy model to accelerate transformation and upgrading, also gaining substantial rewards in the form of more varied development models and revenue channels during the pandemic prevention period when residents' consumption levels significantly increased. For instance, Sanqi Mutual Entertainment Company's transformation during the pandemic control period is worth learning for most game companies [3].
2. Analysis and classification of diversification strategy
(1) Analysis of diversification strategy
Diversification strategy was proposed by Igor Ansoff, the pioneer of strategic management. In his book "Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model is involved in the management policies of many countries, making every enterprise, large or small, seek a place to stand according to the development model of diversification strategy [4].
(2) Classification and implication of diversification strategy
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The implicated meanings derived from the four different models of diversification strategy vary. Horizontal diversification refers to the enterprise's use of market-provided original conditions to produce new products that can meet new user needs, thus driving market consumption. Vertical integration is the enterprise's vertical derivation based on its development situation, using the product supply chain to penetrate other market fields to seek new consumers. Concentric diversification focuses more on innovation in original technology and requires the production of new products within the original production range. The whole process is achieved through the evolution of original technology. Conglomerate diversification emphasizes expanding the scope of operations, requiring the enterprise to expand its operations by linking factors related to its products, such as raw materials, technology, and market [5].
3. Impact of diversification strategy on the performance of game companies
It can be said that in the operation process of all game companies, the impact of diversification strategy on company performance is uniformly divided into two parts: changes in operation mode and transfer of strategic planning. The changes in these two parts gradually generate effects that lead to improved company performance. The impact brought by the diversification strategy is multifaceted. This paper will take Sanqi Mutual Entertainment Game Company as an example to analyze the impact of the diversification strategy on the performance of game companies [6].
(1) Change in operation mode
Currently, Sanqi Mutual Entertainment Game Company's main operation range is quite extensive, relying on the advantages brought by the diversification strategy. The company not only involves the operation of interactive entertainment but also independently oversees the R&D and publication of mobile and web games. Recently, its development keeps pace with technology by constantly innovating, expanding the market to include layouts in film and two-dimensional animation, and shaping the market cultural industry chain for Sanqi Mutual Entertainment Game Company in music, VR technology, and various general entertainment businesses like live streaming.
Sanqi Mutual Entertainment Game Company was established in 1995, but its early development path was not smooth. Originally a small enterprise, the company did not involve the operation of games and other entertainment industries in its industrial chain, always facing 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. Still, accompanied by poor operations and market contraction in later stages, Sanqi Mutual Entertainment ultimately couldn't avoid the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of Sanqi Mutual Entertainment Shanghai Technology Co., Ltd.'s shares. Even though it was nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth grasping. The two companies, through multi-faceted collaboration, completed the asset restructuring of various industries. It's worth mentioning that Sanqi Mutual Entertainment had already begun to showcase its emerging strategy. The company transformed from a single modern cultural creative company before the acquisition to a listed company with dual main businesses of advanced production manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's company operation strategy also underwent changes, and the business scope covered by the original cultural creative industry.
