This Lord is Very Scientific-Chapter 662 - 594 of the Emperor
(Anti-theft, will be published in due course.) Abstract: Accompanied by technological advancement and intelligent network coverage models, the rise of the game industry in recent years is evident to the public. The method of game distribution is no longer restricted to rigid promotional modes, and its influence is gradually extending to all aspects of life. Accordingly, game companies also need to continuously integrate resources, innovate and iterate, and improve performance to keep pace with the rapid development of the times. Diversification strategy perfectly meets the planning needs and development goals within the game industry. Against the backdrop of economic globalization, diversification strategy as a preferred mode of enterprise development is equally applicable to game companies. This paper uses Sanqi Mutual Entertainment Company as an example to explain the impact of diversification strategy on the performance of game companies.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategic means that enterprises adopt during the operation process to occupy more new markets and expand new markets, and it is also used to avoid risks encountered in operating a single business. It is a strategic plan for targeted and prepared entry into new business fields. Applying diversification strategy practically to game companies can effectively improve company performance, bringing about a transformation from quantitative change to qualitative change.
1. Macro Background of Diversification Strategy
Entering 2021, under the strong control of the epidemic by the state, people's lives returned to normal, and the economy and culture showed a good trend of recovery. On April 30, 2021, according to data released by the National Bureau of Statistics, the nationwide cultural industry development basically recovered to pre-epidemic levels [1]. This is undoubtedly favorable news for the game industry, which occupies a large proportion of the cultural industry. Although the advent of the epidemic did not significantly impact the game industry, the inability to conduct offline activities has consistently affected the performance of game companies. With the warming of the cultural industry, for most game companies, this means that the great development and prosperity of the cultural industry can promote and drive more game companies onto the path of sustainable development [2].
From last year's outbreak of the epidemic 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 epidemic prevented people from traveling, it was unable to control the speed of online network transmission. More and more new media have emerged, driving the development of the cultural industry during the epidemic prevention period. However, because each enterprise wants to squeeze into the online market, the competitive environment within the cultural industry has become very intense. Many traditional offline enterprises could not withstand the impact of the epidemic and were eliminated by society, but in this short span of two years, many successfully transformed cultural industries emerged, most of which relied on diversification strategy models to accelerate transformation and upgrading. During the epidemic prevention period when consumption levels significantly increased, they also reaped substantial benefits, gaining more diversified development modes and income channels. For example, the transformation Sanqi Mutual Entertainment Company made during the epidemic prevention period is worthy of reference for most game companies [3].
2. Brief Analysis and Classification of Diversification Strategy
(a) Brief Analysis of Diversification Strategy
Diversification strategy was proposed by Igor Ansoff, the progenitor of strategic management. In his book "What is Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model is involved in management policy guidelines of multiple countries, resulting in every large and small enterprise today striving for a place according to the diversity strategy's development model [4].
(b) Classification and Meaning of Diversification Strategy
Diversification strategy is divided into four types: Horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The different meanings of these four derived models from diversification strategy are also varied. Horizontal diversification refers to enterprises utilizing original market conditions to produce new products that can satisfy users' new demands, thereby driving market consumption; vertical integration is when enterprises based on their development status vertically extend, utilizing the product industry chain to penetrate other market fields to seek new consumer objects; concentric diversification focuses more on innovation in the original technology, requiring new product production within the original production scope, realizing the process through the transformation of existing technology; conglomerate diversification emphasizes expanding the operating range's change, requiring enterprises to link factors related to their own product, such as raw materials, technology, and markets to expand the operating range [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: the change of operation mode and the transfer of strategic planning. The changes in these two parts gradually produce effects that drive company performance improvement. The impact brought by the diversification strategy is multi-faceted. 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 Operation Mode
Currently, the main operation range of Sanqi Mutual Entertainment Game Company appears quite broad, which is also due to the advantages brought by diversification strategy. The company's business not only involves the operation of interactive entertainment, but also entirely handles the research and development of mobile games and web games under its banner. In recent years, they have kept up with technological advancements to continuously innovate, expanding the market to layout film and animation ACG. They are also shaping the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music, VR technology, and various live broadcast and Pan-entertainment businesses.
Sanqi Mutual Entertainment Game Company was established in 1995, but the development road in the early stages was not smooth sailing. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and initially, the industry chain of Sanqi Mutual Entertainment did not involve the operation of games or other entertainment industries, always facing the risk of being swallowed by the market. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011, but accompanied by poor post-operation and market contraction, Sanqi Mutual Entertainment ultimately couldn't escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with a 60% equity stake. Although nominally acquired, for Sanqi Mutual Entertainment, this was a worthwhile development opportunity. The two companies completed asset restructuring of various industries through multi-party collaboration. It is worth mentioning that the exhibition strategy always operated by Sanqi Mutual Entertainment was beginning to show its prowess. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company prior to the acquisition to a dual-core listed company where advanced production manufacturing and modern cultural creativity run in parallel. Correspondingly, the company operation strategy of Sanqi Mutual Entertainment also underwent changes, the business scope of the original cultural creative industry covered
