This Lord is Very Scientific-Chapter 665 - 597
(Anti-theft, will release in due time.) Abstract: With the advancement of technology and the coverage model of smart networks, the rise of the gaming industry in recent years has been evident to the citizens. The traditional modes of game promotion have evolved, with games influencing various aspects of life. Correspondingly, game companies need to continuously integrate resources and innovate with rapid societal development to enhance performance. A diversification strategy perfectly aligns with the planning needs and development objectives within the gaming industry. In the context of economic globalization, diversification strategy, as the primary model for corporate development, is also applicable to game companies. This article takes Sanqi Mutual Entertainment Company as an example to elucidate 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 strategy means used by enterprises during operation to capture new markets and enter new business fields with preparation, aiming to avoid risks encountered in operating a single business. Applying diversification strategy to game companies can effectively enhance company performance, bringing about a transformation from quantitative to qualitative change in the development of game companies.
1. The Macroeconomic Background of Diversification Strategy
In 2021, under effective national control of the pandemic, people's lives have returned to normalcy, and the economic and cultural sectors present a favorable recovery situation. On April 30, 2021, data released by the National Bureau of Statistics revealed that the development of the cultural industry nationwide had basically returned to pre-pandemic levels[1]. This is highly beneficial news for the gaming industry, which holds a significant proportion of the cultural industry. Although the pandemic did not greatly impact the gaming industry, the inability to conduct offline activities has always affected game companies' performance. The revival of the cultural industry means that the great development and prosperity of the cultural industry can lead more game companies to a path of sustainable development[2].
From the outbreak of last year's pandemic to the current stabilization, the country has issued policies supporting cultural industry development in terms of finance, regulations, and finance. While the pandemic hindered people's travel, it could not control the spread speed of online networks. The emergence of more new media drove cultural industry development during the pandemic control period. However, the competitive environment in the cultural industry became intense as enterprises rushed to enter the online market. Many traditional offline enterprises could not withstand the pandemic impact and were phased out, but within these short two years, many cultural industries successfully transformed. These enterprises largely relied on the diversification strategy mode to accelerate transformation and upgrading, achieving remarkable results with more diversified development models and income channels during the pandemic control period, where consumer spending levels significantly increased. Sanqi Mutual Entertainment Company's efforts in transformation during the pandemic are a worthy reference for most game companies[3].
2. Brief Analysis and Classification of Diversification Strategy
(1) Brief Analysis of Diversification Strategy
Diversification strategy, proposed by the forefather of strategic management, Igor Ansoff, is mentioned in his book "Corporate Strategy," covering its classifications. This influential strategic mode has been included in management policy guidelines in multiple countries, resulting in enterprises, big or small, pursuing a place by following the diversification strategy development mode today[4].
(2) Classification and Significance of Diversification Strategy
Diversification strategy is categorized into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. These four modes derived from diversification strategy each have different meanings. Horizontal diversification refers to enterprises leveraging the original market conditions to produce new products meeting consumers' new demands, thus driving market consumption. Vertical integration involves enterprises branching vertically based on their development to seek new consumers by infiltrating other market areas through the product supply chain. Concentric diversification focuses more on technological innovation within the existing production range to produce new products, achieving this through the metamorphosis of existing technology. Conglomerate diversification emphasizes expanding operational scope, requiring enterprises to expand by connecting factors related to their products, such as raw materials, technology, and markets[5].
3. The Impact of Diversification Strategy on Game Company Performance
In the operation process of all game companies, the impact of diversification strategy on their performance is divided into two parts: changes in operating modes and shifts in strategic planning. These changes gradually take effect in enhancing company performance. The impact of diversification strategy is multifaceted. This paper will analyze the impact of diversification strategy on the performance of game companies, using Sanqi Mutual Entertainment Game Company as an example[6].
(1) Change in Operating Modes
Currently, the operational scope of Sanqi Mutual Entertainment Game Company is very extensive, which is an advantage brought by the diversification strategy. The company not only involves interactive entertainment operations but also handles the development and distribution of mobile and web games. In the recent developments, keeping pace with technological advancement, it has expanded its market to include film and television, anime, music, VR technology, and various live broadcast businesses, creating its market culture industry chain in the entertainment sector.
In 1995, when Sanqi Mutual Entertainment Game Company was founded, its development path was not all smooth. The company's predecessor was a small enterprise, initially without involvement in operating games and entertainment industries. There was always a risk of being swallowed by the market. However, through stable development of a single industry, Sanqi Mutual Entertainment Company went public in 2011. Yet, with poor subsequent operation and market contraction, Sanqi Mutual Entertainment could not escape acquisition.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with a 60% equity stake. Although nominally acquired, this was a development opportunity worth seizing for Sanqi Mutual Entertainment. With extensive cooperation, the two companies completed various industrial asset restructurings. Notably, Sanqi Mutual Entertainment's operational strategy, which had been gradually emerging, was initially evident. Sanqi Mutual Entertainment Company transformed from a single modern cultural creativity company before acquisition into a dual-primary listed company with advanced manufacturing and modern cultural creativity running parallel. The company's operational strategy also changed correspondingly, with previously covered business ranges in the cultural creative industry.
