This Lord is Very Scientific-Chapter 685 - 617
(Anti-theft, will be posted later.) Abstract: With the progression of technology and the coverage model of the intelligent network, the rise of the gaming industry in recent years has been evident to the public. The dissemination of games no longer confines itself to rigid promotional modes, and the influence of games is gradually expanding to all aspects of life. Correspondingly, game companies must continually integrate resources, innovate, update, and improve performance amid the rapid development of the era. The diversification strategy perfectly aligns with the planning needs and developmental goals within the gaming industry. In the background of economic globalization, the diversification strategy, as the preferred development mode for enterprises, is equally applicable to game companies. This article uses 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
The diversification strategy is a market strategic approach companies use to occupy more new markets and explore new markets; it is also a strategic plan that enterprises adopt to evade risks encountered during the operation of a single business by entering new business fields with targeted preparation. Applying the diversification strategy to a game company can effectively improve company performance and bring a transformation from quantitative to qualitative changes in the game company's development.
1. The Macrosocial Background of the Diversification Strategy
Entering the year 2021, under the effective control of the pandemic by the nation, people's lives have returned to normal, and the economy and culture are showing a great recovery trajectory. On April 30, 2021, data released by the National Bureau of Statistics showed that the national cultural industry's development had basically recovered to pre-pandemic levels[1]. This is incredibly favorable news for the gaming industry, which holds a significant proportion in the cultural industry. Despite the pandemic's arrival, it did not heavily impact the gaming industry, yet the inability to conduct offline activities continued to affect the performance of game companies. The warming of the cultural industry implies for most game companies that the great development and prosperity of the cultural industry can promote and enable more game companies to embark on a sustainable development path[2].
Since the outbreak of the pandemic last year to the current stabilization, the country has issued relevant policies from multiple aspects such as finance, institution, and financial support to foster the development of the cultural industry. Although the pandemic halted people's travel, it couldn't control the online network's dissemination speed. More and more new media appeared, driving the development of the cultural industry during the pandemic prevention period. However, as each company attempted to squeeze into the online market, the competitive environment within the cultural industry became intensely fierce. Many traditional offline companies failed to withstand the pandemic's impact and were eliminated by society. However, in these short two years, numerous cultural industries successfully transformed, accelerating their transformation and upgrading through a diversification strategy model. During the pandemic prevention period, where the residents' consumption levels significantly increased, they also reaped considerable benefits, gaining more diversified development models and funding income channels. For instance, the transformation undertaken by Sanqi Mutual Entertainment during the pandemic prevention period is something most game companies could draw from[3].
2. A Brief Analysis and Classification of Diversification Strategy
(I) A Brief Analysis of Diversification Strategy
The diversification strategy was proposed by Igor Ansoff, the pioneer of strategic management. In his book "Corporate Strategy," he mentioned the classification of diversification strategies. This globally influential strategic model is involved in the management policy strategies of multiple countries, thus leading every big and small enterprise today to seek a place according to the development model of the diversification strategy[4]. 𝕗𝐫𝐞𝕖𝕨𝐞𝗯𝚗𝕠𝘃𝐞𝚕.𝐜𝗼𝚖
(II) Classification and Meaning of Diversification Strategy
The diversification strategy is divided into four types: Horizontal Diversification, Vertical Integration, Concentric Diversification, and Conglomerate Diversification. The four different modes generated from the diversification strategy have varied meanings. Horizontal Diversification refers to an enterprise producing new products that satisfy new consumer demands using the original conditions the market provides, thereby driving market consumption; Vertical Integration refers to an enterprise's vertical extension based on its development situation, using the product's industry chain to penetrate other market fields seeking new consumer targets; Concentric Diversification emphasizes innovation through original technology, requiring new product production within the original production scope, achieving the whole process through the metamorphosis of original technology; Conglomerate Diversification emphasizes expanding the operation scope, requiring enterprises to connect relevant factors such as raw materials, technology, and market related to its products to expand the operation scope[5].
3. The Impact of Diversification Strategy on the Performance of Game Companies
In the operations of all game companies, the impact of diversification strategy on a game company's performance can be divided into two parts: the change of operational mode and the shift of strategic planning. From these two parts of change gradually generates effects that drive the company's performance enhancement. The impacts brought by the diversification strategy are multifaceted. This paper will use Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on the performance of game companies[6].
(1) Change of Operational Mode
Currently, the main operation scope of Sanqi Mutual Entertainment Game Company is extremely extensive, which benefits from the advantages brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment, but it also wholly encompasses the research and distribution of mobile games and web games under Sanqi Mutual Entertainment Game Company. Moreover, in recent years, keeping pace with the times and continually innovating, it has expanded the market to lay out films, anime secondary dimensions, and is shaping the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in areas like music, VR technology, and various live broadcasts in the pan-entertainment business.
In 1995, Sanqi Mutual Entertainment Game Company was established, but the development path in the early stages was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially, the industry chain of Sanqi Mutual Entertainment did not involve the operation of games and other entertainment industries, constantly facing the risk of being swallowed by the market. Yet, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. Nonetheless, following operational mismanagement and market contraction in later stages, Sanqi Mutual Entertainment inevitably faced the fate of acquisition.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with 60% equity. Though nominally acquired, for Sanqi Mutual Entertainment, this represented a development opportunity worth seizing. Through multi-party collaboration, the two companies completed asset restructuring of various industries. Notably, the exhibition strategy operated by Sanqi Mutual Entertainment had commenced to show prominence at this time. Sanqi Mutual Entertainment transformed from being a singular modern cultural and creative company before the acquisition to a dual-main business publicly listed company, concurrently operating advanced production manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's corporate operation strategy was also changing, encompassing the business scope covered by the original cultural and creative industry.
