This Lord is Very Scientific-Chapter 690 - 622
(Anti-theft, to be sent later.) Abstract: Accompanied by advancements in technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to the public. The methods of spreading games are no longer confined to rigid promotional modes, and their influence has gradually extended to various aspects of life. Correspondingly, game companies need to continuously integrate resources, innovate, update, and improve performance with the rapid development of the times. A diversification strategy fits well with the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, diversification strategy, as the preferred model for corporate development, is also applicable to game companies. This article explains, using Sanqi Mutual Entertainment Company as an example, the impact of diversification strategy on the performance of game companies.
Keywords: Diversification Strategy; Game Company; Performance; Impact; Sanqi Mutual Entertainment
Diversification strategy is a market strategy tool adopted by enterprises during their operations to capture and explore new markets. It is also a strategic plan used to enter new business fields with targeted and prepared measures to avoid risks encountered in operating single businesses. Applying diversification strategy to game companies can effectively improve company performance, bringing about a process from quantitative to qualitative change in the development of game companies.
1. The macro background of diversification strategy
Heading into 2021, with the country's strong control over the pandemic, people's lives are back on track, and economic and cultural sectors are showing a great recovery. As of April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the national cultural industry has basically returned to pre-pandemic levels[1]. This is very good news for the gaming industry, which occupies a significant portion of the cultural industry. Although the pandemic did not heavily impact the gaming industry, the inability to conduct offline activities always affects the performance of game companies. The cultural industry's warming provides game companies the potential for great development and prosperity, facilitating more of them to embark on continuous development paths[2].
From the outbreak of last year's pandemic to the current stable situation, the government has issued policies to support the development of the cultural industry from various aspects such as finance, regulations, and finance. Although the pandemic hindered people's mobility, it couldn't control the speed of online network dissemination. More and more new media emerged, driving the cultural industry development during pandemic prevention. However, each enterprise's desire to squeeze into the online market led to an extremely competitive environment in the cultural industry. Many traditional offline enterprises couldn't withstand the pandemic impacts and were socially eliminated, but in these short two years, many successfully transformed cultural industries emerged. These enterprises mostly accelerated transformation and upgrades through diversification strategy, significantly gaining during the pandemic prevention when residents' consumption levels increased. They obtained diverse development models and revenue channels, such as the transformation made by Sanqi Mutual Entertainment during pandemic prevention worth emulating by most game companies[3].
2. A brief analysis and classification of diversification strategy
(i) Brief analysis of diversification strategy
Diversification strategy was proposed by the founding father of strategic management, Igor Ansoff, in his book "What Is Corporate Strategy," where the classification of diversification strategy is discussed. This influential strategic model is involved in management policies in various countries, leading every large and small enterprise today to seek a place according to the diversification strategy development model[4].
(ii) Classification of diversification strategy and its significance
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The four different modes derived from diversification strategy each have different meanings. Horizontal diversification refers to enterprises using the original conditions provided by the market to produce new products that satisfy new user needs, thus driving market consumption. Vertical integration involves enterprises deriving vertically according to their development situation, utilizing the product industry chain to penetrate other market fields, seeking new consumer targets. Concentric diversification focuses more on innovation of existing technology, requiring the production of new products within the existing production range, realizing the process through the transformation of existing technology. Conglomerate diversification emphasizes expanding the scope of operations change, requiring enterprises to connect with factors like raw materials, technology, and markets related to their products for scope expansion in operations[5].
3. Impact of diversification strategy on game companies' performance
It can be said that in the operation process of all game companies, the impact of diversification strategy on the performance of game companies is mainly divided into two parts: changes in operational modes and strategic planning shifts. From these two parts' changes, effects gradually lead to performance improvements. The influence brought by the diversification strategy is multifaceted. This paper will take 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) Changes in operational modes
Currently, the primary operational scope of Sanqi Mutual Entertainment Game Company is quite extensive, which is also a benefit brought by the diversification strategy. The business of the company not only involves interactive entertainment operation but also covers the research and publication of mobile and web games completely. Moreover, recent development aligns with modern technology through constant innovation, expanding the market into layouts of film, animation, ACG culture, music, VR technology, and various live entertainment businesses, shaping the market's cultural industry chain belonging to Sanqi Mutual Entertainment Game Company.
Sanqi Mutual Entertainment Game Company was established in 1995, but its initial development journey wasn't smooth sailing. Originally a small enterprise, Sanqi Mutual Entertainment didn't involve game or entertainment industry operations at first, always facing the risk of being swallowed by the market. Yet, relying on the stable development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. However, following poor operations and market tightening, Sanqi Mutual Entertainment eventually could not escape the fate of being acquired. 𝘧𝑟𝑒𝑒𝘸𝘦𝘣𝑛𝑜𝘷𝑒𝓁.𝘤𝘰𝓂
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the equity of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. The two companies completed asset restructuring of various industries through multi-party collaboration. It is noteworthy that Sanqi Mutual Entertainment's ongoing operations strategy began showing promise, transforming from a single modern cultural creativity company before acquisition to today's dual major business listed company of advanced production manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's company operation strategy is also undergoing changes, as the business scope covered by the original cultural creativity industry
