This Lord is Very Scientific-Chapter 700 - 632
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(Anti-theft, will be posted later.) Abstract: With the advancement of technology and the pervasive model of intelligent networks, the rise of the gaming industry in recent years is evident to all. The method of disseminating games is no longer confined to rigid promotional models, and their influence is gradually expanding to all aspects of life. Accordingly, game companies need to continually integrate resources, innovate, and improve performance in line with the rapid development of the times. A diversification strategy perfectly aligns with the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, a diversification strategy, as a preferred model for corporate development, is equally applicable to game companies. This paper, using Sanqi Mutual Entertainment Company as an example, illustrates the impact of diversification strategies on the performance of game companies.
Keywords: Diversification strategy; Game companies; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategic means adopted by enterprises during operations to occupy more and explore new markets, as well as a strategic plan that enterprises use to enter new fields of business with target and preparedness, in order to mitigate the risks encountered in operating a single venture. Applying diversification strategies effectively to game companies can enhance company performance substantially and facilitate a process from quantitative to qualitative change in the development of game companies.
1. The macro background of diversification strategy
Entering 2021, with the country's effective control of the pandemic, people's lives returned to normal, and the economic and cultural sectors presented a favorable trend of recovery. On April 30, 2021, according to data released by the National Bureau of Statistics, the development of the national cultural industry basically recovered to pre-pandemic levels[1]. This is very advantageous information for the gaming industry, which holds a large share of the cultural industry. Although the pandemic did not significantly impact the gaming industry, the inability to conduct offline activities has continuously affected the performance of game companies. The recovery of the cultural industry signifies, for most gaming companies, a broader development and prosperity that can drive more game companies toward sustainable development[2].
From the outbreak of last year's pandemic to the current stabilization, the state has promulgated related policies from various aspects such as finance, institutions, and finance to support the development of the cultural industry. The pandemic may have stopped people from traveling, but it could not control the online network's speed of dissemination. The emergence of more and more new media has been driving the development of the cultural industry during the pandemic containment period. However, since many enterprises are vying to enter the online market, competition within the cultural industry has been fierce. Many traditional offline companies have succumbed to the pandemic impact and been eliminated by society, but in these short two years, many successfully transformed cultural industries have emerged, mostly relying on the diversification strategy model to accelerate transformation and upgrading, and they have also reaped substantial benefits during the pandemic containment period, when residents' consumption levels increased markedly, resulting in more diversified development models and revenue channels. For instance, Sanqi Mutual Entertainment's transformation during the pandemic containment period is a worthy reference for most game companies[3].
2. Brief analysis and classification of diversification strategies
(a) Brief analysis of diversification strategies 𝕗𝐫𝚎𝗲𝘄𝐞𝕓𝐧𝕠𝘃𝕖𝐥.𝐜𝚘𝚖
Diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book "What Is Corporate Strategy," he mentioned the classification of diversification strategies. This globally influential strategic model is involved in the management policies and guidelines of many countries, making almost every enterprise, big or small, strive for a place according to the development model of diversification strategies[4].
(b) Classification and implications of diversification strategies
There are four types of diversification strategies: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The four different models derived from diversification strategies have distinct meanings. Horizontal diversification involves enterprises using the primitive conditions provided by the market to produce new products that meet users' new demands, thereby driving market consumption. Vertical integration refers to enterprises deriving vertically based on their development situation, penetrating other market fields with product industrial chains to seek new consumers. Concentric diversification focuses more on innovation in existing technologies, requiring the production of new products within the existing production range, achieving this through the transformation of existing technology. Conglomerate diversification emphasizes expanding the scope of operations, requiring enterprises to consider factors such as raw materials and technologies related to their products, as well as markets, to expand their operating range[5].
3. The impact of diversification strategies on the performance of game companies
It can be said that in the operations of all game companies, the impact of diversification strategies on performance is unified into two parts: the change of operating mode and the shift in strategic planning. These changes gradually generate effects to boost company performance. The impact of diversification strategies is manifold. This paper will use Sanqi Mutual Entertainment Game Company as a case to analyze and study the impact of diversification strategies on the performance of game companies[6].
(1) Change in operating modes
Currently, the main operation scope of Sanqi Mutual Entertainment Game Company is quite extensive, largely due to the advantages brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment but also fully undertakes the development and distribution of mobile games and web games. In recent years, it has kept pace with technological advancements and continuously innovated, expanding the market to realms of film and animation, creating its own market cultural industry chain in music, VR technology, and various types of live broadcasting among other pan-entertainment businesses.
The Sanqi Mutual Entertainment Game Company was founded in 1995, but its early development was not smooth sailing. The precursor to Sanqi Mutual Entertainment Game Company was a small enterprise, initially with no involvement in game and other entertainment industry operations within its industrial chain, always under 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. Yet, with poor operational management in later stages and market contraction, Sanqi Mutual Entertainment eventually could not escape the fate of acquisition.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Though nominally acquired, this was a valuable development opportunity for Sanqi Mutual Entertainment. Through multi-faceted collaboration, the two companies completed the asset restructuring of various industries. Notably, the strategy that Sanqi Mutual Entertainment had always operated was beginning to show its edge. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company prior to acquisition to a current dual-main business listed company involving advanced manufacturing and modern cultural creativity concurrently. Corresponding to this, Sanqi Mutual Entertainment's company operational strategy also underwent changes. The business scope covered by the original cultural creative industry
