This Lord is Very Scientific-Chapter 702 - 634
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(Anti-theft, to be sent later.) Abstract: With the progress of technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to the populace. The dissemination of games is no longer confined to rigid promotional models, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate and iterate, and improve performance in line with the rapid development of the times. The diversification strategy fits exactly with the game industry's planning needs and development goals. In the context of economic globalization, the diversification strategy, as the preferred mode of enterprise development, is also applicable to game companies. This article 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
The diversification strategy is a market strategy method adopted by enterprises in the operation process to occupy more new markets and develop new markets. It is also a strategic plan used by enterprises to avoid the risks encountered in operating a single business and to purposefully and preparedly enter new business fields. Applying the diversification strategy practically to game companies can effectively improve the company's performance, bringing a process of transformation from quantitative change to qualitative change for the development of game companies.
1. The Macro Background of Diversification Strategy
Stepping into 2021, under the country's effective control of the pandemic, people's life is back on track, and the economic and cultural landscape shows a promising trend of recovery. On April 30, 2021, according to related data published by the National Bureau of Statistics, the overall development of the cultural industry nationwide has basically returned to the pre-pandemic level [1]. This is incredibly beneficial news for the gaming industry, which holds a large proportion within the cultural industry. Although the pandemic did not significantly impact the gaming industry, the inability to conduct offline activities has always affected the performance of game companies. The warming of the cultural industry means that for most game companies, the great development and prosperity of the cultural industry can promote and lead more game companies onto the path of sustainable development [2].
From the outbreak of the pandemic last year to the current stability, the country has promulgated relevant policies from aspects like finance, system, and finance to support the development of the cultural industry. Although the pandemic hindered people's travel, it could not control the spread speed of the online network. More and more new media have emerged, driving the development of the cultural industry during the pandemic prevention period. However, the competition environment within the cultural industry is very fierce due to every company trying to squeeze into the online market. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society. However, within these short two years, many successfully transformed cultural industries have emerged, and most of these companies accelerated transformation and upgrading relying on the diversification strategy model, significantly benefiting during the pandemic prevention period with a notable increase in resident consumption levels. They have obtained more diversified development models and income channels. For example, the transformation made by Sanqi Mutual Entertainment during the pandemic prevention period is worth learning for most game companies [3].
2. Simple Analysis and Classification of Diversification Strategy
(1) Simple Analysis of Diversification Strategy
The diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book "Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategy model is involved in the management policies of multiple countries, so much so that today every big and small enterprise seeks to secure a place according to the development mode of the diversification strategy [4].
(2) Classification and Meaning of Diversification Strategy
There are four types of diversification strategy: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The four different models derived from the diversification strategy have different meanings. Horizontal diversification refers to the production of new products that meet new user needs using the original market conditions, thereby driving market consumption. Vertical integration, on the other hand, is derived vertically by the enterprise based on its development situation, using the product industry chain to penetrate other market fields to seek new consumers. Concentric diversification focuses more on innovation of existing technology, requiring the production of new products within the original production scope, the entire process achieved through the metamorphosis of existing technology. Overall diversification focuses more on changes in expanding the scope of operations. The enterprise needs to expand its scope of operation by contacting factors related to its product, such as raw materials, technology, and market [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 in operation mode and the shift of strategic planning. From the gradual effect generated by the transformation of these two parts, the company's performance is driven to improve. The impact brought by the diversification strategy is multifaceted. This paper will use Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on game company performance [6].
(1) Change in Operation Mode
Currently, the main operation scope of Sanqi Mutual Entertainment Game Company is very broad. This is also thanks to the advantages brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment but also takes full responsibility for the development and distribution of mobile games and web games under Sanqi Mutual Entertainment Game Company. Moreover, in recent years of development, it has kept pace with times and technology to continuously innovate, expanding the market to include films and anime two-dimensional layouts, as well as establishing its market cultural industry chain in music, VR technology, and various live streaming and other pan-entertainment businesses.
Sanqi Mutual Entertainment Game Company was established in 1995, but the development path in the early stages was not smooth sailing. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and initially, Sanqi Mutual Entertainment's industrial chain did not involve operations in the entertainment industry like games, always facing the risk of being incorporated into the market. However, with the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011, but due to poor operations in later stages and market contraction, Sanqi Mutual Entertainment ultimately did not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% equity of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Despite being nominally acquired, this was a development opportunity worth grasping for Sanqi Mutual Entertainment. The two companies completed various industry asset reorganizations through multi-party collaboration. Notably, the strategy that Sanqi Mutual Entertainment had always operated on was beginning to show its edge at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before being acquired to today's dual-core listed company of advanced production manufacturing and modern cultural creativity operating in parallel. Correspondingly, Sanqi Mutual Entertainment's corporate operation strategy also underwent changes, with the business scope covered by the original cultural creative industry expanding.
