This Lord is Very Scientific-Chapter 712 - 644
(Anti-theft, to be released later.) Abstract: With the advancement of technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to everyone. The way games are disseminated is no longer confined to rigid promotional methods, and the influence of games has gradually expanded to all aspects of life. Correspondingly, gaming companies need to continuously integrate resources, innovate, and improve performance amidst the rapid development of the times. A diversification strategy caters well to the planning needs and development goals within the gaming industry. In the context of economic globalization, the diversification strategy, as a preferred model for corporate development, is also applicable to gaming companies. This article uses Sanqi Mutual Entertainment Company as an example to illustrate the impact of diversification strategy on the performance of gaming companies.
Keywords: Diversification strategy; Gaming company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategic approach adopted by enterprises to capture more new markets and expand into new markets. It is also a strategic plan for enterprises to avoid the risks encountered in operating a single business and enter new business fields with purpose and preparation. Applying diversification strategies to gaming companies can effectively improve company performance, bringing a transformation from quantitative to qualitative changes in the development of gaming companies.
1. The Macroeconomic Background of Diversification Strategy
Entering 2021, with the effective control of the pandemic in the country, people's lives have returned to normal, and economic and cultural sectors are also showing a positive recovery trend. On 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 the pre-pandemic level[1]. This is extremely favorable news for the gaming industry, which accounts for a large proportion of 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 gaming companies. The recovery of the cultural industry signifies that the cultural industry's major development and prosperity can promote more gaming companies to embark on a sustainable development path[2].
From last year's pandemic outbreak to the current stabilization, the state has promulgated relevant policies from various aspects such as finance, institutions, and finance to support the development of the cultural industry. Although the pandemic has hindered travel, it cannot control the transmission speed of online networks. The emergence of new media has propelled the development of the cultural industry during the pandemic prevention and control period, but the competition environment within the cultural industry is very fierce as each enterprise seeks to enter the online market. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society, but in this short span of two years, many successful transitioning cultural industries have emerged. These enterprises largely relied on the diversification strategy model to accelerate their transition and upgrade, gaining diversified development models and income channels during the pandemic prevention and control period when residents' consumption levels significantly increased. Sanqi Mutual Entertainment's transformation during the pandemic prevention and control period is worth emulating by most gaming companies[3].
2. Analysis and Classification of Diversification Strategy
(1) Analysis of Diversification Strategy
The diversification strategy was proposed by Igor Ansoff, the father of strategic management. In his book "What is Corporate Strategy," he mentioned the classification of diversification strategies. This world-influencing strategic model is involved in the management policies of several countries, so much so that today every large and small enterprise is seeking a place by following the development model of diversification strategy[4].
(2) Classification and Meaning of Diversification Strategy
The diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The different modes derived from the diversification strategy each have different meanings. Horizontal diversification refers to companies utilizing the raw conditions provided by the market to produce new products that meet new user needs, thus driving market consumption. Vertical integration involves businesses developing vertically based on their development situation, using the product industrial chain to penetrate other market fields to seek new consumer targets. Concentric diversification focuses more on innovation within existing technologies, requiring new product production within the existing production range, achieving change through the metamorphosis of existing technology. Conglomerate diversification emphasizes expanding the business scope, where companies need to expand their business scope by linking factors such as raw materials, technology, and markets related to their products[5].
3. The Impact of Diversification Strategy on Gaming Company Performance
It can be said that in the operations of all gaming companies, the impact of the diversification strategy on gaming company performance is generally divided into two parts: changes in business models and shifts in strategic planning. From these two parts of transformation, effects gradually arise, driving the improvement of company performance. The impact of the diversification strategy is multifaceted, and this paper will analyze and study the impact of the diversification strategy on gaming company performance using Sanqi Mutual Entertainment Game Company as an example[6].
(1) Changes in Business Models
Currently, the primary business scope of Sanqi Mutual Entertainment Game Company is quite extensive. This is also the advantage brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment but also fully handles the development and distribution of mobile games and web games. In recent years of development, the company has continuously innovated with the advancement of the times, expanding its market layout to include film and anime secondary dimensions, and shaping its market cultural industry chain in music, VR technology, and various live streaming pan-entertainment businesses.
Sanqi Mutual Entertainment Game Company was founded in 1995, but the early development path was not smooth sailing. The predecessor of the Sanqi Mutual Entertainment Game Company was a small enterprise, initially not involved in the operation of gaming and other entertainment industries in its industry chain, always at 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. But with later poor operations and market contraction, Sanqi Mutual Entertainment ultimately could not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with a 60% shareholding. Although it was nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. Under multi-faceted cooperation, the two companies completed asset restructuring of various industries. It is noteworthy that the strategy that Sanqi Mutual Entertainment had been operating started to reveal its edge. The company transitioned from a single modern cultural creative company before the acquisition to a dual main business listed company of advanced production manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's company operation strategy also underwent changes, with the business scope originally covered by the cultural creative industry...
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