This Lord is Very Scientific-Chapter 713 - 645
(Anti-theft, to be sent later.) Abstract: With the advancement of technology and the coverage model of smart networks, the recent rise of the gaming industry is evident to the public. The way games are promoted is no longer limited to rigid modes of promotion, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate, and improve performance to keep pace 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, the diversification strategy, as the preferred development mode for enterprises, equally applies to game companies. This article, taking Sanqi Mutual Entertainment Company as an example, explains the impact of diversification strategy on the performance of game companies.
Keywords: Diversification strategy; Game companies; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy adopted by enterprises in their operation process to capture more new markets and expand into new markets. It is also a strategic plan used by enterprises to avoid risks encountered during the operation of a single business and to enter new business fields with orientation and preparation. Applying diversification strategy to game companies can effectively improve company performance, bringing about a transformation process from quantitative changes to qualitative changes for the development of game companies. 𝐟𝗿𝐞𝚎𝚠𝐞𝚋𝕟𝐨𝚟𝐞𝕝.𝕔𝕠𝚖
1. The macro background of diversification strategy
Entering 2021, with the country's effective control over the pandemic, people's lives have returned to normal, and a robust recovery of economic culture has emerged. On April 30, 2021, according to 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 very favorable news for the gaming industry, which accounts for a significant proportion of the cultural industry. Although the pandemic did not greatly affect the gaming industry, the inability to conduct offline activities always impacts the performance of game companies. The revival of the cultural industry signifies, for most game companies, that the great development and prosperity of the cultural industry can promote and drive more game companies toward sustainable development [2].
From last year's outbreak to the current stabilization of the pandemic, the country has issued relevant policies to support the development of the cultural industry in various aspects such as finance, systems, and finance. Although the pandemic has hindered people's travel, it cannot control the speed of online network dissemination. The emergence of more and more new media has driven the development of the cultural industry during the pandemic prevention and control period. However, due to each enterprise's desire to enter the online market, the competitive environment within the cultural industry has become extremely intense. Many traditional offline enterprises have been eliminated by society due to being unable to withstand the pandemic's impact at this time. Yet, within these short two years, many successfully transformed cultural industries have emerged. These enterprises mostly rely on the diversification strategy mode to accelerate transformation and upgrading, and during the pandemic prevention and control period with significantly increased resident consumption levels, they have also harvested rich rewards, obtaining more diversified development modes and funding income channels. An example worth learning from for most game companies is the transformation made by Sanqi Mutual Entertainment Company during the pandemic prevention and control period [3].
2. Analysis and classification of diversification strategy
(1) Brief analysis of diversification strategy
Diversification strategy was proposed by Igor Ansoff, the pioneer of strategic management. In his book 'What is Corporate Strategy,' he mentioned the classification of diversification strategy. This world-impacting strategic model has been involved in management policy guidelines of multiple countries, resulting in every enterprise, big or small, seeking a place according to the development model of diversification strategy today [4].
(2) Classification and meaning of diversification strategy
The diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The four different modes derived from the diversification strategy also have different meanings. Horizontal diversification refers to the production of new products that satisfy new user demands using the original conditions offered by the market, thereby driving market consumption. Vertical integration is where enterprises based on their development status undergo vertical derivation, infiltrating other market fields through the product industry chain to seek new consumer objects. Concentric diversification focuses more on the innovation of existing technology, requiring new product production within the original production scope, realizing the transformation through the evolution of existing technology. Overall diversification emphasizes more on the expansion of business scope changes, requiring enterprises to connect their products with related raw materials, technologies, and market factors to expand their business scope [5].
3. The impact of diversification strategy on the performance of game companies
It can be said that during the operation process of all game companies, the impact of diversification strategy on company performance is uniformly divided into two parts: changes in the operating mode and shifts in strategic planning. From these two parts, the changes gradually generate effects that drive the company's performance improvement. The impact brought by diversification strategy is multifaceted. This paper will analyze the impact of diversification strategy on the performance of game companies, taking Sanqi Mutual Entertainment Game Company as an example [6].
(1) Changes in the operating mode
Currently, Sanqi Mutual Entertainment Game Company's main operating scope is very extensive, which is also the advantage brought by the diversification strategy. The company's business not only involves interactive entertainment operations, but also comprehensively covers the research and publication of mobile games and web games under Sanqi Mutual Entertainment Game Company. Moreover, in recent development years, the company continuously innovate following the era's technology, expanding the market layout to include film, animation, second dimension, and is shaping its own market cultural industry chain in music, VR technology, and various live broadcast and pan-entertainment industries.
Sanqi Mutual Entertainment Game Company was founded in 1995, but its developmental path in the early stage was not smooth. The precursor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially not involving gaming and entertainment industry operations in its industrial chain, always at risk of being engulfed by the market. However, relying on stable development of single industry, Sanqi Mutual Entertainment was listed in 2011. But with poor operational performance in later stages and market contraction, Sanqi Mutual Entertainment eventually did not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired a sixty percent stake in Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, for Sanqi Mutual Entertainment, it was a developmental opportunity worth seizing. Through multi-faceted collaboration, the two companies completed asset restructuring across various industries. It's worth mentioning that Sanqi Mutual Entertainment Game Company's operational strategy that has always been in operation showcased its initial potential at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before acquisition to a dual-main-listed company with advanced manufacturing and modern cultural creativity parallel. Correspondingly, Sanqi Mutual Entertainment's company operational strategy has also undergone changes, as the business scope covered by the original cultural creative industry.
