This Lord is Very Scientific-Chapter 722 - 654
(Anti-theft, to be published later.) Abstract: With the advancement of technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years is evident to the public. The dissemination of games is no longer confined to rigid promotional modes, and the influence of games has gradually expanded into all aspects of life. Correspondingly, gaming companies also need to continuously integrate resources, innovate, update, and improve performance with the rapid development of the times. A diversification strategy perfectly aligns with the planning needs and development goals within the gaming industry. Under the backdrop of economic globalization, a diversification strategy, as a preferred mode of enterprise development, is equally applicable to gaming companies. This article uses Sanqi Mutual Entertainment Company as an example to explain the impact of a diversification strategy on the performance of gaming companies.
Keywords: diversification strategy; gaming company; performance; impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy tool adopted by enterprises during their operations to capture more new markets and expand existing markets. It is also a strategic plan for enterprises to enter new areas of business with targeting and preparation to mitigate risks encountered during the operation of a single business. Applying a diversification strategy to gaming companies can effectively improve company performance, bringing about a transformation from quantitative to qualitative growth in the development of gaming companies.
1. Macroeconomic Background of Diversification Strategy
Entering 2021, under the strong control of the pandemic by the state, people's lives have resumed normalcy, and the economic and cultural sectors show a promising recovery. On April 30, 2021, data released by the National Bureau of Statistics indicated that national cultural industry development had basically returned to pre-pandemic levels [1]. This is highly favorable news for the gaming industry, which holds a significant portion of the cultural industry. Although the pandemic did not greatly impact the gaming industry, the inability to conduct offline activities has always affected the performance of gaming companies. The recovery of the cultural industry means that the great development and prosperity of the cultural industry can promote more gaming companies to embark on a path of sustainable development [2].
From last year's outbreak to the stabilization of the pandemic, the state has supported the development of the cultural industry through various policies in finance, institutions, and financial sectors. While the pandemic hindered people's travel, it could not control the speed of online network transmission. The emergence of more and more new media drove the development of the cultural industry during the pandemic control period. However, since every company wants to enter the online market, the competitive environment within the cultural industry is very fierce. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society. Yet, over these short two years, many successfully transformed cultural industries have also emerged, relying on a diversification strategy model to speed up transformation and upgrading. During the pandemic control period, when the level of resident consumption significantly increased, they also gained a lot, obtaining more diversified development models and funding income channels. For example, the transformation made by Sanqi Mutual Entertainment Company during the pandemic control period is worth emulating for most gaming companies [3].
2. Brief Analysis and Classification of Diversification Strategy
(1) Brief 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 globally influential strategy model is involved in management guideline policies in multiple countries, making every small and large enterprise today strive to find a place according to the development model of diversification strategy [4].
(2) Classification and Implications of Diversification Strategy
Diversification strategy is divided into four types: Horizontal Diversification, Vertical Integration, Concentric Diversification, and Overall Diversification. The four different derived modes of diversification strategy also have different meanings. Horizontal diversification refers to the enterprise using the original conditions provided by the market to produce new products that satisfy new user needs, thereby driving market consumption. Vertical integration is when an enterprise vertically derives according to its development situation and uses the product industry chain to penetrate other market fields to seek new consumers. Concentric diversification focuses more on the innovation of existing technology, requiring the production of new products within the original production range, achieving this through the transformation of existing technology. Overall diversification places more emphasis on the change of business scope and expansion, requiring enterprises to connect with raw materials and technology related to their products and market factors for expansion of business scope [5].
3. Impact of Diversification Strategy on Gaming Companies' Performance
It can be said that in the operations of all gaming companies, the impact of a diversification strategy on game company performance is uniformly divided into two parts: changes in business model and shifts in strategic planning. The transformation in these two parts gradually produces effects that drive the improvement of company performance. The impacts brought by a diversification strategy are multifaceted. This paper will analyze and study the impact of a diversification strategy on gaming companies' performance using Sanqi Mutual Entertainment Game Company as an example [6].
(1) Changes in Business Model
At present, Sanqi Mutual Entertainment Game Company's main operating range is very extensive, relying on the advantages brought by its diversification strategy. The company's business not only involves the operation of interactive entertainment, but also fully covers the research and distribution of mobile and web games under Sanqi Mutual Entertainment Game Company. Moreover, in recent years, it has kept pace with contemporary technology and continuously innovated, expanding the market to include the layout of film and animation second dimension, and also shaping its market cultural industry chain in music, VR technology, and various live streaming and other pan-entertainment businesses.
Founded in 1995, Sanqi Mutual Entertainment Game Company did not experience smooth development in its initial stages. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and at first, its industry chain did not involve the operation of games or other entertainment industries, always facing 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 operation in later stages and market contractions, Sanqi Mutual Entertainment eventually did not escape being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with a 60% equity stake. Though nominally acquired, this was a development opportunity worth seizing for Sanqi Mutual Entertainment. The two companies completed asset restructuring of various industries through multi-faceted collaboration. It is worth mentioning that the diversification strategy that Sanqi Mutual Entertainment has always operated has shown initial success. Sanqi Mutual Entertainment Company transformed from a solely modern cultural creative company before acquisition to a dual-main business listed company now advancing in both advanced manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's company operating strategy is also undergoing changes, with the scope of business covered by the original cultural creative industry.
