This Lord is Very Scientific-Chapter 727 - 659
(Anti-theft, to be released later.) Abstract: Accompanied by technological progress and the coverage model of intelligent networks, the rise of the game industry in recent years has been evident to the public. The dissemination of games is no longer limited to rigid promotional modes, and the influence of games has gradually expanded to various aspects of life. Correspondingly, game companies need to continuously integrate resources, innovate iteration, and improve performance in line with the rapid development of the times. The diversification strategy perfectly meets the planning needs and development goals within the game industry. Under the background of economic globalization, diversification strategy, as the preferred model for enterprise development, is also applicable to game companies. This paper illustrates the impact of diversification strategy on the performance of game companies taking Sanqi Mutual Entertainment Company as an example.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy tool that enterprises use during their operation to capture more new markets and develop new markets. It is also a strategic plan that enterprises adopt to avoid risks encountered in operating a single business and enter new business fields with targeting and preparedness. The practical application of diversification strategy in game companies can effectively enhance company performance, bringing a quantitative to qualitative change in the development of game companies.
1. Macro Background of Diversification Strategy
Entering 2021, under the effective control of the pandemic by the government, people's lives resumed order, and economic culture presented a thriving recovery scenario. On April 30, 2021, relevant data released by the National Bureau of Statistics indicated that the development of the national cultural industry had basically returned to pre-pandemic levels[1]. For the game industry, which holds a significant proportion in the cultural industry, this is very favorable news. Although the arrival of the pandemic did not inflict great harm on the game industry, the inability to conduct offline activities always affected the performance of game companies. The recovery of the cultural industry means for most game companies that the great development and prosperity of the cultural industry can promote and drive more game companies to embark on a path of sustainable development[2].
From last year's pandemic outbreak to the current stabilization, the government has introduced relevant policies from multiple aspects such as fiscal, institutional, and financial to support the development of cultural industries. Although the pandemic hindered people's movement, it could not control the speed of online network dissemination. More and more new media emerged, driving the development of cultural industries during the pandemic prevention and control period. However, due to various companies wanting to rush into the online market, the competitive environment within the cultural industry became very intense. Many traditional offline enterprises couldn't withstand the impact of the pandemic and were eliminated by society. However, in these short two years, many successful cultural industry transformations emerged, and most of these enterprises relied on diversified strategic models to accelerate transformation and upgrading, also yielding substantial rewards during the pandemic prevention and control period when residents' consumption levels significantly increased, obtaining more diverse development models and sources of income. For example, the transformation undertaken by Sanqi Mutual Entertainment during the pandemic prevention and control period is worth most game companies learning from[3].
2. Brief Analysis and Classification of Diversification Strategy
(1) Brief analysis of diversification strategy 𝒇𝒓𝒆𝒆𝙬𝒆𝒃𝓷𝒐𝓿𝙚𝙡.𝒄𝓸𝒎
Diversification strategy was proposed by Igor Ansoff, the pioneer of strategic management, who mentioned the classification of diversification strategy in his book "What is Enterprise Strategy." This world-influencing strategic model is involved in the management policy of multiple countries, so much so that today every enterprise, big or small, seeks a place according to the development model of diversification strategy[4].
(2) Classification and meaning of diversification strategy
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The four different models derived from diversification strategy have different meanings. Horizontal diversification refers to enterprises using the original conditions provided by the market to produce new products that can meet new user needs, thereby driving market consumption. Vertical integration is for enterprises to vertically derive based on their development situation, infiltrating other market fields through the product industry chain to seek new consumers. Concentric diversification focuses more on innovation of existing technologies, requiring the production of new products within the original production scope, realizing transformation through the evolution of existing technologies. Overall diversification emphasizes expansion in business scope, requiring enterprises to connect with factors related to raw materials, technology, and market to expand their business scope[5].
3. Impact of Diversification Strategy on the Performance of Game Companies
In all game companies' operations, the impact of diversification strategy on the performance of game companies can be divided into two parts: changes in the operating model and shifts in strategic planning. These two parts of changes gradually produce effects that drive the improvement of company performance. The impact brought by diversification strategy is multifaceted. This paper will take Sanqi Mutual Entertainment Game Company as an example to analyze the impact of diversification strategy on the performance of game companies[6].
(1) Changes in Operating Model
Currently, the main operating scope of Sanqi Mutual Entertainment Game Company is very extensive, also relying on the advantages brought by diversification strategy. The company's business not only covers interactive entertainment operations but also fully manages the research and publishing of mobile games and web games under its umbrella. In recent development, it has continuously innovated in accordance with contemporary technology, expanding the market into film and animation layouts. It also shapes the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music, VR technology, all kinds of streaming and other pan-entertainment businesses.
Sanqi Mutual Entertainment Game Company was founded in 1995, but the initial development path was not smooth. Sanqi Mutual Entertainment Game Company's predecessor was a small enterprise, and at first, Sanqi Mutual Entertainment's industry chain did not cover game and other entertainment industry operations, constantly facing the risk of being swallowed by the market. But relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011. However, along with poor post-operation and market contraction, Sanqi Mutual Entertainment eventually 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 nominal acquisition, for Sanqi Mutual Entertainment, this was an opportunity worth grasping for development. The two companies completed the asset restructuring of various industries in multi-faceted collaboration. It is worth mentioning that the exhibition strategy always operated by Sanqi Mutual Entertainment was already beginning to show its brilliance at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before acquisition to a dual-main business listed company with advanced production manufacturing and modern cultural creativity running concurrently. Correspondingly, Sanqi Mutual Entertainment's company operating strategy is also undergoing changes in the business scope covered by the original cultural creative industry.
