This Lord is Very Scientific-Chapter 762 - 694

(To be released later.) Abstract: With the progress of technology and the model of intelligent network coverage, the rise of the game industry in recent years is evident to all citizens. The way games are disseminated is no longer confined to rigid promotional models, and their influence has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate, and update to improve performance in line with the rapid development of the times. A diversification strategy perfectly meets the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, diversification strategy, as the preferred mode of corporate development, is also applicable to gaming 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

A diversification strategy is a market strategy employed by enterprises during operations to occupy and expand new markets, as well as to avoid risks encountered in running a single business. It involves a strategic plan to purposefully and preparedly enter new business fields. Applying diversification strategy to gaming companies can effectively enhance company performance, bringing about a transformation from quantitative to qualitative change in the company’s development.

1. The Macro Background of Diversification Strategy

Entering 2021, with the effective control of the pandemic by the country, people’s lives have returned to normal, and the economic and cultural landscape shows a promising recovery trend. On April 30, 2021, relevant data released by the National Bureau of Statistics showed that the development of the national cultural industry had basically returned to the pre-pandemic level[1]. For the game industry, which occupies a significant portion of the cultural industry, this is very favorable news. Although the arrival of the pandemic did not greatly impact the game industry, the inability to conduct offline activities always affected game companies’ performance. With the warming of the cultural industry, for most game companies, this means that the great development and prosperity of the cultural industry can promote and drive more game companies onto a path of sustainable development[2].

From the outbreak of the pandemic last year to the current stabilization, the country has promulgated relevant policies from multiple aspects such as finance, system, and finance to support the development of the cultural industry. Although the pandemic has halted people’s travel, it cannot control the spread speed of online networks. More and more new media have emerged, driving the development of the cultural industry during the pandemic prevention period. However, since each company wants to enter the online market, the competitive environment within the cultural industry has become very intense. Many traditional offline companies have been eliminated by society due to the pandemic’s impact, but in just two short years, many successfully transformed cultural industries have emerged. Most of these companies have accelerated their transformation and upgrading relying on diversification strategy modes, reaping substantial rewards during the pandemic prevention period when residents’ consumption levels have significantly increased, gaining more diversified development models and capital income channels. For example, the transformation made by Sanqi Mutual Entertainment during the pandemic prevention period is worth emulating by most game companies[3].

2. Brief Analysis and Classification of Diversification Strategy

(1) Brief Analysis of Diversification Strategy

Diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book "What is Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model has been involved in management policies of multiple countries, so today every business, big or small, seeks a place according to the development model of diversification strategy[4].

(2) Classification of Diversification Strategy and Its Meaning

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 various meanings. Horizontal diversification refers to the company utilizing the original conditions provided by the market to produce new products that can meet new user demands, thereby driving market consumption. Vertical integration is when a company, based on its development situation, vertically derives 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 scope. The entire process is realized through the metamorphosis of existing technology. Overall diversification focuses more on expanding the scope of operations. Enterprises need to associate factors related to their product’s raw materials, technology, and market to expand the scope of operations[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 divided into two parts: changes in the operation mode and shifts in strategic planning. The effects gradually generated from these two parts drive the improvement of company performance. The impact of diversification strategy is multifaceted, and this paper will take Sanqi Mutual Entertainment Game Company as an example to analyze and research the impact of diversification strategy on the performance of game companies[6].

(1) Changes in Operation Mode

Currently, the primary operation scope of Sanqi Mutual Entertainment Game Company is very broad, which is also an advantage brought by the diversification strategy. The company’s business not only involves interactive entertainment operations, but it also undertakes the research and publication of mobile and web games under Sanqi Mutual Entertainment Game Company. Moreover, in the development of recent years, it has continuously innovated in line with contemporary technology, expanding the market to include film and anime, and it is shaping the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music, VR technology, and various live streaming pan-entertainment businesses.

In 1995, Sanqi Mutual Entertainment Game Company was established. However, the initial development path was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small-scale enterprise, and the industrial chain of Sanqi Mutual Entertainment did not initially involve the operation of games and other entertainment industries, with the risk of being annexed by the market at any time. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. But with poor operations afterward and market contraction, Sanqi Mutual Entertainment ultimately did not escape being acquired. 𝚏𝐫𝚎𝗲𝕨𝐞𝐛𝕟𝚘𝐯𝚎𝗹.𝕔𝐨𝗺

In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% equity of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. The two companies completed restructuring of various industrial assets through multi-party coordination. Notably, the strategy that Sanqi Mutual Entertainment has always operated began showing its initial power at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural and creative company before being acquired to the current dual main listed company with advanced production manufacturing and modern cultural creativity running parallel. Correspondingly, the company’s operational strategy of Sanqi Mutual Entertainment has also changed, along with the scope of business originally covered by the cultural and creative industry. In 2014, Wuhu Shunrong Auto Parts Co., Ltd’s cultural and creative industry originally covered the business scope.