This Lord is Very Scientific-Chapter 765 - 697

(Anti-theft, will be released later.) Abstract: With the progress of technology and the coverage model of the intelligence network, the rise of the game industry in recent years is evident to the citizens. The dissemination of games is no longer confined to rigid promotional methods, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate and iterate, and improve performance in line with the rapid development of the times. A diversification strategy precisely meets the planning needs and development goals within the game industry. In the context of economic globalization, a diversification strategy, as a preferred mode for enterprise development, is equally applicable to game companies. This article uses Sanqi Mutual Entertainment Company as an example to explain the impact of a diversification strategy on the performance of game companies.

Keywords: Diversification Strategy; Game Companies; Performance; Impact; Sanqi Mutual Entertainment Company

Diversification strategy is a market strategic tool adopted by enterprises during the operation process to occupy and expand new markets. It also serves as a strategic plan for enterprises to avoid the risks encountered in operating a single business and to enter new business fields with purpose and preparation. The practical application of a diversification strategy in game companies can effectively improve company performance, bringing about a transformation from quantitative to qualitative change in the development of game companies.

1. Macro Background of the Diversification Strategy

In 2021, with the effective control of the pandemic by the state, people’s lives returned to normal, and the economy and culture also showed a robust recovery. On April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the national cultural industry had basically returned to the pre-pandemic level [1]. This is very beneficial news for the game industry, which holds a significant share in the cultural industry. Although the pandemic did not significantly impact the game industry, the inability to conduct offline activities has always affected the performance of game companies. The warming of the cultural industry means large-scale development and prosperity of the cultural industry for most game companies, which can promote more game companies to embark on the path of sustainable development [2].

From the outbreak of the pandemic last year to the current stabilization of the pandemic, the state has promulgated relevant policies to support the development of the cultural industry from various aspects such as finance, systems, and finance. Although the pandemic has restrained people’s travel, it cannot control the speed of online network dissemination. The emergence of more and more new media has promoted the development of the cultural industry during the pandemic prevention and control period. However, due to the desire of various enterprises to enter the online market, the competitive environment within the cultural industry has become very intense. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society. But in just two years, numerous cultural industries successfully transformed, largely relying on the diversification strategy model to accelerate transformation and upgrading. They also gained abundant returns in the pandemic prevention and control period when residents’ consumption levels significantly improved, obtaining more diversified development modes and revenue channels. For example, the transformation made by Sanqi Mutual Entertainment during the pandemic prevention and control 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 "Corporate Strategy," he mentioned the classification of diversification strategy. This global strategic model is involved in the management policy guidelines of many countries, so today, every enterprise, large 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 conglomerate diversification. The four different modes derived from the diversification strategy have different meanings. Horizontal diversification refers to the production of new products that can meet the new demands of users utilizing the initial conditions provided by the market, thereby driving market consumption. Vertical integration is when an enterprise derives vertically based on its development situation, infiltrating other market fields through the product industry chain to seek new consumers. Concentric diversification focuses more on the innovation of existing technology, requiring the production of new products within the existing production range, achieving the transformation through the metamorphosis of existing technology; conglomerate diversification emphasizes expanding the business scope, requiring the enterprise to connect with factors related to its products, such as raw materials, technology, and market, to expand its business scope [5].

3. The Impact of Diversification Strategy on the Performance of Game Companies

It can be said that in the operation process of all game companies, the effect of a diversification strategy on game company performance is uniformly divided into two parts: the change of operation mode and the shift of strategic planning. The gradual emergence of effects from these two changes drives the improvement of company performance. The impact brought by a diversification strategy is multifaceted. This paper will analyze and study the impact of diversification strategy on game company performance using Sanqi Mutual Entertainment Game Company as an example [6].

(1) Change in Operation Mode

Currently, the primary operation scope of Sanqi Mutual Entertainment Game Company is extensive, which is also an advantage brought by the diversification strategy. The company’s business not only involves the operation of interactive entertainment, but Sanqi Mutual Entertainment Game Company also controls the R&D and release of mobile games and web games. In recent years, following the technology of the times and continuously innovating, the market has extended to the layout of film and anime ACG, and it is shaping the market cultural industry chain of Sanqi Mutual Entertainment Game Company in music, VR technology, and various live broadcast and other pan-entertainment businesses.

In 1995, Sanqi Mutual Entertainment Game Company was founded. The initial development path was not smooth, as the predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and its industry chain initially did not involve the operation of games and other entertainment industries, always facing the risk of market annexation. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. But with poor operation and market contraction in the later stages, Sanqi Mutual Entertainment still did 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% equity stake. Although nominally acquired, this was an opportunity for development that Sanqi Mutual Entertainment could seize. Through multilateral collaborations, the two companies completed various industry asset restructurings. It is worth noting that the operation strategy that Sanqi Mutual Entertainment had been operating was already beginning to show its edge by this time. Sanqi Mutual Entertainment Company transitioned from a single modern cultural creative company before being acquired to a dual-major listed company now alongside advanced production manufacturing and modern cultural creativity simultaneously. Correspondingly, Sanqi Mutual Entertainment’s company operation strategy was also undergoing changes, covering the business scope of the original cultural creative industries. In 2014 Wuhu Shunrong Auto Parts Co., Ltd. first covered the business scope of the original cultural creative industry.