This Lord is Very Scientific-Chapter 771 - 703

(Anti-theft, will be released later.) Abstract: With the progress of technology and the coverage model of smart networks, the rise of the game industry in recent years is evident to the public. The dissemination method of games is no longer confined to stereotypical promotional modes; the influence of games has also gradually extended to all aspects of life. Correspondingly, game companies need to continually integrate resources with the rapid development of the era, innovate, and iterate to improve performance. Diversification strategy aptly meets the planning needs and development goals within the game industry. In the context of economic globalization, diversification strategy, as the preferred model for corporate development, is equally applicable to game companies. This article explains the impact of diversification strategy on game company performance, using Sanqi Mutual Entertainment Company as an example.

Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company 𝙛𝓻𝒆𝓮𝒘𝙚𝙗𝒏𝙤𝙫𝓮𝒍.𝓬𝒐𝙢

Diversification strategy is a market strategic method employed by enterprises during operations to capture more new markets and explore them. It is also a strategic plan for enterprises to avoid risks encountered in running a single business by entering new business fields selectively and preparedly. Applying the diversification strategy practically to game companies can effectively improve company performance and bring a transformation from quantitative to qualitative change in the development of game companies.

1. Macro Background of Diversification Strategy

As of 2021, with the government's effective control over the pandemic, people's lives have returned to normal, and economic and cultural scenes show a promising recovery trend. On April 30, 2021, data published by the National Bureau of Statistics indicates that the development of the national cultural industry has basically recovered to pre-pandemic levels[1]. This is very favorable news for the game industry, which occupies a significant portion of the cultural industry. Although the advent of the pandemic has not severely impacted the game industry, the inability to conduct offline activities has affected game companies' performance. The cultural industry's resurgence means for most game companies that the major development and prosperity of the cultural industry can promote and drive more game companies to embark on a path of sustainable development[2].

From the outbreak of the pandemic last year to its current stabilization, the state has issued policies from fiscal, institutional, and financial aspects to support the development of the cultural industry. Although the pandemic has halted people's movement, it cannot control the speed of online network dissemination. The emergence of more new media has driven the development of the cultural industry during pandemic prevention and control. However, the competition environment within the cultural industry is intense as each enterprise strives to enter the online market. Many traditional offline enterprises could not withstand the pandemic's impact and were eliminated by society. However, numerous successful cultural industry transitions have emerged over these two years, largely relying on diversification strategy models to accelerate transformation and upgrading, significantly benefiting during the pandemic prevention period as well, gaining more diversified development modes and fund income channels. For example, the transformation Sanqi Mutual Entertainment Company made during the pandemic prevention period is worth learning from for 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 work "Corporate Strategy," he discussed the classification of diversification strategy. This world-impacting strategic model is involved in policy guidelines in multiple countries, leading every large and small enterprise to seek a place according to the diversification strategy development model today[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 distinct meanings. Horizontal diversification refers to enterprises utilizing market-provided original conditions to produce new products meeting new user demands, thereby driving market consumption; vertical integration is the vertical derivation based on enterprise's development, utilizing the product supply chain to penetrate other market areas, seeking new consumers; concentric diversification focuses more on the innovation of existing technology, requiring production of new products within the existing production scope, achieving transformation through existing technology; overall diversification emphasizes extending business scope changes, requiring enterprises to connect related raw materials, technology, and market factors of their products to expand the business scope[5].

3. The Impact of Diversification Strategy on Game Company Performance

In the operation process of all game companies, the impact of diversification strategy on game company performance is classified into two parts: changes in operation mode and transfer of strategic planning. The effects gradually emerge from the changes in these two parts, boosting the company's performance. The impact of 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 a case study[6].

(1) Changes in Operation Mode

Currently, the main operation range of Sanqi Mutual Entertainment Game Company is very broad, thanks to the advantages brought by diversification strategy. The company's business not only involves interactive entertainment operations but also fully handles the development and distribution of mobile games and web games. Moreover, in recent years, it has continuously innovated following technological advancements, expanding the market layout into film and animation, creating its market cultural industry chain in music, VR technology, and various live streaming and pan-entertainment businesses.

Founded in 1995, Sanqi Mutual Entertainment Game Company did not have a smooth path in early development. Its predecessor was a small enterprise, initially not involving game and entertainment industry operations in its industrial chain, constantly facing the risk of being swallowed by the market. Yet, relying on the steady development of single industry, Sanqi Mutual Entertainment Company went public in 2011, but later due to poor operation and market contraction, Sanqi Mutual Entertainment did not escape the fate of being acquired.

In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% equity in Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Though nominally acquired, for Sanqi Mutual Entertainment, this was an opportunity worth seizing for development. The two companies completed various industry asset restructuring through multiple collaborations. Notably, Sanqi Mutual Entertainment Company's strategy has already shown promise at this time, transforming from a single modern cultural creative company before the acquisition to a dual main business listed company alongside advanced production manufacturing and modern cultural creativity. The company's operating strategy correspondingly changed, covering the business scope of the original cultural creative industry. In 2014, Wuhu Shunrong Auto Parts Co., Ltd. first covered the business scope of the original cultural creative industry.