This Lord is Very Scientific-Chapter 800 - 732: The Impact of Diversification Strategy on Game Company Performance—A Case Study of 37 Interactive Entertainment

(Anti-theft, release later.) Summary: With the advancement of technology and the coverage of intelligent networks, the rise of the game industry in recent years is evident to all, and the ways of spreading games are no longer confined to rigid promotional methods. The influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate, and improve performance amid the rapid development of the era. Diversification strategy precisely caters to the planning needs and development goals within the game industry. In the context of economic globalization, diversification strategy, as the preferred mode of enterprise development, is equally applicable to game companies. This article explains the impact of diversification strategy on gaming company performance using Sanqi Mutual Entertainment Company as an example.

Keywords: Diversification strategy; Gaming company; Performance; Impact; Sanqi Mutual Entertainment Company

Diversification strategy is a market strategic means adopted by enterprises to occupy new markets and explore new markets more broadly during operations. It is also a strategic planning that enterprises use to avoid risks encountered in operating a single business by entering new business fields in a targeted and prepared manner. The practical application of diversification strategy to game companies can effectively improve company performance, bringing a transformation process from quantitative change to qualitative change in the development of gaming companies.

1. The macro background of diversification strategy

Entering 2021, with the country's strong control over the pandemic, people's lives are on track, and the economy and culture are showing great signs of recovery. On April 30, 2021, according to data released by the National Bureau of Statistics, the development of the national cultural industry has basically recovered to pre-pandemic levels [1], which is excellent news for the gaming industry, which holds a significant share in the cultural industry. Although the pandemic did not severely impact the game industry, the inability to conduct offline activities always affected the performance of game companies. The warming of the cultural industry means that the great development and prosperity of the cultural industry can promote more game companies to embark on a path of sustainable development [2].

From last year's outbreak to the current stability of the pandemic, the country has promulgated relevant policies in finance, institutions, and finance to support the development of the cultural industry. Although the pandemic hindered people's outings, it cannot control the propagation speed of online networks. More and more new media have emerged, driving the development of the cultural industry during the pandemic prevention period. However, because all companies want to enter the online market, the competitive environment in the cultural industry is extremely fierce. Many traditional offline enterprises were eliminated by society during this time due to the impact of the pandemic. But in just two years, many cultural industries have successfully transformed, and these companies mostly relied on diversification strategy models to accelerate transformation and upgrades, achieving significant results during the pandemic prevention period when resident consumption levels increased significantly, gaining more diverse development modes and income channels. For example, the transformation made by Sanqi Mutual Entertainment Company during the pandemic prevention period is worth learning from for most game companies [3].

2. Brief analysis and classification of diversification strategy

(a) Brief analysis of diversification strategy

Diversification strategy was proposed by the pioneer of strategic management, Igor Ansoff. In his book "What is Corporate Strategy", he mentioned the classification of diversification strategy. This world-influencing strategic model is involved in management policy guidelines of many countries, so today every enterprise is vying for a position according to the development mode of diversification strategy [4].

(b) Classification of diversification strategy and its meaning

Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The meanings derived from the four different modes of diversification strategy are also distinct. Horizontal diversification means enterprises use the original conditions provided by the market to produce new products that meet new user needs, thereby driving market consumption. Vertical integration is where enterprises derive vertically based on their development situation, using the product industry chain to penetrate other market areas to seek new consumer targets. Concentric diversification pays more attention to innovation in existing technologies and requires the production of new products within the existing production range, achieving transformation through the metamorphosis of existing technologies. Overall diversification emphasizes expanding the business scope, where enterprises need to associate relevant raw materials, technologies, and markets with their products to expand the 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 impact of diversification strategy on the performance of game companies is uniformly divided into changes in the operation mode and strategic planning shifts. The effects gradually arise from these two parts to drive the enhancement of company performance. The impact brought by diversification strategy is multi-faceted. 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) Changes in operation mode

Currently, the main operating scope of Sanqi Mutual Entertainment Game Company is quite extensive, which is also the advantage brought by the diversification strategy. The company's business not only includes the operation of interactive entertainment, but it also undertakes the development and distribution of mobile games and web games single-handedly. In recent developments, it continuously innovates by keeping up with the times and technology, expanding the market to layout films and anime subculture, also shaping the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music and VR technology as well as various live broadcasts and other pan-entertainment businesses.

Sanqi Mutual Entertainment Game Company was established in 1995, but the initial development path was not smooth. Its predecessor was a small enterprise, and at first, Sanqi Mutual Entertainment's industry chain did not include game and entertainment industry operations, constantly facing the risk of being swallowed up by the market. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. But with later poor business operations and market contraction, Sanqi Mutual Entertainment ultimately could not escape the fate of being acquired.

In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, for Sanqi Mutual Entertainment, this was an opportunity worth grasping. The two companies completed asset restructuring of various industries through multi-party cooperation. Notably, the strategy Sanqi Mutual Entertainment has been operating began to show its edge at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before being acquired into a dual-main business listed company that paralleled advanced manufacturing and modern cultural creativity. Correspondingly, changes also occurred in Sanqi Mutual Entertainment Company's business operation strategy, within the original scope of the cultural creative industry's business covered by Wuhu Shunrong Auto Parts Co., Ltd. in 2014.