This Lord is Very Scientific-Chapter 831 - 763: The Impact of Diversification Strategies on Game Company Performance—A Case Study of 37 Interactive Entertainment

(Anti-theft, to be released later.) Abstract: With the progress of technology and the coverage of smart networks, the rise of the gaming industry in recent years is evident to the public. The ways of spreading games are no longer confined to rigid promotional modes, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies need to continuously integrate resources, innovate, iterate, and improve performance as the era progresses rapidly. A diversification strategy precisely meets the planning needs and development goals within the gaming industry. In the context of economic globalization, the diversification strategy as a preferred enterprise development model is also applicable to game companies. This article illustrates the impact of diversification strategy on game company performance with Sanqi Mutual Entertainment Company as an example.

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

Diversification strategy is a market strategy means that enterprises adopt in the process of operation to acquire more new markets and develop new markets. It is also a strategic plan that enterprises need to avoid risks encountered in operating a single business, entering new fields with focus and preparation. Applying diversification strategy in game companies can effectively enhance company performance, bringing development changes from quantitative to qualitative.

1. Macroscopic background of diversification strategy

Entering 2021, with the country's effective control of the pandemic, people's lives return to normal, and economic culture presents a great recovery scene. On April 30, 2021, according to the data released by the National Bureau of Statistics, the national cultural industry development basically recovered to pre-pandemic levels [1]. This is very advantageous news for the gaming industry, which occupies a large proportion in the cultural industry. Although the pandemic's arrival didn't greatly affect the gaming industry, the inability to conduct offline activities always affects the performance of game companies. The warming of the cultural industry means, for most game companies, that the great development and prosperity of the cultural industry can promote more game companies to embark on continuous development paths [2].

From last year's outbreak of the pandemic to the current stability, the country has issued relevant policies to support the development of the cultural industry from multiple aspects such as finance, systems, and finance. Although the pandemic has hindered people's outings, it cannot control the speed of online network spreads. More and more new media appeared, driving the development of the cultural industry during the pandemic prevention period. However, due to the competition among enterprises vying to enter the online market, the competition environment between cultural industries is very fierce. Many traditional offline enterprises couldn't withstand the pandemic's impact and were eliminated by society. But within these short two years, many successfully transformed cultural industries emerged, and most of these enterprises accelerated transformation and upgrading by relying on diversified strategy modes, gaining fruitful results in the pandemic prevention period where residents' consumption levels significantly increased, acquiring more diverse development modes and income channels, for example, Sanqi Mutual Entertainment Company's transformation during the pandemic prevention period is worth most game companies' reference [3].

2. Overview and classification of diversification strategy

(a) Overview of diversification strategy

Diversification strategy was proposed by Igor Ansoff, the founder of strategic management. He mentioned the classification of diversification strategy in his book, "What is Corporate Strategy." This strategy mode, influential worldwide, is involved in many countries' management policies, so nowadays every enterprise, big or small, strives for a place according to the development mode of diversification strategy [4].

(b) Classification and meaning of diversification strategy

Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The meanings of the four modes derived from diversification strategy are also different. 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 enterprises deriving vertically based on their development situation, using product industry chains to penetrate other market fields to seek new consumption objects; concentric innovation needs to produce within the original production scope, the whole process is realized through the transformation of original technology; overall diversification involves changes, enterprises need to link themselves with related raw materials and technology and market factors to expand business scope [5].

3. Impact of diversification strategy on game company performance

It can be said that in the operational process of all game companies, the impact of diversification strategy on game company performance is divided into two parts: the change in operational modes and the shift in strategic planning. The effects gradually developed from these two parts drive the improvement of company performance. The impact of diversification strategy is multifaceted. This paper will analyze the impact of diversification strategy on game company performance using Sanqi Mutual Entertainment Game Company as an example [6].

(1) Change in operational modes

At present, the main operational scope of Sanqi Mutual Entertainment Game Company is very extensive, which is also due to the advantages brought by diversification strategy. The company's business not only involves interactive entertainment operations but also Sanqi Mutual Entertainment Game Company singularly handles the research, development, and distribution of mobile games and web games. In recent years, keeping pace with the times and technology, the market has expanded to include film and anime, concurrently shaping Sanqi Mutual Entertainment Game Company's market culture industry chain in music, VR technology, and various live entertainment businesses.

Established in 1995, Sanqi Mutual Entertainment Game Company didn't have smooth roads in early development. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise. Initially, Sanqi Mutual Entertainment's industry chain didn't involve game and other entertainment industry operations, and there was always the risk of being annexed by the market. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. Despite subsequent operational difficulties and market compression, Sanqi Mutual Entertainment ultimately couldn't escape the fate of acquisition.

In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, it was a development opportunity for Sanqi Mutual Entertainment. The two companies completed various industrial asset restructurings through multi-party cooperation. It is worth mentioning that the strategy Sanqi Mutual Entertainment had been operating showed its edge at that time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before acquisition to a dual main business listed company integrating advanced production manufacturing and modern cultural creativity. Correspondingly, Sanqi Mutual Entertainment's company operation strategy also changed. The business scope covered by the original cultural creative industry. In 2014, Wuhu Shunrong Auto Parts Co., Ltd. allocated the business scope covered by the original cultural creative industry.