"Bang!"
Yale extended his hand, flicked the Artifact Spirit's forehead, and said sharply, "Watch closely! Those Magical Beasts are coming!"
Suddenly, the chessboard began to change, with pieces emerging as light and shadow.
These words are what I say when lonely till old age.
Though these Magical Beasts are numerous, their marching lacks order, showing that it's not truly a group behavior. In the context of economic globalization, diversification strategy as the preferred development model for companies also applies to game 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 Companies; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy adopted by enterprises during operations to capture new markets and expand existing ones. It's also a strategic plan employed to evade risks encountered in single-business operations, entering new fields with targeted preparation. Implementing diversification strategy in game companies can effectively improve company performance, bringing a transformative evolution from quantitative to qualitative growth in the company's development.
1. The Macro Background of Diversification Strategy
Heading into 2021, with the government's strong control over the pandemic, people's lives returned to normal, and economic culture showed a significant recovery trend. On April 30, 2021, according to data released by the National Bureau of Statistics, the development of the national cultural industry has basically returned to pre-pandemic levels [1]. This is very good news for the game industry, which occupies a large proportion in the cultural industry. Although the pandemic did not cause significant harm to the game industry, the inability to carry out offline activities still impacts game company performance. With the cultural industry's recovery, for most game companies, this means that the grand development and flourishing 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 stabilizing of the pandemic, the government has issued policies supporting the cultural industry's development from various aspects like finance, system, and economy. Though the pandemic stopped people's travel, it could not control the online network's transmission speed. The emergence of more new media has promoted the cultural industry's development during the pandemic prevention period. However, as companies scramble to enter the online market, the competitive environment is becoming very tense within the cultural industry. Many traditional offline enterprises could not bear the impact of the pandemic and were eliminated by society. But in these two short years, many transformed cultural industries emerged successfully, largely relying on the accelerated transformation and upgrading brought by diversification strategy mode. During the pandemic prevention period, residents' consumption levels increased significantly, resulting in abundant gains and more diversified development models and funding channels. For example, the transformation done by Sanqi Mutual Entertainment in the pandemic prevention period is worth learning from for many game companies [3].
2. A Brief Analysis and Classification of Diversification Strategies
(a) A Brief Analysis of Diversification Strategy
Diversification strategy was proposed by Igor Ansoff, the father of strategic management. In his book "What is Corporate Strategy," he mentioned categories of diversification strategy. This world-influencing strategic model is involved in management policies across many countries, so today, every enterprise is seeking a place according to the diversification strategy development model [4].
(b) Classification and Meaning of Diversification Strategy
Diversification strategies are classified into four types: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The meanings derived from these four different modes also vary. Horizontal diversification refers to companies using original market conditions to produce new products that fulfill user demands, thus driving market consumption. Vertical integration means companies derive vertically according to their development situation, using the product industry chain to infiltrate other market fields to find new consumption targets. Concentric diversification focuses more on innovation in existing technology, requiring the production of new products within the existing production range, realizing transformation through existing technology. Overall diversification emphasizes expanding changes in business scope. Enterprises need to consider factors related to their product raw materials, technology, and market to expand the business scope [5].
3. The 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: changes in operation mode and shifts in strategic planning. From these two parts of transition, effects gradually emerge to boost company performance improvement. The influence brought by diversification strategy is multifaceted. This paper will use Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on game company performance [6].
(1) Changes in Operation Mode
Currently, the main operation scope of Sanqi Mutual Entertainment Game Company is very broad, relying on the advantages brought by diversification strategy. Not only does the company's business involve interactive entertainment operations, but Sanqi Mutual Entertainment Game Company also wholly manages the development and distribution of mobile and web games. In recent years, following technological advancements, it expands its market to include film and anime, also shaping the market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music, VR technology, various livestreams, and other pan-entertainment businesses.
Sanqi Mutual Entertainment Game Company was established in 1995, but the initial development path was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially not involving game and entertainment industry operations, consistently facing the risk of being absorbed by the market. But relying on the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. However, along with the later poor operation and market contraction, Sanqi Mutual Entertainment eventually could not escape the fate of being acquired.
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 developmental opportunity worth seizing. The two companies completed asset reorganization through multi-faceted collaboration. It's worth mentioning that the strategy Sanqi Mutual Entertainment has always operated was beginning to show its successes. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before acquisition into today's dual main industry listed company of advanced production manufacturing and modern cultural creativity, correspondingly changing the company's operational strategy, covering business scope of the original cultural creative industry.