Tencent’s strategic outlook is built around three interlocking pillars: the expansion of live‑service experiences, the deployment of advanced AI tools across development pipelines, and the cultivation of evergreen intellectual properties that can sustain long‑term community engagement. In a recent, wide‑ranging interview, Yong‑yi Zhu, Vice President and head of Operations, Strategy and Compliance for Tencent Games, unpacked how each of these elements fits into the company’s broader ambition to create stable, recurring revenue streams while remaining adaptable to shifting market conditions.
**Live‑service as the “holy grail”** Zhu repeatedly emphasized that live‑service titles sit at the core of Tencent’s DNA. Iconic franchises such as *Honor of Kings*, *League of Legends* and *Valorant* exemplify how a game can evolve continuously, deepening its community and generating steady income long after launch. "We see live service not just as a monetisation model but as a lifestyle platform," he explained. "Players aren’t just spending a weekend with a title; they’re integrating it into their daily routines." However, the company acknowledges that not every live‑service experiment succeeds.
Recent casualties like *Highguard*—a project reportedly backed by TiMi Studio Group—demonstrate the risk inherent in chasing recurring revenue. Zhu stressed that Tencent remains undeterred: the firm will continue to back live‑service ventures that align with its strategic vision, while also learning from failures to refine its approach. **Strategic studio partnerships and selective acquisitions** Over the past year, Tencent has re‑evaluated several of its studio relationships.
UK‑based studios Splash Damage and Bulkhead have spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025. Zhu clarified that these moves are not admissions of defeat but strategic decisions based on synergy. "If a partnership doesn’t amplify a studio’s strengths or fit our long‑term roadmap, we may decide the studio is better off standing alone," he said. The integration of newly acquired studios also presents challenges.
Cultural differences, market conditions, and divergent development philosophies can impede smooth assimilation. Zhu admitted that some acquisitions have been “hard to integrate,” but he framed these setbacks as a natural part of a diversified growth strategy.
The key, he argued, is to maintain a portfolio that balances high‑risk, high‑reward projects with more stable, evergreen titles. **Evergreen IP and community building** Evergreen franchises—both single‑player and multiplayer—are another cornerstone of Tencent’s plan.
The company’s mobile portfolio, for instance, is rich with titles that have demonstrated lasting appeal. Zhu pointed to *Call of Duty* as an example of an IP that, while released as a series of sequels, retains a core identity that sustains fan loyalty over many years.
The goal is to nurture games that evolve with their audiences, fostering communities that remain active long after the initial launch window. **Global studio support and knowledge sharing** Zhu oversees roughly twenty studios worldwide, ranging from Miniclip and Sumo Digital in Europe to Digital Extremes in North America and Grinding Gear Games in New Zealand.
His focus is less on geographic expansion and more on ensuring each studio has the resources it needs to succeed. This includes regional publishing expertise, technical assistance, backend infrastructure, and data‑driven analysis.
For example, during the development of *Dune Awakening*, experts from China and Europe collaborated directly with Funcom’s team, offering real‑time troubleshooting and, in some cases, transitioning into permanent staff members. The support model is deliberately modular. While creative direction remains the studio’s domain, Tencent steps in on cross‑cutting challenges such as Unreal Engine optimisation, localisation for MENA or Southeast Asian markets, and compliance with regional regulations.
This hybrid approach allows studios to retain artistic autonomy while benefiting from Tencent’s scale and operational know‑how. **Balancing live‑service and premium experiences** When asked whether Tencent favours large live‑service projects over smaller premium titles, Zhu replied that the decision is studio‑specific.
Studios like Funcom, which had already been running *Conan Exiles* as a live service before Tencent’s investment, continue on that path because it aligns with their DNA. Conversely, other studios that attempted live‑service but found it unsustainable have pivoted back to premium, high‑quality releases that constitute their core competency. The notion that Tencent only backs games with budgets exceeding £50 million was challenged by Zhu.
He clarified that the company evaluates projects of all scales, focusing on the studio’s stage of development and its ultimate aspirations. “We have small games in our portfolio,” he affirmed, citing collaborations with Larian Studios and FromSoftware—both minority‑stake investments that illustrate how modest‑budget titles can still contribute meaningfully to a long‑term audience‑building strategy. **AI as an empowerment tool, not a replacement** A recurring theme in Zhu’s interview was the role of artificial intelligence in modern game development. He described AI as a productivity enhancer that can accelerate concept art, rigging, motion matching, code review, and even project‑management tasks such as automated Slack bots that assign homework.
"AI isn’t about replacing developers; it’s about making them more efficient and allowing smaller teams to produce higher‑quality content," he said. Tencent encourages its studios to experiment with AI, but it draws a clear line regarding content generation.
While AI can assist in technical pipelines, using generative models to create copyrighted assets raises legal concerns. To mitigate risk, Tencent ensures that AI tools are trained on proprietary data sets and that agreements with vendors prohibit external data leakage. This safeguards intellectual property and prevents unintended cross‑pollination of assets between games. **Geographical considerations and outsourcing** The interview also touched on the shifting geography of game development talent.
High‑cost regions like California are seeing headcount reductions, while studios in Asia and Eastern Europe benefit from lower operating expenses and growing expertise. Zhu noted that outsourcing decisions are driven by a blend of cost, timezone compatibility, and the need for specialised skill sets. For instance, Sumo Digital may support European studios due to proximity, even though the UK is not the cheapest location.
**Future outlook** Looking ahead, Zhu envisions a model where core internal teams are complemented by external partners—a structure that proved effective for *Star Wars: Galactic Racer* and is being considered for upcoming projects like *Expedition 33*. This flexible staffing approach enables Tencent to scale resources up or down based on project demands, preserving a “family‑feel” while still delivering ambitious titles.
In summary, Tencent’s long‑term strategy is a mosaic of live‑service ambition, AI‑driven efficiency, and the nurturing of evergreen IPs that can sustain vibrant player communities. By selectively partnering with studios that share its vision, providing robust global support, and embracing AI as a collaborative tool, Tencent aims to create a stable, diversified portfolio that can weather market fluctuations and continue to engage gamers worldwide.