Tencent’s overarching vision for its games empire is built around three interlocking pillars: the pursuit of live‑service experiences, the strategic use of artificial‑intelligence tools, and the cultivation of evergreen intellectual property that can sustain communities over years. In a recent, in‑depth conversation with Yong‑yi Zhu, Vice‑President and head of Operations, Strategy and Compliance for Tencent Games, the company’s nuanced approach emerged, revealing why live‑service is heralded as a “holy grail” yet is only one facet of a broader, adaptable strategy. ### Live‑Service as a Core Driver, Not a Sole Focus Zhu opened the interview by emphasizing that Tencent’s DNA is steeped in titles that thrive on ongoing engagement—Honor of Kings, League of Legends, and Valorant are prime examples. These games have evolved into platforms that generate recurring revenue while fostering deep‑rooted player communities.
“We see live service as a way to turn a game into a lifestyle,” he explained, noting that the model encourages players to return day after day, extending the commercial lifespan of a title far beyond a traditional launch window. However, Zhu was quick to qualify this ambition.
While live‑service remains a cornerstone, Tencent also invests heavily in "evergreen" IPs—games that retain relevance through regular updates, expansions, or sequels. He cited Call of Duty as an illustration of an evergreen franchise that, despite being released as a series of discrete titles, maintains a consistent audience and revenue stream. In Tencent’s view, the ideal property can oscillate between live‑service and evergreen modes, depending on market conditions and player expectations.
### Portfolio Realignment and Studio Autonomy Since the last interview a year ago, Tencent has reshaped its global portfolio. Notable Western studios such as Splash Damage and Bulkhead have been spun out as independent entities, echoing earlier separations of The Chinese Room and Secret Mode. Zhu declined to detail the negotiations but stressed a guiding principle: a partnership must be mutually beneficial.
If a studio’s direction diverges from Tencent’s long‑term objectives, or if the studio can thrive better on its own, the company will support a clean break. “Sometimes the synergy isn’t there, or there are better opportunities elsewhere,” he said. Zhu also acknowledged the challenges of integrating newly acquired studios.
Cultural differences, market dynamics, and divergent development pipelines can impede smooth assimilation. He admitted that not every acquisition will be a “slam dunk,” but emphasized that each decision is weighed against the goal of building sustainable, high‑quality communities.
### Global Support Network and Knowledge Transfer Tencent’s operational reach now spans roughly twenty studios across Europe, North America, and Oceania, including Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios, Digital Extremes, and Grinding Gear Games. Zhu’s mandate is less about geographic expansion and more about ensuring that each studio can launch and maintain successful products.
To that end, Tencent offers a suite of shared services: regional publishing expertise, technical assistance, quality‑assurance testing, backend infrastructure, and data analytics. A concrete example is the collaboration on *Dune Awakening*. Experts from Tencent’s Chinese and European teams embedded themselves alongside Funcom’s developers, troubleshooting engine issues, refining gameplay mechanics, and even staying on as permanent staff when the partnership proved fruitful. While creative direction remains the studio’s domain, Tencent steps in on cross‑studio challenges such as optimizing Unreal Engine pipelines or navigating regional distribution hurdles in the Middle East, North Africa, and Southeast Asia.
### Size Does Not Dictate Viability When asked whether Tencent only backs projects exceeding £50 million, Zhu refuted the notion of a hard financial ceiling. He argued that the company evaluates games on a case‑by‑case basis, considering the studio’s maturity, strategic fit, and potential for growth. “We have small games in our portfolio,” he affirmed, pointing to investments in studios like Larian and FromSoftware—both minority stakes that have produced critically acclaimed, purpose‑driven titles without necessarily commanding blockbuster budgets. ### Outsourcing, Core Teams, and Geographic Considerations Zhu highlighted a hybrid development model that blends a lean core team with external specialists.
This approach, successfully employed on *Star Wars: Galactic Racer* and the upcoming *Expedition 33*, allows Tencent to scale resources dynamically, tapping into high‑precision talent when needed while keeping the central team intimate and agile. Location plays a pivotal role: proximity can reduce latency and improve collaboration, yet cost considerations push some functions to more affordable regions.
For instance, Sumo Digital may support European studios due to time‑zone alignment, whereas UK‑based operations might be less cost‑effective. The broader industry trend mirrors this shift. As Amir Satvat noted at Gamescom Dev, development headcount is migrating from expensive hubs like California to emerging markets across Asia. Zhu concurred, noting that North America is becoming increasingly challenging for large, permanent teams, whereas distributed support structures can deliver the same output at lower overhead.
### The Rise of Chinese Studios on the Global Stage The 2024 Gamescom Opening Night Live showcased a wave of polished titles from Chinese developers, prompting speculation about a power shift from West to East. Zhu welcomed the development, crediting games such as *Black Myth: Wukong* for raising the bar of quality expectations for console and PC experiences. He observed that many Chinese studios, historically adept at high‑quality mobile games, are now applying their expertise to higher‑budget platforms, aided by better tooling and a willingness to adopt new technologies. ### AI as an Enabler, Not a Replacement Artificial intelligence emerged as a recurring theme in Zhu’s outlook.
He framed AI as a productivity catalyst rather than a substitute for human creativity. Tencent encourages its partners to experiment with AI across the development pipeline—concept art generation, rigging, motion matching, code review, and even project‑management bots that automate routine tasks in communication platforms like Slack. The company’s stance is pragmatic: AI tools can accelerate iteration and elevate quality, especially for smaller teams that wish to retain a “family‑feel” while delivering ambitious content.
Nevertheless, Zhu acknowledged unresolved legal and ethical questions surrounding generative AI, particularly around copyright. Tencent mitigates risk by restricting AI training data to internally owned assets, ensuring that any AI‑derived output remains within the company’s IP boundaries.
Agreements with tool vendors explicitly prevent external data leakage, safeguarding both the studio’s creations and the broader ecosystem. ### Looking Ahead Tencent’s strategy is anchored in flexibility. Whether a studio pursues a live‑service model, focuses on premium single‑player experiences, or experiments with hybrid approaches, the overarching goal remains the same: to nurture long‑lasting player engagement that translates into sustainable revenue. By leveraging a global support network, fostering cultural synergy, and embracing AI as a collaborative tool, Tencent aims to keep its portfolio resilient amid shifting market dynamics.
In Zhu’s words, “At the end of the day, I sit in games, which is part of a larger Tencent ecosystem, and my purview is always about how we keep people engaged and having fun. Because, to put it bluntly, the more people love your game, the more they’ll play it, and that drives the bottom line.”