Tencent’s strategy for the future of gaming revolves around three core pillars: live‑service experiences, advanced AI tooling, and the cultivation of evergreen titles that can sustain long‑term player engagement. While many industry observers have questioned the wisdom of betting heavily on live‑service models—citing Sony’s missteps and other companies that chased recurring‑revenue fantasies only to stumble—Tencent remains convinced that the approach is a key driver of stability and community building.
Yong‑yi Zhu, Vice President and head of Operations, Strategy and Compliance for Tencent Games, summed up the company’s philosophy: "Our holy grail is live service. Look at our DNA—Honor of Kings, League of Legends, Valorant. Those games keep growing, they nurture communities, and they become part of players’ daily lives rather than a one‑off experience." This mindset informs how Tencent evaluates every studio it works with. The firm’s massive, ever‑shifting portfolio is designed to support games that become lifestyle choices for gamers worldwide.
Live‑service, however, is only one slice of the overall plan. In the year since GamesIndustry.biz last spoke with Zhu, several high‑profile moves have taken place.
UK‑based studios Splash Damage and Bulkhead were spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025. Zhu declined to detail the negotiations, but emphasized a simple rule: a partnership must bring mutual benefit. "If the synergy isn’t there—if the game doesn’t align with our long‑term vision—or if there are better opportunities elsewhere—we’ll let the studio go solo. In many cases they thrive better on their own than under the Tencent umbrella." He also acknowledged that not every acquisition works out smoothly.
Market conditions, cultural gaps, and integration challenges sometimes make it difficult to meld a new studio into Tencent’s ecosystem. "Not every deal is a slam dunk," Zhu admitted, noting that the company is realistic about occasional setbacks. So what does the broader strategy look like?
Evergreen titles—both single‑player and multiplayer—are a cornerstone. Mobile games, in particular, showcase Tencent’s strength in sustaining long‑term player bases.
The goal is to build communities that persist for years, rather than chasing fleeting hype. Zhu illustrated this with the Call of Duty franchise, describing it as an evergreen IP that evolves through successive releases while retaining a loyal audience. Stability is another recurring theme. In the past, many premium developers have experienced boom‑and‑bust cycles, hiring aggressively for a launch and then laying off staff when sales dip.
Tencent aims to avoid that volatility by fostering consistent revenue streams and steady employment. "We want to bring stability to our partners, something you don’t see as often from other large publishers," Zhu said. Talent acquisition and development are equally vital. Tencent looks for high‑quality developers whose strengths complement its own capabilities.
The company currently oversees roughly twenty studios across the globe, including Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios in Europe, Digital Extremes in North America, and Grinding Gear Games in New Zealand. Zhu’s focus is less about geographic expansion and more about ensuring each studio has the resources it needs to launch successfully.
To that end, Tencent offers a suite of support services: regional publishing expertise, technical assistance, testing, backend infrastructure, and data analysis. Zhu cited the example of Funcom’s Dune Awakening, where experts from China and Europe worked side‑by‑side with the development team to resolve technical hurdles. In some cases, the assistance extended to permanent hires, turning short‑term consultants into full‑time staff members. Creative direction remains largely in the hands of individual studios, but Tencent steps in when common challenges arise—such as troubleshooting Unreal Engine issues or navigating publishing in specific regions like the Middle East and North Africa or Southeast Asia.
This collaborative model allows studios to retain their artistic identity while benefiting from Tencent’s global reach. When asked whether Tencent is shifting focus toward larger live‑service projects at the expense of smaller titles, Zhu responded that the answer depends on the studio’s DNA. Funcom, for example, had been running the live‑service game Conan Exiles long before Tencent’s investment, so the partnership naturally reinforced that direction. Other studios that experimented with live service but found it unsuitable have pivoted back to premium, smaller‑scale games—areas where they have historically excelled.
"We want to help studios become best‑in‑class at whatever they do, whether that’s a massive MMO or a tightly crafted single‑player experience," he explained. The size of a project is not a hard barrier either. While Bulkhead’s CEO once suggested that Tencent would only consider games exceeding £50 million, Zhu clarified that the company evaluates opportunities across all scales.
What matters is the studio’s stage of development and its long‑term aspirations. "We have small games in our portfolio, and we’re open to helping them grow if the fit is right," he said. Tencent’s minority stakes in Larian Studios and FromSoftware serve as “north stars” for its investment philosophy.
Both companies have built lasting franchises through deliberate, incremental growth rather than blockbuster launches. Their success demonstrates that purposeful, audience‑centric development can yield sustainable returns, even without massive budgets.
On the operational side, Zhu admitted that plans to more tightly integrate Chinese and Western support teams have progressed slower than hoped, largely due to time‑zone challenges. Instead, the focus has shifted to cross‑studio knowledge sharing, allowing best practices to flow throughout the network.
This approach mirrors the model used for Star Wars: Galactic Racer, where a lean core team is bolstered by external specialists for specific tasks. Outsourcing decisions are made on a case‑by‑case basis, balancing cost, expertise, and geographic considerations. For example, Sumo Digital may support European studios because of proximity, even though the UK is an expensive location.
The broader industry trend, highlighted by Amir Satvat’s Gamescom Dev keynote, shows development headcount moving from high‑cost regions like California to more affordable hubs across Asia. Zhu echoed this shift, noting that North America is becoming increasingly challenging for studios without an established, cohesive team. While his own background at Activision involved a tightly knit Santa Monica group that consistently delivered content, he sees support functions—especially those that can be outsourced—thriving in lower‑cost environments. The rise of Chinese studios at Gamescom’s Opening Night Live sparked speculation about a power shift from West to East.
Zhu welcomed the change, pointing to titles like Black Myth: Wukong that have raised the bar for console and PC quality. He explained that Chinese developers, traditionally strong in mobile, are now applying their expertise to high‑end platforms, aided by better tooling and a willingness to adopt new technologies. Artificial intelligence is a cornerstone of that tooling evolution. Zhu stressed that AI at Tencent is not meant to replace humans but to amplify productivity.
Smaller development teams—often 30‑40 people—can now produce higher‑quality content faster thanks to AI‑driven concept art, rigging, motion matching, code review, and even project‑management bots that remind staff of tasks. "China loves AI as a tool, and we’re seeing that mindset spread across our global studios," he said.
In contrast, Western developers tend to be more cautious, citing ethical concerns, copyright issues, and potential player backlash. Zhu urged a more open attitude: "People shouldn’t be afraid of AI. It’s like the internet—an inevitable wave. I’ve spent time figuring out how to use it efficiently in my own workflow, and I think teams should do the same." Tencent encourages responsible AI use, focusing on internal data and ensuring that generative models are trained only on the company’s own assets.
This safeguards intellectual property and prevents accidental leakage of proprietary content into external games. Agreements with AI vendors guarantee that data stays within Tencent’s secure environment. Overall, Tencent’s expansive backing allows it to experiment across a spectrum of bets—from large‑scale live‑service titles to niche indie projects.
Recent moves, such as stepping back from Bulkhead and Splash Damage while investing in a minority stake in W4, the commercial partner of the Godot engine, illustrate a flexible, opportunistic approach. Regardless of the specific format, the unifying thread remains engagement: keeping players entertained, fostering lasting communities, and ultimately translating that enthusiasm into sustainable revenue.