Tencent’s strategic outlook has become a frequent topic of debate, especially around its emphasis on live‑service games. While some industry giants such as Sony have stumbled in their attempts to secure a steady stream of recurring revenue, other firms that have stuck with more conventional release models, like Capcom, have weathered the storm relatively unscathed. One of the recent casualties of the live‑service model was Highguard, a title reportedly backed by Tencent’s TiMi Studio Group, yet the company itself shows no signs of abandoning the alluring promise of ongoing service titles.
"Our holy grail is live service, right?" explains Yong‑yi Zhu, Vice‑President and head of operations, strategy, and compliance at Tencent Games. "Look at Tencent’s DNA – Honor of Kings, League of Legends, Valorant. Those games constantly evolve, creating stable revenue streams and vibrant communities.
More and more, games are becoming lifestyles rather than fleeting experiences." Zhu’s remarks underline that live service is only one pillar of a broader, multifaceted strategy. Since the last interview with GamesIndustry.biz a little under a year ago, several of Tencent’s UK studios—including Splash Damage and Bulkhead – have spun out as independent entities, echoing earlier separations of The Chinese Room and Secret Mode in 2025. Zhu declined to detail the rationale, but emphasized a simple principle: "A partnership must make sense for both sides.
If the studio’s vision doesn’t align with our long‑term goals, or if better opportunities exist elsewhere, we step back. Sometimes a studio thrives more as a standalone operation than under Tencent’s umbrella." He acknowledges that not every acquisition hits the mark. Market conditions, cultural gaps, and integration challenges can turn a promising deal into a learning experience.
"Not every studio we acquire becomes a slam‑ dunk," he says. So what does Tencent actually aim for? Zhu points to evergreen titles – both single‑player and multiplayer – as a core component.
In the mobile space, single‑player experiences already dominate the portfolio, but the overarching objective is to nurture sustainable, long‑term communities that keep players engaged over years. Live service is the preferred vehicle, yet it is not the sole focus.
"An IP can become evergreen," he notes, citing Call of Duty as an example of a franchise that persists through successive iterations. Stability is another recurring theme. Zhu contrasts the boom‑and‑bust cycles of many premium releases with Tencent’s desire for consistent performance. "We aim to avoid the layoffs that follow a single hit and then a miss.
Our goal is to bring steadiness to the industry." Talent acquisition and synergy are equally vital. Zhu stresses that Tencent looks for high‑quality developers whose strengths complement the company’s capabilities. He oversees roughly twenty studios worldwide, including Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios, Digital Extremes, and Grinding Gear Games.
His focus is less on geographic expansion and more on ensuring each studio has the support it needs to launch successfully. Support comes in many forms: regional publishing expertise, technical assistance, testing, backend infrastructure, and data analysis.
Zhu cites the collaboration on Dune Awakening as an illustration. Experts from China and Europe worked side‑by‑side with Funcom’s developers, troubleshooting issues and sometimes staying on as permanent staff when the partnership proved fruitful. Creative direction largely remains with the individual studios, but Tencent steps in on cross‑studio challenges, such as Unreal Engine optimization or publishing logistics in regions like MENA and Southeast Asia. This flexible approach allows studios to retain their artistic identity while benefitting from Tencent’s global resources.
When asked whether Tencent is shifting its focus toward larger live‑service projects at the expense of smaller titles, Zhu responds that the decision is studio‑specific. Funcom, for instance, had already been running the live‑service Conan Exiles before Tencent’s acquisition, making live service part of its DNA. Other studios that experimented with live service and found it unsuitable have reverted to premium titles, which remain their strength.
"We want to help studios excel in whatever they do best, whether that’s a live‑service world or a high‑quality single‑player experience," he says. The notion that Tencent only pursues games with budgets exceeding £50 million is a misconception.
Zhu clarifies that the company evaluates projects of all scales, focusing instead on the studio’s stage in its development journey and the potential for growth. "We have small games in our portfolio," he confirms, highlighting investments in Larian Studios and FromSoftware as examples of long‑term partners whose titles may not always be massive blockbusters but consistently build audience and craft.
Zhu also reflects on internal restructuring aimed at bridging Tencent’s Western and Chinese operations. Progress has been slower than hoped due to time‑zone challenges, prompting a shift toward disseminating best practices across the group rather than creating a single unified support team.
Outsourcing remains a strategic tool. Tencent often blends core in‑house teams with external specialists, a model that proved successful for titles like Star Wars: Galactic Racer and is being considered for upcoming projects such as Expedition 33. The decision on how many staff to retain versus outsource depends on the need for precision work, location preferences, and cost considerations.
For example, Sumo Digital may support European studios because of proximity, even though the UK is not the cheapest location. Industry trends reinforce this global redistribution of talent. As Amir Satvat highlighted at Gamescom Dev, development headcount is migrating from expensive hubs like California to more cost‑effective regions in Asia.
Zhu agrees, noting that while North America still hosts strong, long‑standing teams, support functions are better placed in lower‑cost locales. The rise of Chinese studios on the global stage—evident in the polished games showcased at Gamescom’s Opening Night Live—suggests a shifting power balance. Zhu welcomes this evolution, citing games such as Black Myth: Wukong as inspirations that demonstrate Chinese developers can produce console‑level quality. He adds that Chinese teams, traditionally strong in mobile, are now mastering high‑end PC and console production, aided by improved tooling and AI.
AI, in particular, is portrayed as an enabler rather than a replacement. Zhu likens it to the internet: an inevitable, useful technology. He personally experiments with AI to boost personal efficiency and encourages developers to view AI as a genuine productivity tool. Applications range from concept art generation and rigging to code review, motion matching, and even automated Slack bots that manage tasks.
Nevertheless, Zhu acknowledges unresolved issues, especially regarding the copyright status of AI‑generated assets. Tencent mitigates risk by restricting AI training data to its own libraries, ensuring that any generated content remains within the company’s IP boundaries. Agreements with tool providers further prevent data leakage. Backed by its massive parent, Tencent Games can afford to place bets of varying sizes across a diverse studio ecosystem.
While recent moves have seen the company step back from Bulkhead and Splash Damage and redirect Lightspeed, it simultaneously announced a minority stake in W4, the commercial partner behind the Godot engine. Zhu anticipates that upcoming events like Gamescom will reveal new initiatives, but the constant thread remains clear: fostering ongoing player engagement, whether through live services or other formats, ultimately drives the bottom line.