Tencent’s strategic roadmap is anchored in three interlocking pillars: the pursuit of live‑service ecosystems, the integration of advanced AI tools, and the cultivation of evergreen titles that can sustain player engagement over many 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 to growth and risk management was laid out in detail. For many years the industry has debated the wisdom of betting on live‑service models.
High‑profile missteps, such as Sony’s ill‑fated attempts to force a recurring‑revenue structure onto its franchises, have been cited as cautionary tales. Meanwhile, studios that have stuck to more traditional, single‑release cycles—Capcom being a prime example—have weathered market turbulence relatively unscathed. The recent collapse of Highguard, a live‑service title allegedly backed by Tencent’s TiMi Studio Group, added another data point to the conversation, suggesting that even a titan like Tencent can encounter setbacks. Nevertheless, Zhu remains convinced that live‑service games represent the "holy grail" of modern game development.
He points to Tencent’s own DNA—titles such as Honor of Kings, League of Legends, and Valorant—as proof that games which evolve over time and foster persistent communities can deliver both financial stability and cultural relevance. "These games keep building on themselves," Zhu explains, "and they become more than a momentary diversion; they turn into a lifestyle for their players." Live service, however, is only one thread in a broader tapestry.
Over the past year, Tencent has undergone a series of strategic realignments. UK‑based studios Splash Damage and Bulkhead were spun off to become independent entities, echoing earlier separations of The Chinese Room and Secret Mode in 2025. While Zhu declined to discuss the specifics, he emphasized a simple principle: a partnership must bring mutual value.
When a studio’s vision does not align with Tencent’s long‑term objectives, or when better opportunities arise elsewhere, the company may choose to let the studio thrive on its own. Zhu is realistic about the challenges of integration. Market conditions, cultural differences, and divergent development philosophies can all impede the smooth absorption of new studios.
"Not every acquisition is a slam‑ dunk," he admits, noting that some deals simply do not mesh with the broader ecosystem. The cornerstone of Tencent’s strategy, according to Zhu, is the development of evergreen titles—games that retain relevance and revenue potential long after launch. This includes both single‑player experiences, which dominate Tencent’s mobile portfolio, and multiplayer experiences that can support ongoing live updates.
The goal is to build durable communities that keep players returning, regardless of whether the game follows a live‑service or a more traditional release model. Zhu cites Call of Duty as an example of an evergreen IP that persists through successive iterations, illustrating how a franchise can remain fresh without relying exclusively on a single‑service framework. Stability is a recurring theme. In the past, many premium developers have experienced boom‑and‑bust cycles, hiring aggressively for a new launch and then laying off staff when sales dip.
Tencent aims to avoid that volatility by fostering a more consistent revenue stream across its portfolio, thereby reducing the need for drastic workforce reductions. Talent acquisition and synergy are equally vital. Zhu stresses that Tencent looks for high‑quality developers whose strengths complement the company’s resources.
The division he oversees includes roughly twenty studios worldwide—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. Rather than dictating creative direction, Tencent provides support services such as regional publishing, technical assistance, testing, backend infrastructure, and data analytics. This collaborative model allows studios to focus on their core competencies while leveraging Tencent’s global reach. A concrete illustration of this support is the assistance provided to Funcom on its Dune Awakening project.
Experts from China and Europe were embedded alongside Funcom’s team to troubleshoot technical challenges. When the collaboration proved successful, some of those experts were offered permanent positions within the studio, demonstrating Tencent’s willingness to nurture talent from within its network.
Creative and artistic decisions largely remain the domain of individual studios, but Tencent steps in when common technical hurdles arise—such as optimizing Unreal Engine pipelines—or when navigating regional publishing complexities in markets like the Middle East, North Africa, or Southeast Asia. The question of scale also surfaces in Zhu’s remarks.
While some observers claim Tencent only considers projects exceeding £50 million, Zhu counters that the company evaluates games of all sizes. The determining factor is the studio’s stage of development and its long‑term aspirations. Smaller titles can still find a home within Tencent’s portfolio if they align with the company’s expertise and cultural fit.
Larian Studios and FromSoftware, both minority‑owned by Tencent, serve as “north stars”—they have produced a series of purposeful, audience‑building games that may not always be blockbuster hits but consistently advance their craft. Outsourcing and hybrid development models are another area of focus. Tencent has experimented with a structure where a core internal team is supplemented by external vendors for specialized tasks—a method that proved effective for titles like Star Wars: Galactic Racer. This approach allows studios to maintain a lean permanent staff while scaling up expertise on demand, balancing cost efficiency with high‑precision development needs.
Geography plays a strategic role in these decisions. Proximity to partners can reduce latency and improve collaboration, yet cost considerations remain paramount.
For example, Sumo Digital may support European studios due to time‑zone alignment, even though operating from the UK carries higher expenses. This mirrors broader industry trends highlighted by Amir Satvat at Gamescom Dev, where development talent is shifting from high‑cost regions such as California to more affordable locales across Asia.
Zhu observes that North America is becoming increasingly challenging for large development teams, especially given rising operational costs. While legacy studios in places like Santa Monica have demonstrated the ability to deliver consistent content, newer support teams benefit from being situated in lower‑cost regions where they can focus on efficiency rather than sheer headcount. The rise of Chinese studios on the global stage—evident at Gamescom’s Opening Night Live—signals a potential power shift in the industry.
Zhu, who was born in China, notes that titles like Black Myth: Wukong have set new standards for console and PC quality, inspiring Chinese developers to elevate their ambitions beyond mobile gaming. Enhanced tooling, particularly AI‑driven solutions, is accelerating this transformation. AI, in Zhu’s view, is not a replacement for human creators but a productivity enhancer.
By automating repetitive tasks—such as concept art generation, rigging, motion matching, code review, and even project‑management bots—AI enables smaller teams (often 30‑40 people) to produce higher‑quality content at a faster pace. He emphasizes that Chinese developers, having grown up alongside AI advancements, are especially adept at integrating these tools into their pipelines.
Conversely, Western developers often approach AI with caution due to ethical concerns, copyright issues, and potential player backlash. Zhu advocates for a balanced perspective: "People should not be afraid of AI. It’s like the internet—an inevitable evolution. I’ve personally explored how AI can make my daily workflow more efficient, and I think development teams should adopt a similar mindset." Tencent encourages its partners to experiment with AI across the development lifecycle, from concept art to production management.
However, the company remains vigilant about intellectual‑property protection. All AI tools used by Tencent’s studios are required to operate on proprietary data sets, ensuring that generated content does not inadvertently incorporate external copyrighted material. Agreements with AI vendors explicitly restrict data sharing beyond the studio’s secure environment, safeguarding both the company’s and its partners’ IP.
In summary, Tencent’s long‑term strategy is a multi‑faceted endeavor that blends live‑service ambition with a commitment to evergreen experiences, strategic talent acquisition, flexible outsourcing, and responsible AI integration. While the company has recently divested from certain studios like Bulkhead and Splash Damage, it continues to diversify its investments, exemplified by a recent minority stake in W4, the commercial partner behind the Godot engine. As Zhu looks ahead to the next Gamescom, his focus remains clear: keep players engaged, deliver enjoyable experiences, and ultimately translate that engagement into sustainable financial performance.