Tencent’s strategic outlook is built around three pillars: live‑service games, artificial‑intelligence tools, and evergreen intellectual property that can sustain player communities over many years. While the industry has seen mixed results from the live‑service model, Tencent remains convinced that this approach, when paired with the right talent and supportive infrastructure, can deliver stable, recurring revenue and lasting player engagement.
The live‑service model has been a polarising topic. Some high‑profile attempts, such as Sony’s recent forays, have faltered, and other companies that clung to a more traditional release cadence have weathered the storm relatively unscathed. One of the more recent casualties was Highguard, a title allegedly backed by Tencent’s TiMi Studio Group, which failed to gain traction.
Despite that setback, Tencent’s leadership continues to champion live services as a core component of its portfolio. "Our holy grail is live service," explains Yong‑yi Zhu, Vice‑President and head of Operations, Strategy and Compliance at Tencent Games.
"Look at our DNA—Honor of Kings, League of Legends, Valorant. Those games evolve over time, creating stable revenue streams and vibrant communities. The goal is to turn a game into a lifestyle, not just a one‑off experience." Zhu emphasizes that live service is only one facet of a broader strategy.
Over the past year, Tencent has re‑evaluated several of its studio relationships. The UK‑based studios Splash Damage and Bulkhead have spun out as independent entities, echoing earlier departures by The Chinese Room and Secret Mode in 2025. Zhu does not disclose the specifics, but notes that the company assesses each partnership on whether it adds mutual value.
When synergy is lacking or a studio’s direction diverges from Tencent’s long‑term goals, the decision is made to let the studio thrive on its own. "Acquisitions don’t always integrate smoothly," Zhu admits. "Market conditions, cultural differences, and strategic misalignment can make integration challenging.
Not every deal will be a slam dunk." Evergreen titles—both single‑player and multiplayer—are another cornerstone of Tencent’s plan. The firm aims to nurture games that can sustain long‑term communities, whether they are mobile experiences or larger console/PC projects. Zhu points to Call of Duty as an example of an evergreen IP that continually refreshes itself through new installments while retaining a loyal fan base.
Stability is a 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 seeks to avoid that volatility by fostering consistent, ongoing engagement across its portfolio. Talent acquisition and development are equally critical. Zhu stresses that any partnership must be synergistic, with Tencent providing expertise in publishing, technical support, testing, backend services, and data analysis. He oversees roughly twenty studios worldwide, including Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios, Digital Extremes, and Grinding Gear Games.
The focus is less on geographic expansion and more on ensuring each studio has the resources it needs to succeed at launch and beyond. For example, when Funcom worked on Dune Awakening, experts from Tencent’s Chinese and European teams collaborated directly with Funcom’s developers, offering hands‑on assistance with engine issues, regional publishing, and even temporary staffing.
In some cases, these consultants transition to permanent roles within the studio. Creative direction generally stays with the individual studio, but Tencent steps in when common technical challenges arise—such as optimizing Unreal Engine pipelines—or when navigating regional distribution in markets like the Middle East, North Africa, or Southeast Asia.
The question of scale also arises. While some observers claim Tencent only pursues projects exceeding £50 million, Zhu refutes that notion. "We evaluate games of all sizes. It’s about where a studio is on its journey and what its ultimate destination looks like.
We have small titles in our portfolio, and we’re open to helping them grow." Larian Studios and FromSoftware serve as "north stars" for Tencent’s investment philosophy. Although Tencent holds only minority stakes, both companies have built their reputations over time, delivering purposeful games that expand their audiences and refine their craft. This demonstrates that success does not always require blockbuster budgets; consistent quality and audience building are equally valuable. Outsourcing and hybrid development models are another area of focus.
Tencent has experimented with smaller core teams augmented by external specialists, a method that proved effective for titles like Star Wars: Galactic Racer. The balance between in‑house staff and outsourced talent depends on the precision required and the geographic considerations of each project.
Location plays a strategic role in these decisions. While the UK offers proximity for European studios, cost considerations may lead Tencent to partner with studios in lower‑cost regions. This mirrors broader industry trends highlighted by Amir Satvat at Gamescom Dev, where development headcount is shifting from high‑cost locales such as California to more affordable regions across Asia.
Zhu acknowledges the challenges of operating across time zones but sees the benefit of cross‑studio knowledge transfer. He also notes that Chinese developers, historically known for high‑quality mobile games, are now producing console‑level experiences, inspired by titles like Black Myth: Wukong. Improved tooling, especially AI‑driven solutions, is accelerating this transition.
AI, in particular, is framed as an augmentative tool rather than a replacement for human talent. "AI helps us iterate faster and produce higher‑quality content with smaller teams," Zhu says. He cites uses ranging from concept art generation and rigging to code review and production‑management bots in Slack. While the West remains cautious due to ethical and copyright concerns, Zhu encourages developers to embrace AI as a productivity enhancer.
Tencent takes steps to safeguard intellectual property when using generative AI. The company restricts AI tools to internal data libraries, ensuring that generated assets are derived from Tencent’s own IP rather than external sources. Agreements with AI vendors prevent data leakage and protect against unintended duplication of assets across games.
Overall, Tencent leverages its massive parent company’s resources to experiment across a spectrum of investments—from large‑scale AAA studios to niche indie developers. Recent moves include withdrawing from Bulkhead and Splash Damage, redirecting the AAA studio Lightspeed, and making a minority investment in W4, a commercial partner of the Godot engine. Zhu anticipates that upcoming events like Gamescom will showcase new initiatives, but the constant thread remains engagement: whether through live services or other models, the aim is to keep players invested, entertained, and ultimately contributing to the bottom line.