Tencent’s overarching strategy is evolving around three core pillars: the expansion of live‑service ecosystems, the integration of advanced AI tools, and the cultivation of evergreen intellectual properties that can sustain long‑term player engagement. In a recent 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 stability was laid out in detail. **Live‑Service as a Strategic Anchor** Zhu described live service as the “holy grail” for Tencent, noting that the company’s DNA is built on titles such as *Honor of Kings*, *League of Legends* and *Valorant*. These games continuously evolve, fostering robust communities and providing a reliable revenue stream that extends far beyond the initial launch window.
However, Zhu was quick to clarify that live service is only one facet of a broader, diversified plan. While some recent live‑service projects—like the ill‑fated *Highguard*—have stumbled, Tencent remains committed to the model because it aligns with the company’s vision of turning games into lifestyles rather than one‑off experiences. The firm’s portfolio is deliberately fluid.
Over the past year, several UK‑based studios, including Splash Damage and Bulkhead, have been spun off into independent entities. Zhu explained that such separations are not failures but strategic decisions based on synergy assessments. "If a partnership doesn’t amplify the game or fit our long‑term roadmap, we may decide the studio is better off standing on its own," he said. This pragmatic stance acknowledges that not every acquisition will integrate seamlessly due to market dynamics or cultural differences.
**Evergreen IP and Sustainable Communities** Beyond live service, Tencent places a strong emphasis on evergreen titles—games that can endure across multiple iterations and maintain active player bases over years. Zhu cited *Call of Duty* as an example of an evergreen IP that thrives through continual releases, even if each new version is technically a separate product. For Tencent, the goal is to nurture titles that evolve organically, supporting both single‑player experiences—particularly prevalent in its mobile catalog—and multiplayer ecosystems that keep players returning. Stability is a recurring theme.
Zhu contrasted the volatile cycles of many premium games, where studios launch a hit and then face layoffs, with Tencent’s aim to provide a steadier employment landscape. By investing in high‑quality talent and ensuring that each studio receives tailored support—ranging from regional publishing expertise to backend infrastructure—Tencent hopes to mitigate the boom‑and‑bust pattern that haunts many developers.
**Global Studio Network and Tailored Support** Zhu 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 about geographic expansion and more about guaranteeing that each studio can launch successfully. This involves offering resources such as technical assistance, testing services, analytics, and localized publishing knowledge. For instance, when Funcom worked on *Dune Awakening*, experts from both China and Europe collaborated on‑site, sometimes transitioning into permanent roles if the partnership proved fruitful.
Creative direction generally remains the purview of the individual studios, but Tencent steps in on cross‑studio challenges—like optimizing Unreal Engine pipelines or navigating regional distribution hurdles in the Middle East, North Africa, or Southeast Asia. This flexible, case‑by‑case support model allows studios to retain creative autonomy while benefiting from Tencent’s extensive operational experience. **Scale, Diversity, and the Myth of a Minimum Budget** Contrary to the notion that Tencent only backs multi‑hundred‑million‑dollar projects, Zhu emphasized that the company evaluates games of all sizes based on the studio’s developmental stage and long‑term aspirations.
While some external observers claim a £50 million floor, Zhu clarified that smaller titles are indeed part of the portfolio, especially when they demonstrate purposeful design and the potential to grow an audience over time. He highlighted Larian Studios and FromSoftware—both minority‑stake holdings—as “north stars” that have built lasting franchises without relying solely on blockbuster budgets. **Cross‑Regional Collaboration and Outsourcing** Zhu acknowledged that integrating Chinese and Western operations has proven more challenging than anticipated, largely due to time‑zone differences and cultural nuances. Nevertheless, the company is experimenting with hybrid development models where a core internal team is supplemented by external specialists.
This approach proved effective for projects like *Star Wars: Galactic Racer* and is being considered for upcoming titles such as *Expedition 33*. The decision on how many staff to retain in‑house 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 locale. **AI as an Enabler, Not a Replacement** A significant portion of the discussion centered on artificial intelligence. Zhu described AI as a productivity catalyst rather than a substitute for human talent. By leveraging AI for concept art, rigging, motion matching, code review, and even project‑management bots in Slack, development teams can maintain a small, tight‑knit culture while delivering higher‑quality content at a faster pace.
He stressed that Chinese developers, having grown up alongside rapid AI tool adoption, view these technologies as natural extensions of their workflow, whereas Western studios often exhibit caution due to ethical, copyright, and community concerns. Zhu urged developers not to fear AI, likening its emergence to the early days of the internet.
He believes that, when used responsibly, AI can streamline repetitive tasks, free up creative capacity, and ultimately enhance the player experience. However, he also warned that generative AI raises complex intellectual‑property questions. Tencent mitigates this risk by restricting AI training data to internal assets and negotiating strict data‑usage agreements with tool providers, ensuring that proprietary content does not leak into external ecosystems. **Looking Ahead** With the backing of its parent conglomerate, Tencent Games can afford to experiment across a spectrum of investments—from high‑risk, high‑reward AAA titles to modest indie projects.
Recent moves, such as the minority investment in W4, the commercial partner behind the open‑source Godot engine, signal a willingness to explore emerging platforms and development frameworks. While some studios have been divested, the overarching narrative remains consistent: Tencent seeks to keep players engaged, whether through live‑service updates, evergreen franchises, or innovative AI‑driven production pipelines. In Zhu’s own words, “My job sits at the intersection of games and the larger Tencent ecosystem, and my constant question is how we keep people having fun and staying engaged.” This focus on sustained enjoyment translates directly to financial performance—more engaged players mean longer playtime, higher monetization, and a healthier bottom line for the company.
Overall, Tencent’s long‑term strategy is a balanced blend of live‑service ambition, AI integration, and the nurturing of timeless IPs, all underpinned by a global network of studios that receive customized support to thrive in an ever‑changing market.