Tencent’s strategic outlook is built around three interlocking pillars: the pursuit of live‑service experiences, the integration of advanced AI tools, and the cultivation of evergreen intellectual property that can sustain long‑term player engagement. 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 whether a focus on live‑service titles is a sound investment. Some high‑profile attempts have flopped—Sony’s gamble on persistent‑online models, for instance, and the recent demise of Highguard, a project reportedly backed by TiMi Studio Group, a Tencent subsidiary.
Yet Zhu insists that live‑service remains the "holy grail" for Tencent. He points to the firm’s DNA—titles such as Honor of Kings, League of Legends and Valorant—that have evolved continuously, fostering stable revenue streams and vibrant player communities. These games are no longer single‑event experiences; they have become lifestyles for their audiences, and Tencent aims to replicate that model across its expanding portfolio.
Live‑service, however, is only one component of a broader, multi‑faceted strategy. Zhu explained that the company has been re‑evaluating its studio relationships. Over the past year, UK‑based studios Splash Damage and Bulkhead have spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025. While Zhu did not disclose specifics, he emphasized that Tencent assesses each partnership on two criteria: the value each side brings and the alignment with the firm’s long‑term vision.
When synergy is lacking or a studio appears better positioned as a standalone operation, Tencent will step back. He acknowledged that not every acquisition integrates smoothly, citing market conditions and cultural differences as occasional obstacles. A key element of Tencent’s roadmap is the development of evergreen titles—games that retain relevance and revenue potential over many years.
This includes both single‑player experiences, which are heavily represented in Tencent’s mobile catalog, and multiplayer services that can evolve with ongoing updates. Zhu cited Call of Duty as an example of an evergreen IP that persists through successive releases, illustrating how a franchise can be refreshed while maintaining its core identity.
Stability is another recurring theme. Zhu contrasted the volatility of many premium releases—where studios may launch a blockbuster and then face layoffs—with Tencent’s desire to provide a steadier employment environment. By nurturing long‑term communities, the company hopes to avoid the boom‑and‑bust cycles that have plagued other developers. Talent acquisition and retention also feature prominently.
Tencent seeks "high‑quality talent" that can work synergistically with its own resources. Zhu oversees roughly twenty studios worldwide, ranging from European outfits like Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers and Stunlock Studios, to North‑American and Oceania partners such as 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 successful products. This support can include regional publishing expertise, technical assistance, testing, backend infrastructure and data analytics—areas where Tencent has deep experience in its domestic market and is now translating that know‑how to global partners. A concrete illustration of this collaborative model came from the development of Dune Awakening.
Experts from China and Europe were embedded alongside Funcom’s team, troubleshooting issues in real time. When a problem proved persistent, the specialists sometimes stayed on as permanent staff, blurring the line between external consultancy and internal hiring.
While creative direction generally remains with the individual studio, Tencent steps in on cross‑cutting challenges such as Unreal Engine optimization or navigating publishing in regions like the Middle East, North Africa and Southeast Asia. The question of scale also emerged. Some observers claim Tencent only backs projects exceeding £50 million, but Zhu refuted that blanket statement.
He said the company evaluates games of all sizes, focusing instead on a studio’s stage in its development journey and its ultimate goals. Small titles do exist in Tencent’s portfolio, and the firm is willing to help them grow if the cultural and technical fit is right. Zhu highlighted Larian Studios and FromSoftware—both minority‑owned by Tencent—as "north stars" that have built purposeful, audience‑centric games over time, regardless of budget.
Outsourcing and hybrid development models are another area of experimentation. Tencent is exploring a structure where a lean core team is supplemented by external specialists, a method that proved effective for Star Wars: Galactic Racer and is being considered for upcoming projects like Expedition 33. Decisions about staffing levels versus outsourced talent depend on the need for high‑precision work and the geographic location of partners.
For example, Sumo Digital may support European studios due to proximity, even though the UK is not the cheapest location, illustrating the trade‑offs between cost, time zones and talent pools. These trends echo broader industry shifts noted by Amir Satvat at Gamescom Dev, where headcount is moving from high‑cost regions such as California to more affordable locales across Asia. Zhu agrees, noting that North America is becoming increasingly challenging for large development teams, though established groups with long‑standing cohesion can still thrive. For support functions, however, locating teams in expensive markets makes less sense.
The rise of Chinese studios on the global stage was evident at Gamescom’s Opening Night Live, which showcased a slew of polished titles from Chinese developers. Zhu welcomed this shift, pointing to successes 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 higher‑end platforms, aided by improved tooling and a cultural embrace of AI. AI, in particular, is a cornerstone of Tencent’s vision for boosting productivity without expanding team size.
Zhu stressed that AI is not intended to replace creators but to augment their capabilities—accelerating concept art, rigging, motion matching, code review and even project management through AI‑driven bots in communication tools. While Western studios may be more cautious due to ethical and copyright concerns, Zhu advocates a pragmatic stance: "People should not be afraid of AI; it’s like the internet—an inevitable tool that can make us more efficient." Nonetheless, the company remains vigilant about intellectual‑property issues. Tencent ensures that AI models are trained only on its own asset libraries, avoiding the legal gray area of using external content.
Agreements with AI vendors lock down data so that proprietary information does not leak outside the studio environment. In summary, Tencent’s long‑term strategy is a balanced blend of live‑service ambition, AI‑enhanced development, and the nurturing of evergreen franchises.
By providing tailored support to a diverse set of studios, embracing flexible development models, and leveraging cutting‑edge tools, the firm aims to keep players engaged for the long haul—an objective that ultimately translates into sustained financial performance. The next Gamescom will likely reveal new projects that reflect this holistic, engagement‑focused approach.