The industry press has spent countless columns debating whether a focus on live‑service games is a sound strategy. Companies such as Sony have taken risky bets and stumbled, while many other developers chasing the promise of steady, recurring income have faced similar setbacks. In contrast, studios that have stayed the course with more traditional models—Capcom being a prime example—have emerged relatively unscathed.
One of the more recent casualties of the live‑service model was Highguard, a title reportedly supported by Tencent’s TiMi Studio Group. Despite that loss, Tencent itself remains undeterred by the allure of live‑service revenue streams.
"Our holy grail is live service, isn’t it?" 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—games that evolve over time, create stable ecosystems for studios, and nurture communities. More and more, games aren’t just short‑term engagements; they become lifestyles." Tencent’s massive, constantly evolving portfolio is designed to support that lifestyle vision. Yet, in a comprehensive interview, Zhu emphasizes that live service represents only one facet of the company’s broader plan.
Since GamesIndustry.biz last spoke with Zhu a little under a year ago, several developments have occurred. UK studios Splash Damage and Bulkhead have spun out as independent entities, following earlier separations by The Chinese Room and Secret Mode in 2025. Zhu declined to detail the reasons for those splits, noting simply that "for certain studios we feel we can’t amplify their game." "The key question for us is whether the partnership makes sense.
Are we adding value as much as the developers are adding value? If there’s a misalignment—whether it’s a lack of synergy with our long‑term strategy or simply a better opportunity elsewhere—we may decide the studio is stronger on its own than under Tencent’s umbrella." Zhu remains realistic about the fact that not every acquisition will succeed. "Sometimes market conditions or cultural differences make integration difficult.
Not every deal will be a slam dunk," he admits. So what does Tencent’s overarching strategy look like?
Zhu points to evergreen titles—both single‑player and multiplayer—as a cornerstone, especially the single‑player experiences that dominate its mobile catalog. The ultimate goal is to build sustainable, long‑term communities that keep players engaged over years.
While live service is a prized objective, it is not the sole focus. "An IP can be nurtured into an evergreen franchise," he says, citing Call of Duty as an example of a series that, despite being released as successive versions, remains an evergreen property. Consistency is the desired outcome.
"We’ve seen many premium games experience boom‑and‑bust cycles, forcing companies to downsize after a launch. Tencent aims to bring stability—something we rarely see from other large publishers." Talent acquisition is another pillar of the strategy.
Zhu stresses that any partnership must be synergistic, with both Tencent and the developer contributing meaningfully. Zhu oversees operations and strategy for Tencent’s global games division, which encompasses roughly twenty studios.
This roster includes 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. His emphasis is less on geographic expansion and more on ensuring each studio can launch successfully. This involves providing support from Tencent’s extensive ecosystem—regional publishing, technical assistance, testing, backend services, and data analysis.
"We bring expertise from our domestic market and translate it to the global stage," he explains. A concrete illustration is the collaboration on Dune Awakening. Experts from China and Europe joined Funcom’s team on‑site, troubleshooting issues together. If a problem persisted, some experts stayed on, and occasionally they were offered permanent positions at the studio.
Creative direction and artistic design generally remain the responsibility of the individual studios, but Tencent steps in on cross‑studio challenges, such as specific Unreal Engine hurdles or publishing logistics in regions like the Middle East, North Africa, or Southeast Asia. When Funcom faced redundancies last October and shut down its subsidiary The Outsiders (the creators of Metal: Hellsinger), the company stated its focus was on channeling internal resources toward new content, features, and enhancements for Dune Awakening.
This raises the question: is Tencent shifting its emphasis toward larger live‑service projects at the expense of smaller titles? "It really depends on the studio," Zhu replies. He notes that Funcom had already been operating the live‑service game Conan Exiles before Tencent’s acquisition, making live service part of its DNA.
Tencent supports that trajectory. Other studios in Tencent’s portfolio have experimented with live service and found it unsuitable, prompting a pivot back to premium titles—their traditional strength. "We aim to help studios become best‑in‑class at whatever they excel at, whether that’s live service or premium experiences," Zhu says. How small is too small for Tencent’s interest?
Bulkhead CEO Joe Brammer previously claimed that Tencent would not consider games under £50 million. Zhu disagrees, stating that Tencent evaluates games of all scales based on a studio’s stage and future aspirations.
"Sometimes our expertise or cultural fit isn’t right, but we do have small games in our portfolio." He cites Larian Studios and FromSoftware as "north stars" for Tencent’s investments. Though Tencent holds minority stakes, both studios have built their franchises gradually, focusing on purposeful, audience‑building titles rather than massive blockbusters. This demonstrates that Tencent does consider smaller projects when they align with long‑term craftsmanship.
Earlier, Zhu discussed establishing Chinese support teams to better integrate Tencent’s Western and Chinese divisions. A year later, progress has been slower than hoped due to time‑zone challenges. The focus has shifted toward disseminating best practices across the group’s studios. Zhu envisions a hybrid model where core teams are supplemented by external developers—a strategy that proved effective for Star Wars: Galactic Racer and is being examined for upcoming projects like Expedition 33.
The balance between in‑house staff and outsourced talent depends on the need for specialized expertise and geographic considerations. For example, Sumo Digital may support European studios because of proximity, even though the UK isn’t the cheapest location. This mirrors observations from Amir Satvat’s Gamescom Dev keynote, which highlighted a migration of jobs from high‑cost regions like California to emerging hubs in Asia.
"North America is becoming increasingly tough unless you have a tightly knit, veteran team," Zhu agrees, drawing on his experience at Activision’s Santa Monica hub. The prominence of Chinese studios at this year’s Gamescom Opening Night Live prompts speculation about a power shift from West to East. Zhu, born in China, responds with optimism: "Games like Black Myth: Wukong have shown the world what high‑quality console and PC content looks like.
Chinese developers, traditionally known for mobile excellence, are now mastering AAA standards." Advances in tooling—particularly AI—are accelerating this transition. Zhu emphasizes that AI at Tencent is a productivity enhancer, not a replacement for human talent.
"Our smaller development teams can now produce more content, iterate faster, and achieve higher visual fidelity thanks to AI‑driven concept art, rigging, motion matching, and code review tools." He observes that Chinese developers, having grown up with AI as a natural part of their workflow, embrace these tools enthusiastically, whereas Western studios often exhibit caution due to ethical, copyright, and community concerns. "People shouldn’t fear AI," Zhu asserts. "It’s like the internet—an inevitable evolution.
I’ve personally explored how AI can make my daily tasks more efficient." Zhu encourages development teams to adopt an open mindset toward AI, treating it as a genuine utility across coding, art, and production management. Tencent promotes AI usage, seeing vast potential while acknowledging that content‑generation AI raises complex copyright questions. He stresses that Tencent confines AI training data to its own libraries, ensuring intellectual property remains internal and preventing inadvertent leakage of proprietary assets.
By leveraging the financial might of its parent company, Tencent Games can experiment widely, placing bets both large and small across a diverse studio landscape. Although recent strategic moves have seen Tencent step back from Bulkhead and Splash Damage while redirecting resources at AAA studio Lightspeed, the company simultaneously announced a minority stake in W4, the commercial partner behind the Godot engine. Looking ahead to the next Gamescom, Zhu is likely to discuss new initiatives, but the consistent thread remains engagement—whether through live‑service ecosystems or other models.
"My role sits at the intersection of games and the broader Tencent ecosystem, always asking how we keep players engaged and having fun. In the end, that translates directly to the bottom line: the more players love a game, the more they’ll play it."