Tencent’s overarching strategy is evolving around three core pillars: the pursuit of live‑service ecosystems, the integration of advanced AI tools, and the cultivation of evergreen intellectual property that can sustain long‑term community 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. Zhu begins by acknowledging the industry’s mixed record with live‑service models. While some high‑profile attempts have faltered—Sony’s recent gamble and the demise of titles like Highguard, which was reportedly backed by Tencent’s TiMi Studio Group—Tencent remains convinced that live services are a "holy grail" for modern gaming.
He points to the company’s own DNA: flagship titles such as Honor of Kings, League of Legends, and Valorant have demonstrated how a game can evolve over years, continually adding content, fostering player communities, and generating recurring revenue streams. These titles illustrate a shift from one‑off experiences to ongoing lifestyles, where players return day after day for new challenges, events, and social interactions.
However, Zhu is quick to stress that live services are only one facet of a broader, diversified portfolio. Over the past year, Tencent has re‑examined several of its studio relationships. Notably, UK‑based developers Splash Damage and Bulkhead have been spun off as independent entities, following earlier separations with The Chinese Room and Secret Mode.
Zhu explains that the decision hinges on strategic fit: "If a partnership doesn’t amplify the game or align with our long‑term goals, it may be better for the studio to operate on its own." He acknowledges that integration can be hampered by market conditions or cultural differences, and not every acquisition will be a slam‑ dunk. Evergreen titles—games that retain relevance and profitability over extended periods—are another cornerstone of Tencent’s plan. Whether single‑player experiences popular on mobile platforms or multiplayer services that thrive on community interaction, the aim is to build sustainable ecosystems that keep players engaged for years.
Zhu cites Call of Duty as an example of an evergreen IP, noting that even though it releases new iterations regularly, the underlying brand remains a constant draw. Stability is a recurring theme. In contrast to the boom‑and‑bust cycles seen in some premium game launches, Tencent seeks to smooth revenue fluctuations by nurturing a steady stream of content and support. This stability extends to talent acquisition: the company emphasizes recruiting high‑quality developers whose expertise complements Tencent’s resources.
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 on geographic expansion and more on ensuring each studio has the tools, publishing expertise, technical assistance, and analytical insight needed to succeed globally. A concrete illustration of this support model is the collaboration on Dune Awakening. Experts from Tencent’s Chinese and European teams worked side‑by‑side with Funcom’s developers, addressing technical hurdles and, when appropriate, offering permanent positions to standout contributors.
While creative direction generally stays with the individual studio, Tencent steps in for cross‑studio challenges—such as optimizing Unreal Engine pipelines or navigating regional publishing in the Middle East, North Africa, or Southeast Asia. When asked whether Tencent is shifting its focus toward larger live‑service projects at the expense of smaller titles, Zhu replies that the decision is studio‑specific. Funcom, for example, had already been running Conan Exiles as a live service before Tencent’s acquisition, so the partnership naturally leans toward supporting that model. Other studios that experimented with live service but found it unsuitable have pivoted back to premium experiences, which remain their core competency.
Contrary to rumors that Tencent only backs games with budgets exceeding £50 million, Zhu clarifies that the company evaluates projects of all scales. "It’s about where the studio is on its journey and what its ultimate destination might be," he says.
Tencent is willing to help smaller developers grow, provided there is cultural and strategic synergy. He cites minority stakes in Larian Studios and FromSoftware as examples of investments in studios that consistently deliver purposeful, audience‑building games, regardless of size. Cross‑studio knowledge sharing is becoming increasingly important. While earlier plans aimed to merge Tencent’s Chinese and Western support teams, time‑zone challenges have slowed progress.
Instead, the focus has shifted to disseminating best practices across the network. Zhu envisions a hybrid development model where core teams are supplemented by external specialists—a strategy that proved effective for titles like Star Wars: Galactic Racer and is being explored for upcoming projects such as Expedition 33. Outsourcing decisions are guided by geography, cost, and talent availability. For European studios, Sumo Digital may provide regional support, while UK‑based operations might be more expensive but offer proximity benefits.
This mirrors broader industry trends highlighted by Amir Satvat at Gamescom Dev, where development headcount is migrating from high‑cost regions like California to more affordable hubs across Asia and Eastern Europe. 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 China. Zhu welcomes this shift, noting that games like Black Myth: Wukong have raised the bar for console and PC quality, encouraging Chinese developers to apply their mobile‑game expertise to higher‑end platforms.
He attributes part of this evolution to advanced tooling, especially AI. AI, for Zhu, is not a replacement for human creativity but an accelerator of efficiency. Tencent leverages AI across the development pipeline—concept art generation, rigging, motion matching, code review, and even project‑management bots that prompt team members with tasks.
While Western studios often approach AI cautiously due to ethical, copyright, and player‑perception concerns, Zhu advocates for a more open mindset, likening AI adoption to the early days of the internet: "People should just not be afraid of AI." Nevertheless, he acknowledges unresolved legal questions around generative AI and intellectual‑property rights. Tencent mitigates risk by ensuring AI tools are trained solely on the company’s own assets, keeping data within its studios, and negotiating contracts that prevent external leakage of proprietary content. In summary, Tencent’s long‑term game plan is a balanced blend of live‑service ambition, AI‑enhanced development, and the nurturing of evergreen IPs that can sustain vibrant player communities. By providing strategic, technical, and publishing support to a diverse portfolio of studios—while remaining flexible about project scale and regional considerations—Tencent aims to create a stable, globally resonant gaming ecosystem.
The ultimate metric, according to Zhu, remains simple: keep players engaged, make them enjoy the experience, and the financial results will follow.