Tencent’s strategic outlook is built around three 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 communities. 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 diversification was laid out in detail. For many years, industry observers have debated the wisdom of concentrating on live‑service models.
Some high‑profile attempts have faltered—Sony’s gamble on a recurring‑revenue model, for example, did not pay off, and several other publishers have seen similar setbacks. Meanwhile, firms that have stayed the course with more traditional, single‑release titles, such as Capcom, have largely avoided those pitfalls.
Even within Tencent’s own ecosystem, the live‑service experiment has not always succeeded; the game Highguard, reportedly backed by TiMi Studio Group, was ultimately discontinued. Nevertheless, Zhu insists that live service remains the “holy grail” for Tencent.
He points to the company’s DNA—flagship titles like Honor of Kings, League of Legends, and Valorant—as proof that games which evolve over time and foster persistent communities provide both financial stability and a deeper connection with players. “These games become a lifestyle, not just a one‑off experience,” he explains. The goal is to create products that keep users engaged for years, turning a single title into a platform for ongoing interaction.
Live service, however, is only one element of a broader strategy. Since the last interview with GamesIndustry.biz, Tencent has reshaped its portfolio.
UK studios Splash Damage and Bulkhead have spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025. Zhu does not disclose the precise reasons for each split but emphasizes that Tencent evaluates every partnership on the basis of mutual benefit. If a studio’s vision does not align with the company’s long‑term objectives, or if a better opportunity exists elsewhere, Tencent may opt to let the studio thrive on its own. “Sometimes a studio is simply stronger as a standalone operation,” he says.
Zhu is realistic about the challenges of integration. Acquisitions can stumble due to market shifts or cultural mismatches, and not every deal will be a slam‑ dunk. The company therefore places a premium on “evergreen” titles—games that can sustain a community over an extended period. This includes both single‑player experiences, which are especially prevalent in Tencent’s mobile catalog, and multiplayer services that encourage recurring play.
The emphasis is on building durable ecosystems rather than chasing short‑term spikes. Stability is a recurring theme. Zhu contrasts Tencent’s approach with the volatility seen in other premium‑game publishers, where a single hit can be followed by layoffs when the next project stalls.
By focusing on consistent, long‑lasting franchises, Tencent aims to smooth out the revenue curve and provide steady employment for its developers. Talent acquisition is the second cornerstone of the strategy.
Zhu stresses that any collaboration must be synergistic: Tencent brings its global publishing expertise, technical infrastructure, and market insight, while the developer contributes creative vision and execution capability. The company’s global footprint now includes roughly twenty studios across Europe, North America, and Oceania—Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios, Digital Extremes, and Grinding Gear Games, among others. Zhu’s role is less about scouting new territories and more about ensuring that each studio has the resources it needs to launch successfully.
This support can range from regional publishing assistance and backend services to technical troubleshooting and data analytics. A concrete illustration of this support model is the collaboration on the upcoming title Dune Awakening.
Experts from Tencent’s Chinese and European teams worked side‑by‑side with Funcom’s developers, addressing technical hurdles in real time. When a problem persisted, Tencent even offered to transition its specialists into permanent positions at the studio, demonstrating a hands‑on, flexible approach.
Creative direction, however, remains the domain of the individual studios. Tencent typically intervenes only on cross‑studio challenges—such as optimizing Unreal Engine pipelines or navigating regional publishing requirements in the Middle East, North Africa, or Southeast Asia. The conversation also touched on the fate of smaller projects.
While some observers claim that Tencent only backs games with budgets exceeding £50 million, Zhu refutes this notion. He argues that the company evaluates projects of all scales, focusing instead on where a studio sits on its development journey and what its ultimate aspirations are. “We have small games in our portfolio,” he confirms, citing investments in studios like Larian and FromSoftware—minority stakes that have produced purpose‑driven titles over time, even if those games were not blockbuster hits. Outsourcing and hybrid development models are another area of focus.
Tencent sees value in combining a core internal team with external specialists, a strategy that proved effective for titles like Star Wars: Galactic Racer and the upcoming Expedition 33. The decision on how many staff to retain in‑house versus outsource depends on the need for highly specialized talent and the geographic considerations of time‑zone alignment and cost. Geography indeed plays a strategic role.
As industry leaders such as Amir Satvat have noted, development headcount is shifting from high‑cost regions like California to more affordable locales across Asia. Zhu agrees, observing that while North America remains a hub for tightly knit, veteran teams, support functions are better situated in lower‑cost environments.
This geographic diversification helps Tencent maintain a lean yet capable development pipeline. The rise of Chinese studios on the global stage was evident at this year’s Gamescom Opening Night Live, which showcased a slate of polished titles from China.
Zhu sees this as a sign of a broader power shift in the industry. “Games like Black Myth: Wukong have raised the bar for console and PC quality,” he says, noting that Chinese developers, historically known for mobile expertise, are now mastering high‑end production values. Artificial intelligence is a key enabler of this evolution.
Zhu stresses that AI is not intended to replace human creators but to augment their efficiency. From concept art generation and rigging to code review and production management bots, AI tools can accelerate iteration and improve output quality. Chinese developers, he observes, are particularly comfortable leveraging AI, whereas Western studios often approach it cautiously due to ethical, copyright, and player‑perception concerns. Zhu’s personal stance is clear: “People should not be afraid of AI.” He likens it to the internet—a transformative technology that, once understood, becomes an indispensable utility.
Tencent encourages its partners to experiment with AI as a genuine productivity tool while remaining vigilant about intellectual‑property safeguards. The company negotiates strict data‑use agreements with AI vendors to ensure that generated content remains within the confines of its own libraries, avoiding inadvertent leakage of proprietary assets. In summary, Tencent’s long‑term plan weaves together live‑service ambitions, AI‑driven efficiency, and a portfolio of evergreen IPs, all underpinned by a commitment to sustainable community building and talent development. By balancing internal expertise with external collaboration, and by embracing both large‑scale and niche projects, Tencent aims to keep players engaged across a diverse array of experiences, ultimately translating that engagement into lasting financial success.