Tencent’s strategic outlook is anchored in three pillars: the expansion of live‑service games, the integration of artificial‑intelligence tools, and the cultivation of evergreen intellectual property. While many industry observers have questioned the wisdom of betting heavily on live‑service models—pointing to Sony’s missteps and other companies that chased recurring‑revenue streams only to stumble—Tencent remains convinced that this approach offers a sustainable path forward. The company’s own DNA, exemplified by blockbusters such as Honor of Kings, League of Legends, and Valorant, demonstrates how games can evolve over time, fostering vibrant communities and turning short‑term engagement into a lasting lifestyle for players.
Yong‑yi Zhu, Vice‑President and Head of Operations, Strategy and Compliance for Tencent Games, summed up the philosophy succinctly: “Our holy grail is live service. These titles build upon themselves, provide stability for studios, and create enduring player ecosystems.” Yet Zhu emphasized that live service is only one facet of a broader, multifaceted plan. Over the past year, Tencent has reshaped its portfolio, allowing studios like Splash Damage and Bulkhead to spin out as independent entities, and parting ways with The Chinese Room and Secret Mode earlier in 2025. Zhu explained that these separations were driven by a lack of strategic synergy rather than any failure on the part of the studios; sometimes a game simply fits better as a standalone venture.
Integration challenges are a reality for Tencent. Cultural differences and shifting market conditions can make it difficult to meld newly acquired studios into the larger organization. Zhu acknowledged that not every acquisition will be a slam‑dunk, but he stressed that the company’s overarching goal is to nurture sustainable, long‑term communities. Evergreen titles—whether single‑player experiences or multiplayer services—play a crucial role in this vision.
Even franchises that appear episodic, like Call of Duty, are treated as evergreen IPs that can be refreshed repeatedly to keep audiences engaged. Stability is another recurring theme. In the past, many premium developers have experienced boom‑and‑bust cycles, launching a hit title only to lay off staff when the next project stalls. Tencent aims to avoid that volatility by providing a steady stream of support, from regional publishing and technical assistance to backend services and data analytics.
Zhu highlighted the company’s global footprint, which includes partners such as 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. The focus, he said, is less on geographic expansion and more on ensuring each studio has the resources it needs to launch successfully. A concrete example of this collaborative model is the support offered to Funcom’s Dune Awakening. Experts from China and Europe were dispatched to work side‑by‑side with Funcom developers, troubleshooting engine issues and fine‑tuning gameplay.
When the partnership proved fruitful, some of those specialists were offered permanent positions at the studio. While creative direction remains the domain of individual developers, Tencent steps in on cross‑studio challenges—such as optimizing Unreal Engine pipelines or navigating publishing logistics in regions like the Middle East, North Africa, and Southeast Asia. The question of scale also arises.
Some critics claim Tencent only backs projects exceeding £50 million, but Zhu refuted that notion. He argued that the company evaluates games of all sizes based on the studio’s stage of development and its long‑term aspirations. Smaller titles do exist within Tencent’s portfolio, and the firm is willing to help them grow if the expertise aligns. Larian Studios and FromSoftware, where Tencent holds minority stakes, serve as “north stars” for this approach: they have built their reputations over time with purposeful, audience‑centric games, proving that success does not always require blockbuster budgets.
Outsourcing and hybrid development models are another pillar of Tencent’s strategy. The company experiments with core internal teams supplemented by external vendors—a method that proved effective for projects like Star Wars: Galactic Racer and the upcoming Expedition 33. Decisions about staffing levels versus outsourced talent depend on the need for precision work, geographic considerations, and cost efficiency. For instance, Sumo Digital may support European studios due to proximity, even though the UK’s higher cost structure presents trade‑offs.
Industry trends reinforce Tencent’s outlook. As highlighted by Amir Satvat at Gamescom Dev, talent is migrating from expensive hubs such as California to more cost‑effective regions across Asia. Zhu concurred, noting that while established North American teams can sustain long‑term development cycles, support functions are better situated in lower‑cost locales.
This shift is evident in the increasing prominence of Chinese studios at global showcases like Gamescom’s Opening Night Live, suggesting a gradual power rebalancing toward the East. A key driver of this shift is the adoption of advanced tooling, particularly AI. Zhu described AI not as a replacement for human creators but as an accelerator that enhances efficiency across the pipeline. From concept art generation and rigging to motion‑matching, code review, and even production management bots in Slack, AI tools enable smaller teams—often 30‑40 members—to punch above their weight, delivering higher‑quality content at a faster pace.
Chinese developers, having grown up alongside these technologies, are especially adept at leveraging AI to bridge the gap between mobile‑first expertise and console‑level polish. In the West, however, AI adoption is tempered by concerns over ethics, copyright, and player perception. Zhu urged developers to view AI as a genuine utility, akin to the early internet, and to experiment with it to boost personal productivity.
He acknowledged ongoing legal ambiguities surrounding generative AI content, emphasizing that Tencent mitigates risk by restricting AI training data to its own libraries and securing agreements with tool providers to prevent data leakage. Overall, Tencent’s expansive resources allow it to place bets across a spectrum of scales and genres.
While the company has recently divested from certain studios and redirected others, it continues to invest strategically, as evidenced by its minority stake in W4, the commercial partner for the open‑source Godot engine. Zhu’s consistent message remains clear: engagement is the ultimate metric.
Whether through live‑service ecosystems, evergreen franchises, or cutting‑edge AI‑enhanced development, the goal is to keep players invested, entertained, and coming back for more—because sustained player love translates directly into long‑term financial health for Tencent and its partners.