The industry has spent countless columns debating whether a focus on live‑service models is wise. Companies like Sony have taken risky bets that didn’t pay off, and many other developers chasing the promise of steady subscription income have stumbled, while more traditional publishers such as Capcom have largely avoided the fallout. One of the most recent casualties of the live‑service experiment was Highguard, a title reportedly backed by Tencent’s TiMi Studio Group. Despite that loss, Tencent remains undeterred by the allure of ongoing service games.
"Our holy grail is definitely live service," 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 – these are games that evolve over time, creating stable revenue streams and strong community bonds. Modern titles are no longer about a brief burst of engagement; they aim to become a lifestyle for players." While live service is a cornerstone, Zhu stresses that it is only one facet of a broader, multi‑layered strategy. Since the last interview with GamesIndustry.biz, Tencent’s portfolio has shifted dramatically.
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, noting that "for certain studios we felt we couldn’t amplify their game." "The key question is whether a partnership makes sense for both sides. Do we bring value, and do they bring value?
If the synergy isn’t there—or if the studio’s direction diverges from our long‑term goals—we may decide they’re better off standing alone," he says. Zhu acknowledges that not every acquisition will be a slam‑ dunk; market conditions and cultural differences sometimes hinder integration. So what does Tencent’s overall plan look like? Evergreen titles—both single‑player and multiplayer—are a central pillar, especially within its mobile portfolio.
The goal is to nurture sustainable communities that keep players returning over years, not just months. Live service is the “holy grail,” but it isn’t the sole focus. "An IP can become evergreen," Zhu notes, citing Call of Duty as an example of a franchise that renews itself with each new installment while remaining a lasting brand. Stability is another major objective.
In the past, many premium developers have experienced boom‑and‑bust cycles, launching a hit and then laying off staff when revenues dip. Tencent aims to smooth those peaks and valleys, offering a more consistent employment environment across its network.
Talent acquisition is equally important. Zhu emphasizes that Tencent seeks "high‑quality talent" that aligns with the company’s vision, ensuring a symbiotic relationship between the parent and the studio. His division oversees roughly twenty studios worldwide, including 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. Rather than obsess over geographic expansion, Zhu focuses on ensuring each studio has the resources it needs for successful launches.
This includes regional publishing support, technical assistance, testing, backend infrastructure, and data analysis. "We bring the expertise we’ve honed in China to the global market," he explains.
A concrete example is the collaboration on Dune Awakening. Experts from China and Europe worked side‑by‑side with Funcom developers, tackling technical challenges and, in some cases, staying on as permanent staff after the project’s completion.
While creative direction generally stays with the individual studio, Tencent steps in on cross‑studio issues such as Unreal Engine optimization or publishing logistics for regions like the Middle East, North Africa, and Southeast Asia. Funcom’s recent restructuring, which saw redundancies and the closure of The Outsiders studio (the creators of Metal: Hellsinger), raised questions about Tencent’s preference for large live‑service projects over smaller endeavors. Zhu clarifies that the decision depends on each studio’s DNA. Funcom had already been running the live‑service title Conan Exiles before Tencent’s investment, so the partnership naturally leaned toward supporting that model.
Other studios in the Tencent family have experimented with live service but pivoted back to premium experiences when the model didn’t fit. "We want to help studios become best‑in‑class at whatever they excel at," Zhu says, whether that’s a live‑service world or a high‑budget single‑player narrative. When asked about the size of projects Tencent considers, Bulkhead CEO Joe Brammer previously claimed the company would not look at games under £50 million. Zhu pushes back, noting that Tencent evaluates games of all scales, focusing instead on the studio’s stage of development and its long‑term aspirations.
"We have small games in our portfolio, and we’re open to helping them grow," he asserts. Larian Studios and FromSoftware serve as "north stars" for Tencent’s investment philosophy. Although Tencent holds only minority stakes, both companies have built their reputations over time, releasing titles that may not be blockbuster hits but consistently expand their audiences and refine their craft. A year after discussing the creation of Chinese support teams to bridge Tencent’s Western and Chinese operations, Zhu admits progress has been slower than hoped due to time‑zone challenges.
The focus has shifted toward disseminating best practices across the global studio network. He does see a future for a hybrid model where small core teams are supplemented by external specialists—a strategy that proved effective for Star Wars: Galactic Racer.
"It’s about finding the right balance between in‑house staff and outsourced expertise," he says, citing the development cycle of Expedition 33 as a similar case. Geography plays a crucial role in outsourcing decisions.
Some studios prefer partners in the same time zone, while others are comfortable with distant collaborators. Sumo Digital, for instance, may support European studios due to proximity, even though the UK isn’t the cheapest location. These trade‑offs mirror broader industry trends highlighted by Amir Satvat’s Gamescom Dev keynote, which noted a shift of development headcount from expensive hubs like California to more cost‑effective regions in Asia. Zhu agrees that North America is becoming increasingly challenging for studios without a tightly knit, long‑standing team.
He draws on his own experience at Activision, where a concentrated team in Santa Monica delivered continuous content updates for years. For support functions, however, he argues that locating teams in high‑cost regions makes little sense. The recent Gamescom Opening Night Live, dominated by polished Chinese titles, suggests a possible power shift from West to East.
Zhu smiles and says, "I hope so. Games like Black Myth: Wukong have shown the world what top‑tier console and PC quality looks like. Chinese developers, traditionally strong in mobile, are now mastering the standards of high‑end PC and console games." A key enabler of this evolution is advanced tooling, especially artificial intelligence.
Zhu stresses that AI at Tencent is not about replacing humans but augmenting them. "AI helps our smaller teams produce more content, iterate faster, and achieve higher quality without inflating headcount," he explains.
Chinese developers, having grown up with AI as a standard tool, are especially adept at leveraging it. In contrast, Western studios often approach AI with caution, citing ethical concerns, copyright issues, and potential player backlash. Zhu encourages a more open mindset: "People shouldn’t be afraid of AI. It’s like the internet—an inevitable wave.
I’ve personally explored how AI can make my daily work more efficient." He outlines practical AI applications across the pipeline: concept art generation, rigging, motion matching, code review, and even production management bots that post tasks in Slack. While AI can streamline many processes, Zhu acknowledges unresolved legal questions surrounding generative AI content. Tencent mitigates risk by ensuring AI tools train only on proprietary libraries, keeping data confined within its studios and negotiating agreements that prevent external leakage of its assets.
With the backing of its massive parent company, Tencent Games can experiment broadly, placing bets of varying sizes across a diverse studio roster. Although it recently divested from Bulkhead and Splash Damage and redirected resources from Lightspeed, it also announced a minority stake in W4, the commercial partner of the Godot engine.
As Gamescom approaches, Zhu is likely to have new projects to showcase, but the constant thread remains the same: fostering ongoing player engagement, whether through live service or other models. "At the end of the day, I sit within the games division of a larger Tencent ecosystem, and my focus is always on keeping players engaged and having fun," Zhu concludes.
"In simple terms, that translates to the bottom line—the more people love and play your game, the stronger the business becomes."