Tencent’s strategic outlook is built around three pillars: live‑service models, artificial‑intelligence tools, and evergreen intellectual property that can sustain long‑term player engagement. In a recent, in‑depth interview, Yong‑yi Zhu, Vice‑President and head of Operations, Strategy and Compliance for Tencent Games, explained how these elements intertwine and why the company remains committed to them despite recent setbacks in the industry.
The live‑service model has been a lightning rod for criticism. Many analysts have pointed to Sony’s missteps and the broader disappointment of studios that chased recurring‑revenue promises only to see projects falter. Even Capcom, which has largely stuck to a more traditional release cadence, appears relatively unscathed.
One of the most recent casualties of the live‑service gamble was Highguard, a title reportedly backed by Tencent’s TiMi Studio Group, which was shuttered after failing to meet expectations. Yet Zhu insists that live‑service remains Tencent’s “holy grail.” He points to the company’s DNA—titles such as Honor of Kings, League of Legends and Valorant—as evidence that games that evolve over time create stable revenue streams and vibrant communities. "These games become a lifestyle, not just a one‑off experience," he says, emphasizing that the goal is to nurture ecosystems where players keep returning for new content, events, and social interaction.
Live‑service, however, is only one facet of a broader, more nuanced strategy. Since the last interview with GamesIndustry.biz, Tencent has seen several of its western studios, including Splash Damage and Bulkhead, spin out as independent entities.
Zhu declined to detail the rationale but noted that the company evaluates each partnership on whether it adds mutual value. When synergy is lacking or a studio’s direction diverges from Tencent’s long‑term goals, the firm may decide that the studio is better off operating on its own. Zhu is realistic about the challenges of integration.
Cultural differences, market conditions, and the sheer complexity of merging processes can hinder the success of an acquisition. "Not every deal is a slam dunk," he admits, acknowledging that some studios simply do not fit comfortably within Tencent’s operational framework. Beyond live‑service, evergreen titles—both single‑player and multiplayer—are a cornerstone of the plan.
Tencent aims to build sustainable communities that persist for years, rather than chasing short‑term spikes. The company cites Call of Duty as an example of an evergreen IP that, despite being released as a series of iterations, maintains a consistent player base and revenue flow. Stability is another recurring theme.
Zhu contrasts Tencent’s approach with the boom‑and‑bust cycles observed at many premium studios, where a single hit can be followed by layoffs when the next project stalls. Tencent seeks to avoid that volatility by diversifying its portfolio and providing continuous support to its studios. Talent acquisition and development also feature prominently.
Zhu stresses that any partnership must be synergistic: Tencent brings resources, publishing expertise, and technical know‑how, while the developer contributes creative vision and execution capability. The company’s global network now includes roughly twenty studios, ranging from Miniclip and Sumo Digital in Europe to Digital Extremes in North America and Grinding Gear Games in New Zealand.
Support for these studios goes beyond capital. Tencent offers regional publishing channels, backend infrastructure, testing services, and data analytics. An illustrative case is the collaboration on Dune Awakening, where engineers from China and Europe worked side‑by‑side with Funcom’s team to troubleshoot engine issues and streamline production pipelines. In some instances, external experts transition into permanent roles within the studio if the partnership proves fruitful.
Creative direction largely remains the responsibility of the individual studios, but Tencent steps in on cross‑cutting challenges such as Unreal Engine optimization or navigating regional publishing hurdles in markets like the Middle East, North Africa, and Southeast Asia. When asked whether Tencent is shifting focus toward larger live‑service projects at the expense of smaller, premium titles, Zhu clarifies that the decision is studio‑specific. Funcom, for example, had already been operating the live‑service game Conan Exiles before Tencent’s investment, aligning with its core competency.
Other studios that attempted live‑service but found it unsuitable have reverted to premium experiences, which remain their strength. Contrary to rumors that Tencent only backs games with budgets exceeding £50 million, Zhu asserts that the company evaluates projects of all scales. The key factor is the studio’s stage in its development journey and whether Tencent’s expertise can help it grow.
Smaller titles are indeed part of the portfolio, and the firm cites Larian Studios and FromSoftware—both minority‑stake investments—as examples of studios that have built a series of purposeful, audience‑building games over time. Zhu also discussed the evolving model of core internal teams supplemented by external specialists. This hybrid approach, successfully employed on projects like Star Wars: Galactic Racer, allows Tencent to retain strategic control while leveraging the flexibility of outsourced talent for high‑precision tasks.
Geographic considerations play a role, too; proximity can reduce costs and improve coordination, but the company remains open to cross‑time‑zone collaborations when they add value. The conversation naturally turned to the shifting geography of game development. As industry veteran Amir Satvat noted at Gamescom Dev, high‑cost regions such as California are losing headcount to emerging hubs in Asia.
Zhu agrees, noting that North America is becoming increasingly challenging for studios without an entrenched, cohesive team. While development teams may stay compact to preserve a “family” feel, support functions—especially those that are not core creative work—can be located in more cost‑effective regions.
China’s rising influence is evident in the growing prominence of Chinese studios at major showcases like Gamescom’s Opening Night Live. Zhu welcomes this shift, highlighting how titles such as Black Myth: Wukong have set new quality benchmarks for console and PC experiences, inspiring Chinese developers to elevate their standards beyond mobile‑first design.
Artificial intelligence is another catalyst for change. Zhu frames AI not as a replacement for human talent but as a productivity enhancer.
AI tools can accelerate concept art generation, rigging, motion matching, code review, and even project management through automated Slack bots. He emphasizes that Tencent encourages developers to experiment with AI, provided the tools are used responsibly and within the company’s IP boundaries. Intellectual‑property concerns remain a gray area.
Zhu acknowledges that the legal status of AI‑generated content is still evolving, and Tencent safeguards its data by ensuring that AI models are trained only on internally owned assets. Agreements with tool providers prevent external leakage of proprietary information, protecting both the company and its partners.
In summary, Tencent’s long‑term strategy is a balanced blend of live‑service ambition, evergreen IP cultivation, talent development, and strategic use of AI. While the company has divested from certain studios and recalibrated its approach in some regions, it continues to invest across a wide spectrum of projects—from massive AAA endeavors to niche indie experiences.
The overarching goal remains consistent: keep players engaged, deliver enjoyable experiences, and translate that engagement into sustainable financial performance.