In recent years, many analysts have debated whether concentrating on live‑service models is a sound strategy. Some high‑profile attempts have faltered—Sony’s gamble did not pay off, and numerous other developers chasing the promise of continuous revenue streams have stumbled. Meanwhile, companies that have remained faithful to more traditional release cycles, such as Capcom, have largely avoided those setbacks. One of the newer casualties in the live‑service arena was Highguard, a title reportedly backed by Tencent’s TiMi Studio Group.
Despite that loss, Tencent itself shows no signs of turning away from the alluring potential 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. Those are games that evolve over time, creating stable revenue and strong community bonds.
More and more, games are becoming lifestyles rather than one‑off experiences." Zhu’s remarks underline that while live service is a cornerstone, it is only one piece of a broader, multifaceted plan. Since GamesIndustry.biz last interviewed him a little under a year ago, several significant changes have taken place. The UK‑based studios Splash Damage and Bulkhead have spun out as independent entities, echoing earlier departures by The Chinese Room and Secret Mode in 2025. Zhu declined to share specifics, 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 to the table as much as the developer does? If there’s a mismatch in strategic alignment—or simply a better opportunity elsewhere—we may decide the studio is stronger on its own," he says. Zhu acknowledges that not every acquisition will be a perfect fit. "Sometimes market conditions or cultural differences make integration difficult.
Not every deal is a slam dunk." So what does Tencent’s overarching strategy look like? Zhu emphasizes evergreen titles—both single‑player and multiplayer—as essential. Mobile games, in particular, showcase many of these enduring experiences. The goal is to nurture long‑term communities that keep players engaged over years.
Live service remains a priority, but it is not the sole focus. "An IP can be built up over time," he notes, citing Call of Duty as an example of an evergreen franchise that evolves through successive releases.
Stability is a recurring theme. Zhu points out that many premium developers have experienced volatile cycles of hiring and layoffs after a major launch. Tencent aims to provide a steadier environment, reducing the boom‑and‑bust rhythm that has plagued the industry.
Talent acquisition is another pillar. Zhu stresses the importance of recruiting high‑quality creators whose goals align with Tencent’s. "Synergy between Tencent and the developer is crucial," he says. Zhu oversees operations and strategy for 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.
His focus is less about geographic expansion and more about ensuring each studio succeeds at launch and beyond. To that end, Tencent offers a suite of support services—regional publishing, technical assistance, testing, backend infrastructure, and data analysis—leveraging its domestic expertise to help studios succeed globally. He illustrates this with a recent collaboration on Dune Awakening, where experts from China and Europe worked side‑by‑side with Funcom’s team to troubleshoot issues. If the partnership proves valuable, the external specialist may even be offered a permanent role at the studio.
Creative direction generally remains the responsibility of the individual studios, but Tencent steps in when common technical challenges arise, such as optimizing Unreal Engine pipelines or navigating publishing in regions like the Middle East, North Africa, or Southeast Asia. Funcom’s recent restructuring—including layoffs and the closure of its subsidiary The Outsiders, the creator of Metal: Hellsinger—raised questions about Tencent’s focus. Zhu clarifies that the approach is studio‑specific. Funcom had already been operating the live‑service title Conan Exiles before Tencent’s investment, so supporting that model fits the studio’s DNA.
Other Tencent‑owned studios have experimented with live service and, after mixed results, shifted toward premium titles that align with their core strengths. "We want to help studios become best‑in‑class at whatever they do, whether that’s live service or premium experiences," Zhu says.
When asked about the size of projects Tencent considers, Bulkhead CEO Joe Brammer once suggested a £50 million floor. Zhu disagrees, stating that Tencent evaluates games of all scales based on the studio’s stage and long‑term vision. "We have small games in our portfolio, and we’re open to helping them grow if the fit is right," he explains. Zhu cites Larian Studios and FromSoftware as “north stars” for Tencent’s investment philosophy.
Although Tencent holds only minority stakes, both companies have built their reputations through purposeful, audience‑building titles rather than blockbuster hits alone. This demonstrates that Tencent values sustainable growth over sheer size.
A year after discussing the creation of joint Chinese support teams, Zhu admits progress has been slower than hoped, largely due to time‑zone challenges. The focus has shifted to sharing best practices across the group, allowing smaller core teams to be supplemented by external talent—a model that proved successful for Star Wars: Galactic Racer and is now being examined for projects like Expedition 33. Outsourcing decisions are influenced heavily by location. Some studios prefer partners in the same time zone for tighter collaboration, while others are comfortable with distant teams.
For example, Sumo Digital may support European studios because of geographic proximity, even though the UK is not the cheapest location. These trade‑offs reflect broader industry trends highlighted by Amir Satvat’s Gamescom Dev keynote, which noted a migration of jobs from high‑cost regions like California to emerging hubs in Asia.
Zhu agrees that North America is becoming increasingly challenging for development unless a studio has a tightly knit, long‑standing team. He draws on his own background at Activision, where a concentrated Santa Monica team delivered content year after year. For support functions, however, “it doesn’t make sense to be in such an expensive part of the world.” The prominence of Chinese studios at this year’s Gamescom Opening Night Live sparked speculation about a power shift from West to East.
Zhu smiles and says, "I hope so. Games like Black Myth: Wukong have shown the world what high‑quality console and PC experiences look like.
Chinese developers, who mastered mobile games, are now applying that expertise to larger platforms." Part of this evolution is the adoption of advanced tools, especially AI. Zhu stresses that AI at Tencent is not meant to replace humans but to augment their capabilities. Smaller development teams can produce more content, iterate faster, and achieve higher quality by leveraging AI for concept art, rigging, motion matching, code review, and even project‑management bots in Slack.
He notes that Chinese developers have grown up with AI as an integral tool, whereas many Western studios remain cautious due to ethical, copyright, and player‑reaction concerns. "People should not be afraid of AI," Zhu says, comparing it to the internet’s early days.
He personally experiments with AI to boost his own productivity and encourages developers to view it as a genuine utility. Tencent promotes AI usage across its studios, emphasizing its potential while recognizing the complexities of content ownership.
Zhu acknowledges that generative AI raises copyright questions, especially when models are trained on external data. Tencent mitigates risk by restricting AI training data to internally owned assets and securing agreements with tool providers to prevent data leakage. By harnessing the resources of its massive parent company, Tencent Games can place bets of varying sizes across a diverse portfolio. While it has recently divested from Bulkhead and Splash Damage and redirected the AAA studio Lightspeed, it also announced a minority investment in W4, the commercial partner behind the Godot engine.
Zhu expects to discuss new initiatives at the upcoming Gamescom, but the consistent thread remains clear: whether through live service or other models, the ultimate objective is to keep players engaged and satisfied, which in turn drives the bottom line.