Tencent’s overarching game‑development strategy is a multifaceted blend of live‑service ambitions, AI‑driven tooling, and the cultivation of evergreen intellectual property. While many industry observers have long debated the wisdom of committing resources to live‑service models—citing Sony’s high‑profile missteps and other firms that chased recurring‑revenue streams only to stumble—Tencent remains convinced that this approach is central to its future. As Yong‑yi Zhu, Vice President and Head of Operations, Strategy and Compliance for Tencent Games, put it, the company’s “holy grail” is indeed live service, a philosophy rooted in its most successful titles such as Honor of Kings, League of Legends, and Valorant.
These games not only generate steady income but also foster persistent communities, turning short‑term engagement into a lasting lifestyle for players. Zhu’s recent interview reveals that live service is just one pillar of a broader, evolving plan.
Since the last conversation with GamesIndustry.biz a little under a year ago, Tencent has seen notable shifts in its portfolio. UK‑based studios Splash Damage and Bulkhead have been spun off to operate independently, echoing earlier separations of The Chinese Room and Secret Mode in 2025. Zhu declined to detail the reasoning behind each split, but emphasized a clear criterion: a partnership must bring mutual value.
When a studio’s direction no longer aligns with Tencent’s long‑term objectives, or when better opportunities arise elsewhere, the company prefers to let the studio thrive on its own. "Sometimes a studio is simply better as a standalone entity," he explained. The reality of acquisitions, Zhu admits, is not always smooth.
Cultural differences, market conditions, and integration challenges can impede the expected synergies. "Not every deal will be a slam dunk," he said, acknowledging that some studios prove difficult to assimilate.
Nevertheless, Tencent’s strategic focus remains on building sustainable, long‑lasting communities. Evergreen titles—both single‑player and multiplayer—are a cornerstone of this vision. Mobile games, where Tencent holds a dominant position, exemplify the single‑player side, while multiplayer experiences reinforce the live‑service model.
The aim is to nurture IPs that can evolve over time, much like the Call of Duty franchise, which, despite being a series of successive releases, is treated as a single, enduring property. Consistency and stability are recurring themes in Zhu’s outlook. He contrasts Tencent’s approach with the volatile cycles many premium‑game developers experience, where a single hit can be followed by layoffs and restructuring. Tencent seeks to avoid those peaks and troughs, opting instead for a steady, reliable output that supports its global workforce.
To achieve this, the company invests heavily in high‑quality talent, ensuring that any collaboration between Tencent and a developer is synergistic and mutually beneficial. Zhu oversees operations and strategy for roughly twenty studios worldwide, ranging from European outfits like Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, and Stunlock Studios, to North American and Oceania partners such as Digital Extremes and Grinding Gear Games.
His priority is not merely geographic expansion but the successful launch and sustained performance of each studio’s projects. This involves providing access to Tencent’s extensive ecosystem—regional publishing expertise, technical support, testing facilities, backend services, and data analytics. For instance, when Funcom faced challenges with its title Dune Awakening, experts from both China and Europe were dispatched to work side‑by‑side with the development team, offering hands‑on assistance and, in some cases, transitioning into permanent staff members if the collaboration proved fruitful.
Creative direction and artistic design generally remain the domain of the individual studios, but Tencent steps in when common technical hurdles arise, such as issues with the Unreal Engine, or when navigating regional publishing complexities in markets like the Middle East, North Africa, or Southeast Asia. This support model allows studios to retain creative autonomy while benefiting from Tencent’s logistical muscle.
The question of scale also features prominently in the discussion. While some commentators have suggested that Tencent only backs projects exceeding £50 million, Zhu refutes this notion. He emphasizes that the company evaluates opportunities across the entire spectrum, considering each studio’s stage of development and long‑term aspirations.
Smaller titles are indeed part of Tencent’s portfolio, and the firm looks to help them grow when appropriate. He cites Larian Studios and FromSoftware—both minority‑stake partners—as exemplars of studios that have built their reputations over time through purposeful, audience‑centric releases, regardless of initial size. Outsourcing and hybrid development models are another area of focus. Tencent is experimenting with core internal teams complemented by external specialists, a strategy that proved effective for titles like Star Wars: Galactic Racer and is being examined for upcoming projects such as Expedition 33.
The balance between in‑house staff and outsourced talent depends on the precision required for a given task and the geographic considerations of time zones and cost. For example, Sumo Digital may support European studios due to proximity, while UK‑based operations might be less cost‑effective, prompting a nuanced evaluation of trade‑offs.
Zhu also observes broader industry trends, noting the migration of development talent from high‑cost regions like California to more affordable locales across Asia. This shift is mirrored in the increasing presence of polished Chinese titles at major events such as Gamescom, suggesting a potential rebalancing of creative power from West to East. He points to games like Black Myth: Wukong as proof that Chinese developers have mastered high‑quality console and PC production, moving beyond their historical focus on mobile and art‑outsourcing work.
Artificial intelligence emerges as a pivotal tool in Tencent’s arsenal. Zhu stresses that AI is not intended to replace human creators but to augment their efficiency. By leveraging AI for concept art, rigging, motion matching, code review, and even production management (e.g., AI bots handling routine Slack queries), smaller teams can achieve output that rivals larger studios.
Chinese developers, having grown up alongside rapid AI advancements, tend to embrace these tools more readily, whereas Western studios often exhibit caution due to ethical, copyright, and community concerns. Zhu advocates for a pragmatic stance: "People should just not be afraid of AI; it's like the internet—an inevitable evolution that can make us more productive." Nevertheless, Zhu acknowledges the unresolved legal complexities surrounding AI‑generated content.
Tencent safeguards its intellectual property by ensuring that AI models are trained exclusively on internal assets, preventing inadvertent incorporation of external copyrighted material. Agreements with AI providers stipulate that data remains confined within Tencent’s secure environment, mitigating the risk of unintended content leakage.
In summary, Tencent’s long‑term game strategy intertwines live‑service ambitions, AI‑enhanced development pipelines, and the nurturing of evergreen franchises. While the company continues to refine its studio portfolio—occasionally divesting when synergies falter—it remains committed to fostering stable, engaging experiences that keep players invested over the long haul. By combining global talent, sophisticated tooling, and a clear focus on community longevity, Tencent aims to solidify its position as a leading force in the evolving landscape of interactive entertainment.