Tencent’s overarching vision for its gaming empire is built around three interlocking pillars: live‑service experiences that keep players coming back, the strategic use of artificial‑intelligence tools to boost productivity, and the cultivation of evergreen intellectual property that can evolve over years. In a recent, in‑depth interview, Yong‑yi Zhu – Vice‑President and head of operations, strategy and compliance for Tencent Games – unpacked how these elements shape the company’s day‑to‑day decisions, its acquisition strategy, and its long‑range ambitions.
### Live‑Service as the “Holy Grail” Zhu openly admits that live‑service titles sit at the core of Tencent’s game‑making philosophy. "If you look at our DNA – Honor of Kings, League of Legends, Valorant – those are games that constantly build on themselves, creating stable revenue streams and vibrant communities," he said. The idea is not merely to sell a product once, but to embed a game into a player’s lifestyle.
This model promises recurring income, a steady flow of user‑generated content, and a platform for cross‑selling other Tencent services. However, Zhu is quick to point out that live‑service is not a one‑size‑fits‑all solution. The company has seen both triumphs and setbacks.
The recent failure of *Highguard*, a title reportedly backed by Tencent’s TiMi Studio Group, illustrates that even with deep pockets, a live‑service game can falter if it does not capture a sustainable audience. Conversely, long‑standing successes like *Honor of Kings* demonstrate the upside of a well‑executed service model.
### A Portfolio That Evolves with Strategy Since the last time GamesIndustry.biz sat down with Zhu, Tencent’s global studio roster has shifted. UK‑based studios Splash Damage and Bulkhead have spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025. When asked why, Zhu explained that the company evaluates each partnership on a case‑by‑case basis: "We ask ourselves whether the partnership adds value for both sides. If there’s a misalignment in strategic goals or cultural fit, we may decide the studio is better off on its own." Zhu acknowledges that not every acquisition will be a slam‑dunk.
Market conditions, cultural differences, and integration challenges can make it difficult to realize the intended synergies. Yet he remains optimistic, emphasizing that the company’s broader aim is to nurture studios that can build lasting communities, whether through live‑service or premium, single‑player experiences. ### Evergreen IP: The Backbone of Longevity Beyond the service model, Tencent places great importance on evergreen titles – games that can be refreshed, expanded, and re‑imagined over time.
This includes both multiplayer franchises and single‑player experiences, the latter of which is heavily represented in Tencent’s mobile catalog. Zhu cites *Call of Duty* as an example of an evergreen IP: "It’s not a single game, but a series that evolves with each new release, keeping the brand relevant for years." The company’s strategy is to strike a balance between stability and innovation. By supporting titles that can continuously engage players, Tencent hopes to avoid the boom‑and‑bust cycles that have plagued other publishers who rely on one‑off blockbuster releases.
### Global Studio Network and Support Infrastructure Zhu oversees roughly twenty studios across the globe, ranging from European developers such as Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, and Stunlock Studios, to North‑American partners like Digital Extremes, and even a New Zealand studio, Grinding Gear Games. His role focuses less on geographic expansion and more on ensuring each studio has the resources it needs to launch successfully.
Tencent offers a suite of support services that include regional publishing expertise, technical assistance, quality‑assurance testing, backend infrastructure, and data analytics. For instance, during the development of *Dune Awakening*, experts from both China and Europe were embedded alongside Funcom’s team to troubleshoot engine issues and streamline production pipelines. In some cases, these consultants transition into permanent staff if the collaboration proves fruitful. While creative direction largely remains with the individual studios, Tencent steps in on cross‑cutting challenges such as optimizing Unreal Engine workflows or navigating publishing hurdles in regions like the Middle East, North Africa, and Southeast Asia.
### Tailoring Strategies to Studio DNA When asked whether Tencent favors large live‑service projects over smaller, premium titles, Zhu highlighted that the decision hinges on each studio’s historic strengths. Funcom, for example, had been operating the live‑service game *Conan Exiles* long before Tencent’s investment, making it a natural fit for continued support in that arena. Other studios that experimented with live‑service but found it unsuitable have pivoted back to premium experiences, which remain their core competency.
The notion that Tencent only backs games with budgets exceeding £50 million was directly refuted by Zhu. He clarified that the company evaluates projects of all scales, focusing 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 if the fit is right," he said. ### Learning from Industry Leaders Zhu cites Larian Studios and FromSoftware as “north stars” for Tencent’s investment philosophy.
Although Tencent holds only minority stakes in these companies, their ability to release purposeful, audience‑building titles over many years aligns with Tencent’s emphasis on craftsmanship and sustained engagement. ### Bridging East and West: Talent, Outsourcing, and AI A recurring theme in Zhu’s commentary is the importance of high‑quality talent and the strategic use of external partners.
The company is experimenting with hybrid development models, where a core internal team is supplemented by specialized outsource vendors. This approach proved effective for projects like *Star Wars: Galactic Racer* and is being considered for upcoming titles such as *Expedition 33*. Location plays a crucial role in these decisions.
While the UK offers proximity to European studios, its higher cost of living makes it less attractive for large‑scale outsourcing. Conversely, studios in lower‑cost regions can provide high‑precision work at a more competitive price point. Zhu also emphasized the growing impact of AI tools on game development.
He argues that AI should be viewed as an efficiency enhancer rather than a replacement for human creators. Tencent leverages AI for concept art generation, rigging, motion‑matching, code reviews, and even project‑management bots that remind teams of upcoming tasks.
The company maintains strict data‑security policies, ensuring that AI models are trained only on internal assets to avoid copyright infringements. ### Cultural Shifts and the Future of Gaming The interview touched on broader industry trends, such as the migration of development talent from expensive hubs like California to emerging regions in Asia.
Zhu acknowledges that North America is becoming a tougher environment for large studios, citing his own experience at Activision’s Santa Monica office as a high‑performing, tightly knit team that consistently delivered content. He also reflected on the increasing visibility of Chinese studios at global events like Gamescom, noting that titles such as *Black Myth: Wukong* have raised the bar for console and PC quality. This, he believes, signals a gradual power shift in the industry, with Chinese developers leveraging their mobile‑game expertise and new AI‑driven tools to produce world‑class experiences across platforms. ### Bottom‑Line Focus: Engagement Equals Revenue Ultimately, Zhu’s mandate is simple: keep players engaged and entertained.
"When people love your game, they play it longer, spend more, and become ambassadors for the brand," he summarized. Whether through live‑service updates, premium single‑player releases, or the strategic application of AI, Tencent’s goal remains the same – to build sustainable, profitable ecosystems that benefit both developers and the broader Tencent conglomerate. In the months ahead, Tencent plans to announce further investments, including a minority stake in W4, the commercial partner behind the open‑source Godot engine.
As the company continues to experiment with diverse business models, its core philosophy—creating lasting player engagement through adaptable, high‑quality experiences—remains the guiding star of its long‑term strategy.