Tencent’s strategic outlook is anchored in three interlocking pillars: the pursuit of live‑service models, the integration of advanced AI tools, and the cultivation of evergreen intellectual property that can sustain long‑term community engagement. In a recent, in‑depth conversation with Yong‑yi Zhu, Vice‑President and Head of Operations, Strategy and Compliance for Tencent Games, the company’s nuanced approach to growth and diversification was laid out in detail. ### Live‑Service as a Core Objective, Not a Sole Focus Zhu opened the discussion by describing live service as the "holy grail" for Tencent.
He pointed to the company’s DNA—titles such as *Honor of Kings*, *League of Legends* and *Valorant*—as proof that games that evolve over time and nurture persistent player communities provide both financial stability and brand loyalty. However, he was quick to qualify this ambition: live service is one component of a broader strategy aimed at building sustainable ecosystems rather than a single‑track obsession.
The conversation highlighted recent setbacks in the live‑service arena. Highguard, a game reportedly backed by Tencent’s TiMi Studio Group, failed to meet expectations and was pulled from the market. Likewise, other industry players have stumbled when chasing recurring‑revenue models, while traditional developers like Capcom have fared better by staying the course with premium releases. Zhu acknowledged these risks, noting that not every acquisition or partnership will produce a slam‑ dunk outcome.
Market conditions, cultural mismatches, and the difficulty of integrating new studios can all impede success. ### Strategic Partnerships and Studio Autonomy Tencent’s portfolio has been in flux. In the past year, UK studios Splash Damage and Bulkhead spun out as independent entities, following earlier separations of The Chinese Room and Secret Mode in 2025.
When asked about these moves, Zhu emphasized the importance of alignment: “Does the partnership make sense? Are we bringing something to the table as much as the developers are?” If the synergy is lacking or a better opportunity exists for a studio to thrive on its own, Tencent prefers to step back.
He described several studios—Miniclip, Sumo Digital, Funcom, Fat Shark, Sharkmob, 10 Chambers, Stunlock Studios, Digital Extremes, and Grinding Gear Games—as examples of where the company provides support without imposing a one‑size‑fits‑all model. Zhu’s role involves ensuring that each studio receives the right mix of resources: regional publishing expertise, technical assistance, testing, backend services, and data analytics. He cited the collaboration on *Dune Awakening* as a case study. Experts from China and Europe joined Funcom’s team on‑site, troubleshooting issues together.
When a problem persisted, the external specialist sometimes stayed on as a permanent employee, illustrating Tencent’s flexible, talent‑first philosophy. ### Balancing Live‑Service and Premium Experiences When asked whether Tencent is shifting its focus toward larger live‑service projects at the expense of smaller, premium titles, Zhu responded that the decision is studio‑specific.
For instance, Funcom had already been operating the live‑service game *Conan Exiles* before Tencent’s acquisition, so the partnership naturally leaned toward supporting that model. Conversely, other studios that experimented with live service and found it unsustainable have reverted to their core competency of premium, narrative‑driven games. The size of a project is not a hard cutoff either. While Bulkhead’s CEO once suggested that Tencent would not consider games under £50 million, Zhu clarified that the company evaluates opportunities across the entire scale spectrum.
The key considerations are the studio’s stage of development, its long‑term vision, and whether Tencent’s expertise can accelerate growth. He highlighted Larian Studios and FromSoftware—both minority‑stake partners—as examples of studios that have built a series of purposeful, audience‑building titles over time, regardless of individual game budgets.
### The Role of AI as an Enabler, Not a Replacement A recurring theme throughout the interview was the transformative potential of artificial intelligence. Zhu described AI as a set of tools that enhance efficiency rather than replace human creativity. In Tencent’s workflow, AI assists with concept art generation, rigging, motion matching, code review, and even production management via Slack bots that assign tasks and track progress.
By leveraging AI, smaller development teams—often 30 to 40 people—can achieve output levels previously reserved for much larger studios, maintaining a “family‑feel” while delivering higher‑quality content. Zhu also addressed the ethical and legal complexities surrounding generative AI. Tencent insists on using proprietary data sets to avoid copyright entanglements, ensuring that AI models train only on the company’s own libraries.
Contracts with tool providers explicitly prevent data leakage, protecting intellectual property from being inadvertently incorporated into external projects. ### Global Talent Distribution and Outsourcing Strategies Geography plays a strategic role in Tencent’s outsourcing decisions.
The company evaluates time‑zone compatibility, cost structures, and the availability of specialized skill sets. For European studios, Sumo Digital may act as a regional hub, while UK‑based operations balance higher labor costs against the benefits of proximity. Zhu referenced Amir Satvat’s keynote at Gamescom Dev, which highlighted a migration of development headcount from expensive North‑American hubs to more cost‑effective regions in Asia. He agreed that North America is becoming increasingly challenging for large teams, though established, tightly knit groups can still thrive there.
### A Vision of East‑West Convergence The conversation concluded on a forward‑looking note about the shifting balance of power in the gaming industry. Zhu expressed optimism that Chinese developers, once known primarily for mobile titles, are now producing console‑grade experiences that set new quality benchmarks. He credited improved tooling, including AI, for lowering barriers and enabling Chinese studios to compete on a global stage.
While Western developers may exhibit more caution due to ethical concerns and potential player backlash, Zhu urged a more open mindset: “People should just not be afraid of AI. It’s like the internet—an inevitable evolution that can make us more efficient.” ### Bottom Line: Engagement Over Everything At its core, Tencent’s strategy revolves around one metric: player engagement. Whether through live‑service ecosystems, evergreen IPs, or cutting‑edge AI tools, the goal is to keep audiences invested and entertained over the long term.
As Zhu summed up, “The more people love your game, the more they’ll play it,” a principle that directly ties creative ambition to the company’s financial health. In summary, Tencent’s long‑term plan is a multi‑faceted tapestry that weaves together live‑service ambition, AI‑driven productivity, strategic studio partnerships, and a commitment to nurturing timeless franchises.
By remaining flexible, prioritizing synergy, and embracing technology as an enabler, the company aims to sustain stable, profitable growth while fostering vibrant, global gaming communities.