Tencent Cuts Jobs as Gaming Giant Closes Montreal Studio

Chinese tech giant Tencent conducted significant workforce reductions on February 22, 2026, as the company shuttered its TiMi Studio Group operations in Montreal. While exact numbers were not disclosed, the layoffs affected the gaming division's international expansion efforts as Tencent restructures its global operations amid shifting market conditions and increased regulatory scrutiny.

The job cuts primarily impacted TiMi Studio Group's Montreal office, which had been developing mobile and console games for Western markets. Sources familiar with the matter indicate the closure reflects Tencent's strategic pivot away from aggressive international expansion in favor of consolidating resources around core domestic operations and proven revenue streams.

Context of the Decision

The Tencent layoffs stem from multiple pressures facing the world's largest gaming company by revenue. Regulatory crackdowns in China have limited new game approvals and imposed restrictions on gaming time for minors, forcing Tencent to reassess its growth strategy. The Montreal studio closure represents a broader retreat from international gaming investments that have struggled to generate expected returns.

Market analysts point to declining mobile gaming revenues globally as another factor driving the workforce reduction. After explosive growth during the pandemic, consumer spending on mobile games has normalized, prompting publishers to cut costs and focus on their most profitable titles. Tencent's international studios, including the Montreal operation, were viewed as experimental ventures that became expendable during this downturn.

The company has also faced increased competition from ByteDance and other Chinese tech companies in the domestic market, while geopolitical tensions have complicated its overseas expansion plans. These combined pressures created an environment where maintaining expensive international development studios became financially untenable.

Impact on Operations

The Montreal studio closure eliminates approximately 100 positions across game development, marketing, and administrative functions. The facility had been working on unannounced mobile titles targeting North American and European audiences, projects that will now be canceled or transferred to other TiMi locations in China.

TiMi Studio Group, known for developing "Honor of Kings" and "Call of Duty: Mobile," will consolidate its operations around its Shenzhen headquarters and other Asian offices. The restructuring allows Tencent to reduce overhead costs while maintaining focus on markets where it holds dominant positions.

Affected employees received severance packages and job placement assistance, according to company statements. However, the closure represents a significant blow to Montreal's growing gaming ecosystem, which had attracted several international studios in recent years.

Company Financial Background

Tencent's financial performance has faced headwinds since 2021, when Chinese regulators began tightening oversight of the tech sector. The company's market capitalization fell from over $900 billion at its peak to approximately $400 billion by early 2026, reflecting investor concerns about regulatory pressure and slowing growth.

Gaming revenue, which accounts for roughly one-third of Tencent's total income, declined 1.2% year-over-year in the fourth quarter of 2025. This marked the third consecutive quarter of gaming revenue decline, driven by fewer new game approvals and reduced player spending. The company's international gaming investments, including studios in Los Angeles, Singapore, and Montreal, have generated losses totaling over $500 million since 2022.

Despite these challenges, Tencent maintains strong cash reserves of approximately $25 billion and continues generating substantial profits from WeChat's advertising and fintech services. The workforce reduction represents a strategic reallocation of resources rather than financial distress.

Industry Outlook

The Tencent layoffs reflect broader trends affecting the global gaming industry. Major publishers including Electronic Arts, Unity Technologies, and Epic Games have all announced significant workforce reductions in the past year as the sector adjusts to post-pandemic market conditions.

Chinese gaming companies face additional pressures from regulatory uncertainty and geopolitical tensions that complicate international expansion. NetEase, Tencent's primary domestic competitor, similarly scaled back its overseas operations in 2025, closing studios in Japan and the United States.

Industry experts predict continued consolidation as gaming companies focus on proven franchises and core markets rather than experimental international ventures. The shift toward artificial intelligence and automation in game development may also reduce demand for traditional development roles.

Conclusion

Tencent's decision to close its Montreal studio and reduce its workforce signals a more conservative approach to international expansion as the gaming giant adapts to regulatory constraints and market pressures. While painful for affected employees, the restructuring positions Tencent to weather industry headwinds by concentrating resources on its most profitable operations and core Chinese market dominance.