Tencent’s Interactive Entertainment Group, or IEG, is integrating ARC Lab with its game AI engine team to build a new AI gaming unit, temporarily also called ARC Lab, according to ChainCatcher. The new division will be led by Chen Dong, Tencent Games’ head of public technology, and is focused on exploring AI-native games. The team currently has about 100 people, with planned staffing set at 400 to 500. It is also said to be hiring at scale from leading multimodal generation teams, with roles spanning audio and video foundation models, video world models, and agent-related work. ChainCatcher, citing people familiar with the matter, said the unit’s early setup draws on talent and data supply chain approaches seen at Seedance and Kling. The report said one key research direction is whether video models can directly generate games. On resources, IEG is described as having cash flow support from first-half game revenue of 130.1 billion yuan, roughly 10,000 H-card computing units in reserve, and access to proprietary game data that Tencent’s Hunyuan large model cannot use. The report added that Tencent’s AI game development remains split across several internal systems, with TEG handling foundational capabilities, IEG’s middle platform integrating tools, and four major studios advancing their own tracks, with no unified standard in place so far.