Tencent Music published its latest financial results yesterday, and they revealed sluggish growth for active users of the company’s three online-music services in China, but a much more-sprightly rise in the number of paid subscribers for those services.
The company ended Q2 with 652 million mobile monthly active users across QQ Music, Kugou Music and Kuwo Music, up just 1.2% year-on-year. However, the number of paying users grew by 33% over the same period, from 23.3 million a year ago to 31 million at the end of June. Tencent Music added 2.6 million paying users in Q2 this year – although as a comparison, Spotify added eight million that quarter.
Tencent Music’s paying users were spending an average of RMB 8.7 a month (around $1.23), which represents a 1.1% dip in Tencent Music’s average revenue per paying user (ARPPU). The company says it generated RMB 1.56bn ($228m) of revenue from its music-streaming services in Q2, up 20.2% year-on-year. The figure included a 31.9% increase in music subscriptions to RMB 798m ($115m), with album-download sales also in the mix (which is why we use the term ‘online music’ rather than just ‘streaming music’ for this part of its business).
Tencent Music was profitable in Q2, reporting a net profit of RMB 927m ($135m), although once again, the company’s ‘social entertainment’ business with karaoke and live-video apps played a big role there. Tencent Music’s revenues from that side of the business grew by 35.3% to RMB 4.34bn ($632m).
Social entertainment accounted for 73.5% of Tencent Music’s overall revenue last quarter, and online music for 26.5%. The company had 239 million mobile monthly active users for the social apps (up 4.8% year-on-year) and 11.1 million paying users (up 16.8%). But those paying karaoke and live-video users spent an average of RMB 130.2 (around $18.57) a month, more than 15 times the ARPPU of the online-music payers.
Other titbits from the financials: Tencent Music has added a short-videos feature to Kugou, enabling both users and professional creators to post – thus bringing it into TikTok/Douyin territory; it has launched a ‘Lite’ version of its WeSing karaoke app, while launching that service in several other south-east Asian countries; and Tencent Music is working on partnerships with manufacturers of smart speakers, smart watches and cars.
In its earnings call yesterday, Tencent Music’s management were also asked about parent company Tencent Holdings’ talks with Vivendi to buy up to 20% of Universal Music Group. CEO Cussion Pang offered a careful response. “Right now tencent is leading the discussions with Vivendi… TME has not made any final decision in terms of our participation in these transactions. But there’s going to be more discussion internally, especially in the board level at TME,” he said.