There is some good news and some not-so-good news in the latest financial results of Chinese streaming giant Tencent Music. The not-so-good including the fact that its Q2 revenues declined year-on-year: down 13.8% to RMB 6.91bn ($1.03bn).
Much of that was due to its ‘social entertainment’ businesses in karaoke and livestreaming, which were down 20.4% to RMB 4.03bn ($601m), but TME also saw revenue from its online music services dip year-on-year by 2.4% to RMB 2.88bn ($430m).
The good news? Tencent Music’s paying users for its three online music services (QQ Music, Kugou Music and Kuwo Music) grew by an impressive 24.9% year-on-year to 82.7 million people, while its revenues from music subscriptions grew by 17.6% to RMB 2.11bn ($315m).
Subscriptions are thus now 73.3% of TME’s online music business, up from 60.7% this time last year. However, the tale being told by these figures is also one of a notable decline in non-subscription revenues: down 33.6% year-on-year.
In its financials announcement, TME noted that advertising revenues had taken a hit, but also sub-licensing revenues – those previously garnered by striking exclusive deals with music rightsholders, then licensing the music on to rivals. With such deals having been cracked down on by the Chinese authorities, the impact on TME’s revenues is clear.
There are challenges, then, but overall the results have been welcomed by investors. Reuters notes that they beat forecasts, which saw TME’s US shares rise 5.9% in extended trading overnight. Like its western publicly-listed counterpart Spotify, it’s still considerably down on its peak though: a market cap of $7.92bn at the close of trading yesterday, a far cry from the $53.81bn it was worth in March 2021.
As ever, the financials also offer some interesting snippets on what’s happening within TME’s music services. It has sold 6m copies of artist Jay Chou’s digital album ‘Greatest Works of Art’ for example, and also recently brokered a deal with YH Entertainment Group to launch ‘Artist Subscription’ tiers for 13 of its musicians offering “customised audio and video content” for paying fans.
TME also notched up more than 100 million viewers for “AI-enhanced” online concerts for artists including Jay Chou and Leslie Cheung, while also hosting “China’s first virtual rap avatar concert” within its TMELAND virtual world. That event, sponsored by Adidas, generated more than 7m views.
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