tencent music logo 2022

Chinese streaming giant Tencent Music’s latest financial results are a mixed bag.

On the plus side, the company saw its operating profits more than double year-on-year in Q4 2022. However, its actual revenues fell by 2.4% to RMB 7.43bn (around $1.08bn), and the reaction saw more than $1.2bn knocked off TME’s market cap (valuation).

The context is important for this decline, however. TME’s revenues from its music streaming services actually grew strongly: up 23.6% to RMB 3.56bn ($516m).

It was the other part of its business, social entertainment – largely karaoke and livestreaming – that saw its revenues plunge by 18.2% to RMB 3.87bn ($561m) in Q4.

There’s a real prospect of a tipping point where online music services overtakes social entertainment to become TME’s biggest source of revenues.

On the former side, TME ended 2022 with 567 million monthly active users of its three music services, down from 615 million at the end of 2021. However, the number of paying users grew from 76.2 million to 88.5 million over that period.

Meanwhile, TME’s revenue from music subscriptions grew by 20.6% to RMB 2.35bn ($341m). The share price continues to be a concern though: at its peak in March 2021, TME was worth $53.81bn, but now its market cap is just $12.1bn.

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Music Ally's Head of Insight

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