Tencent Music Entertainment, China’s largest music streaming company, ended the third quarter bruised from setbacks but buoyed by its growing music services. After taking hits from regulators and competition from competing social platforms, TME managed only a 3% increase in total revenue to 7.8 billion RMB ($1.21 billion) from the prior-year quarter.
The company’s online music service turned in a solid performance — but not without hiccups. Revenue climbed 31% to 2.89 billion RMB ($448 million) as Tencent Music added 19.5 million subscribers, a 37.7% increase. But advertising on TME’s music platforms — QQ Music, KuGou Music and Kuwo Music — “could have been higher” if not for regulatory impact on finance and gaming, said Tony Yip, chief strategy officer. Yip added that new ad products, such as an emphasis on music video, will improve monetization of the 565 million free users of its music apps.
At the end of the quarter, QQ Music’s daily video views and viewers reached 100mm and 18mm respectively, representing triple-digit annual growth.
Music streaming services may bear the name “music” but are increasingly “pan-entertainment,” a term TME used to describe competitors that lured away its “casual users” and caused monthly average users to drop from the second quarter. (Music users’ average revenue per user slid to 8.9 RMB ($1.39) from 9.4 RMB ($1.47) in the prior-year period.)
In addition to focusing on videos, TME is building its live-streaming business, used by 10,000 musicians by the end of the third quarter, and long-form audio — audiobooks, podcasts — that reach 140 million users monthly, up 89% increase year over year, and over 5 million paying users, up over 100%.
Q3 Financials
- Revenue: 7.8 billion RMB ($1.2 billion), up 3% y/y
- Net profit: 788 million RMB ($122 million), down 37% y/y
- Music subscription revenue: 1.9 billion RMB ($295 million), up 24.3% y/y
9 Month Financials (Q1 to Q3)
- Revenue: 780 billion RMB ($673 million), up 64.9% y/y
- Operating profit: 116.4 billion RMB ($98.1 million), up 29.4% y/y
- Net income: 87 billion RMB ($73 million), up 44.1% y/y
Listener Metrics
- Music paying users: 71.2 million, up 37.7% y/y
- Listeners to long-form audio (audiobooks, podcasts): 140 million, up 89% y/y
- Mobile music monthly active listeners: 636 million, down 1.5% y/y
- Music ARPU: 8.9 RMB, down 5.3% y/y
- Long-form audio paying users: 5 million, up more than 100% y/y
Misc.
- APRU declined from Q3 2020 due to churn in “casual users” that use “other pan-entertainment platforms,” although it increased from Q2 2021
- 260,000 independent musicians were on the platform on 9/30/21
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