Tencent Music Entertainment propelled China’s booming music market with a 24% rise in revenue from January to March, the company announced in its first-quarter earnings report on Monday (May 17). Although TME’s revenue was down 6.4% from the previous quarter, its music app revenue rose 34.5% to 2.75 billion yuan ($427 million) from the previous quarter. same period last year.
Music represents only 35.1% of TME’s total turnover – social entertainment is the majority – but represents a constantly growing part of its activity. Subscribers to its music apps – QQMusic, Kugou Music, Kuwo Music and WeSing – increased by 4.9 million from the fourth quarter of 2020, the largest sequential increase since 2016. Its “freemium” model improves its conversion rate, the ratio of subscribers to paying subscribers. and free music app users. Subscribers represented 9.9% of monthly music users in Q1 2021, compared to 8.0% and 9.0% in the previous two quarters.
In 2020, China had the world’s fourth-largest music streaming market, growing 90.7% to $718 million, according to IFPI.
Just as Western music services are getting into podcasts, TME is pushing long-form audio — primarily audiobooks — hard in what Cussion Pang, president of Tencent Music, said in a statement as an “evolution toward a whole -in-one”. online music and audio entertainment destination in China. TME isn’t turning that plan into more money just yet: Average revenue per subscriber fell 1.1% to 9.3 yuan ($1.44) from Q1 2020. Long-playing audio, however, makes more sticky music apps by increasing engagement: in Q1 2021, the percentage of monthly active users who listened to long-playing audio increased to 20.0%, from 5.5% in Q1 2020 and 15% in the fourth quarter of 2020.
Also on Monday, Tencent Music announced that it has renewed a licensing agreement with Sony Music Entertainment. Shares of Tencent Music rose 0.6% to $15.30 on the Nasdaq on Monday, giving it a market capitalization of $25.9 billion.
Financial measures (year-over-year changes and sequential monthly changes):
- Total income rose 24.0% to 7.82 billion yuan ($1.19 billion); it fell by 6.1% compared to Q4 2020.
- Revenue from music subscriptions rose 40.2% to 1.69 billion yuan ($258 million); it increased by 7.0% against 1.58 billion in the fourth quarter of 2020.
- Operating result rose 11.2% to 1.16 billion yuan ($180.8 million).
- Net profit to shareholders rose 10.3% to 926 million yuan ($143.8 million).
Music listening metrics (year-over-year changes and sequential monthly changes):
- Music the subscribers grew 42.6% to 60.9 million year-over-year; they improved 8.8% of 56.0 million in the fourth quarter of 2020.
- Music monthly active users (MAU) fell 6.4% to 615 million year-on-year; it fell 1.1% from 622 million in Q4 2020. (A year ago, Tencent Music executives believed this behavioral changes during the pandemic this uneven The first quarter of 2020 would persist. This doesn’t seem to have happened because the music MAUs were weaker than one year ago.)
- Monthly music ARPU (average revenue per user) fell 1.1% to 9.3 yuan ($1.44) year-on-year; it was 1.1% lower than in the fourth quarter of 2020.
Social listening metrics (changes from year to year and sequential months)
- Social MAU fell 14.2% to 224 million; they were the same as Q4 2020.
- Social Followers fell 12.5% to 11.3 million; they or they increased by 4.6% compared to 10.8 million in the fourth quarter of 2020.
- ARPU of social users increased by 35.7% to 149.7 yuan ($23.25) from Q1 2020 — when ARPU fell by 12.9% from the 1st quarter of 2019 from to the COVID-19 epidemic. Q1 2021 ARPU fell 13% from 172.1 yuan ($26.73) in the fourth quarter of 2020.