Tencent Music Counts 51.7 Million Paying Subscribers, Enjoys Biggest Quarterly Surge Since 2016

Tencent Music IPO Launches at Lowest Expected Price Range
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Tencent Music experienced a 46 percent year-over-year increase in paid subscribers during 2020’s third quarter, with 51.7 million counted by the end of September.

Tencent Music revealed this and other noteworthy performance stats today, in its third-quarter earnings report. Through July, August, and September of 2020, the Shenzhen-headquartered company – which operates the QQ Music, Kugou Music, and Kuwo Music streaming services in China, as well as the WeSing karaoke app – added 4.6 million paid subscribers, from Q2 2020. The figure represents Tencent Music’s largest increase in quarterly subscribers since 2016, when it was founded.

Despite the all-time-high subscribership boost and total, however, Tencent Music’s mobile monthly active users (MAUs) for music slipped 2.3 percent year over year, finishing at 646 million in Q3 2020 against 661 million in Q3 2019 – or nearly half of the residents in the world’s most populous country. Mobile MAUs for “social entertainment” also dipped, by 6.4 percent, as did paid users for social entertainment, decreasing 14.6 percent (to 10.5 million) from Q3 2019’s 12.3 million.

The release then proceeds to reiterate the solid viewership figures associated with Tencent Music’s livestream concerts, besides the stable of international deals – including a contract with Merlin in late October and an agreement with Peermusic earlier this month – that the publicly traded company locked down during the quarter-year-long stretch.

Building upon the latter points and emphasizing the progress it’s made on the indie-artist front, Tencent Music noted that it has “continued to record triple-digit year-over-year growth in both the number of participating indie musicians…and the number of indie music works uploaded.”

And in a significant contrast to stateside streaming services, Tencent Music platforms are quietly scoring exclusive tracks and content from these independent creators – including Ren Ran’s “Bird and Cicada,” which generated over 500 million streams during the quarter after being “exclusively licensed to” TME. (It appears that the track’s streaming exclusivity is domestic, with China-based listeners able to access it solely via Tencent Music apps, as it’s available on Spotify U.S. presently.)

Tencent Music Q3 2020 revenues, for their part, increased by 16.4 percent, to about $1.14 billion at the current exchange rate, compared to Q3 2019. Online music-service income jumped 25.9 percent year over year, finishing Q3 2020 at approximately $349.82 million. The number encompasses a predictable (given the paid-subscriber gains) 55 percent bump in earnings deriving from monthly subscription fees, $220.14 million.

Thanks to the aforementioned livestream-concert growth and a continued pivot to WeSing karaoke, revenues from social entertainment services and other categories surpassed $791.62 million – a 12.7 percent year-over-year improvement. Net profits totaled about $170.39 million.

During today’s trading hours, Tencent Music stock (TME) gained about 2.4 percent, for a per-share price of $15.31. As a whole, the Q3 2020 earnings report appears encouraging, especially because many industry observers doubted the revenue potential of the Chinese market in the not-so-distant past. And in terms of possible implications on the broader streaming landscape, it bears reiterating that Spotify and Sony/ATV Music Publishing have stakes in Tencent Music.