Tencent has officially pumped approximately $40 million into Indian streaming giant Gaana, which reportedly boasts a roughly $570 million post-investment valuation.
The multimillion-dollar debt investment represents the latest in a series of high-profile startup plays for the Chinese conglomerate, about 29 percent of which belongs to South African internet company Naspers. Tencent initially backed Gaana in February of 2018, and in September of 2020, the Shenzhen-headquartered company’s stake exceeded 34 percent. For reference, Gurgaon, India-based Times Internet possesses a majority interest (roughly 60 percent) in Gaana.
Gaana – the premium tier of which costs about $1.33 per month for India residents, against $3.99 for international users – offers a more than 45 million-song library, according to higher-ups, in addition to podcasts and live-radio options. On the listener front, the 11-year-old service has approximately 200 million monthly active users (MAUs) to its credit, per company officials.
The figure reflects not only the popularity of local streaming platforms, but the relative difficulty that Spotify (which inked a major licensing deal with India’s oldest record label last year) and other leading services have had in establishing a material presence in the nation of about 1.37 billion. To be sure, just 11 percent of Spotify’s 158 million premium subscribers resided outside of Europe, North America, and Latin America as of Q1 2021, following a subscription-only debut in South Korea in February.
Moreover, Tencent has quietly secured a significant stake in several of today’s foremost music companies. Its Tencent Music divisions – QQ Music, Kugou Music, and Kuwo Music – surpassed a cumulative total of 60 million paid users in Q1 2021, with an accompanying 24 percent year-over-year revenue hike. Additionally, the entity owns one-fifth of the stock market-bound Universal Music Group and about 1.6 percent of Warner Music Group.
Worth noting in conclusion is that there may be another strategic layer to Tencent’s continued financial support for Gaana, besides the obvious interest in developing an expanded music-industry presence. Tencent is currently facing a possible $1.5 billion “antitrust” penalty – and a chance of being ordered to sell off Kuwo Music and Kugo Music – as part of the Chinese government’s broader crackdown on internet and tech businesses.
Considering this scrutiny, it could make sense to diversify into foreign holdings that are unlikely to face selloff orders from the Chinese government or outright bans from other governments yet. In this regard, the Indian government last year banned Tencent rival ByteDance’s TikTok, and all manner of short-form video-sharing apps promptly emerged to take the platform’s place. Gaana released one of these options, Gaana HotShots, last July.
Anghami, the most popular music streaming service in the Middle East and North Africa, is preparing to arrive on NASDAQ following a SPAC merger. And amid growing streaming competition in emerging markets, Universal Music Group in March inked a bolstered licensing deal with Boomplay, Africa’s leading music platform.