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Tencent Music Entertainment has announced its Q4 earnings, revealing a paying subscriber bump of nearly 21% compared to 2022. Here’s the latest.
The platform reported revenue of 6.89 billion yuan ($957.06M) for Q4 2023, a 7.2% decline compared to the same period in 2022. Despite the revenue decline, the number of paying subscribers rose to 106.7 million, for a 20.6% jump in the Q4 2023 quarter compared to Q4 2022.
Part of the revenue decline can be attributed to China’s regulatory crackdown on digital platforms’ chance-based features—impacting games and music heavily. “The social entertainment segment is still feeling the pains from the recent regulatory crackdown,” says 86Research’s Charlie Chai, a Shanghai-based analyst. “The gambling-related revenue took a much higher-than-expected percentage of Tencent Music’s revenue, and this part is now disappearing.”
Meanwhile the company’s online music service revenue jumped 41.1% to 5.02 billion yuan ($697M) year-over-year thanks to steady growth of paid subscriptions and advertising.
Tencent was among the Chinese software giants that saw shares tank in December 2023 after Beijing unveiled new regulations surrounding online spending. Tencent shares fell 12.4% in December 2023, charting the stock’s worst performance since October 2008 during the global financial crisis. That drop was estimated to have wiped $47 billion from Tencent’s market value. Meanwhile, competitor NetEase saw its stock dive 25% and wiped out $16.4 billion in value.
Some of the regulations now required in China include spending limits in games, while incentives like daily login rewards are banned. Other limitations introduced include limiting how many purchases can be made and issuing warnings in-app for what the regulations call “irrational consumption behavior.” China has been cracking down on apps that feature addictive behaviors—especially for its minor population.
In 2021, Chinese regulators established industry rules for the amount of time children are allowed to spend playing games. Approvals of new video games in the country was also suspended for around eight months, resuming in April 2022 as authorities eased a broader crackdown on the technology industry.
