The number of paying streaming subscribers at China’s Tencent Music Entertainment hit 100 million in the June, the company said Tuesday as it revealed its second quarter financials.
Subscriber numbers increased by 20% year on year and by 5 million quarter on quarter, to hit 99.4 million, the company said. That increase helped quarterly revenues from music subscriptions to rise by 37% year-on-year to RMB2.89 billion ($399 million).
The group, which also incorporates more lucrative but slower growing social music activity such as karaoke, saw total revenue in the quarter rise by 6% to RMB7.29 billion ($1.01 billion). Net profit attributable to equity holders weighed in at RMB1.30 billion ($179 million), a 52% year-over-year increase.
Revenues from social entertainment services actually decreased by 25% to RMB3.04 billion ($419 million) from RMB4.03 billion in the same period of 2022. “The decrease was mainly due to the implementation of service enhancement and risk control measures intended to offer a better music-centric user experience,” the company said, while also suggesting that these measures will help in the future.
“We have seen users become increasingly accustomed and willing to pay for copyrighted music, whether for songs they want to listen to or for premium listening features they enjoy. This trend is evidenced by the all-time high paying ratio and [average revenue per uses] recorded by our online music services in the quarter,” said Cussion Pang, executive chairman of TME. “Such achievements led to revenues from online music services exceeding that of social entertainment services for the first time in our company’s history. This marks a significant step along TME’s growth trajectory.”
The company claims to have improved the functionality of its services with things including a better recommendation engine, expansion of music services to more use cases, such as IoT scenarios that serve a larger audience in a more immersive way, as well as creating a more individualized and differentiated music entertainment experiences through use of AI.
“All of these efforts have reinforced our platform’s ability to gain user traction,” said Ross Liang, CEO of TME. “At the same time, TME’s deepening ties with iconic labels and artists, as well as our growing ability to nurture potential musicians and assist in music production, strengthened our industry influence and content appeal.”
Financial commentators and investment analysts have expressed high degrees of concern about deflation in China as the economy’s post-pandemic rebound slows to a crawl, high levels of youth unemployment and the danger of economic contagion from a distressed property market. Others have reacted with skepticism over whether the central government has completed its crackdown on the country’s tech industry players.
Tencent Music made little comment on the direction of the Chinese economy or such regualtory unknowns, but happily saw its latest results move against the macro-economic trend. The Tencent Group parent company will reveal its quarterly figures on Wednesday. Its senior management is expected to be more forthcoming on economic and political matters.
