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Tencent Music Reports Steady Q1 as China’s Streaming Market Grows

Tencent Music Entertainment rode China’s booming music market to a 24% gain in revenues from January to March, the company announced in its first quarter earnings report on Monday.

Tencent Music Entertainment rode China’s booming music market to a 24% gain in revenues from January to March, the company announced in its first quarter earnings report on Monday (May 17). Although TME’s revenues declined 6.4% from the previous quarter, revenue from its music apps rose 34.5% to 2.75 billion yuan ($427 million) compared to the same period last year.

Music accounts for only 35.1% of TME’s total revenue – social entertainment is the majority — but represents a steadily growing share of its business. Subscribers to its music apps — QQMusic, Kugou Music, Kuwo Music and WeSing — grew by 4.9 million from 2020’s fourth quarter, the biggest sequential increase since 2016. Its “freemium” model is improving its conversion rate, the ratio of subscribers to both paid and free music app users. Subscribers represented 9.9% of monthly music users in Q1 2021, up from 8.0% and 9.0% in the previous two quarters.


In 2020, China had the fourth largest music streaming market globally, growing 90.7% to $718 million, according to IFPI.

Just as Western music services are jumping into podcasts, TME is making a hard push into long-form audio — mainly audiobooks — in what Cussion Pang, chairman of Tencent Music, said in a statement is an “evolution into an all-in-one online music and audio entertainment destination in China.” TME isn’t turning this plan into more money just yet: average revenue per subscriber dropped 1.1% to 9.3 yuan ($1.44) from the first quarter of 2020. Long-form audio does, however, make the music apps stickier by increasing engagement: in Q1 2021, the percent of monthly active users who listened to long-form audio improved to 20.0%, compared to 5.5% in Q1 2020 and 15% in Q4 2020.

Also on Monday, Tencent Music announced that it renewed a licensing deal with Sony Music Entertainment. Tencent Music’s shares rose 0.6% to $15.30 on the Nasdaq on Monday, giving it a market capitalization of $25.9 billion.


Financial metrics (year-over-year and sequential month changes):

  • Total revenue grew 24.0% to 7.82 billion yuan ($1.19 billion); it fell 6.1% from Q4 2020.   
  • Music subscription revenue grew 40.2% to 1.69 billion yuan ($258 million); it rose 7.0% from 1.58 billion in Q4 2020.
  • Operating profit grew 11.2% to 1.16 billion yuan ($180.8 million).
  • Net profit to shareholders grew 10.3% to 926 million yuan ($143.8 million).  

 Music listening metrics (year-over-year and sequential month changes):     

  • Music subscribers grew by 42.6% to 60.9 million year-over-year; they improved 8.8% from 56.0 million in the fourth quarter of 2020.
  • Music monthly active users (MAU) dropped 6.4% to 615 million year-over-year; it fell 1.1% from 622 million Q4 2020. (A year ago, Tencent Music executives believed that the behavioral changes during the pandemic that bumped up Q1 2020 would persist. This doesn’t appear to have happened as music MAUs were lower than a year ago.) 
  • Monthly music ARPU (average revenue per user) fell 1.1% to 9.3 yuan ($1.44) year-over-year; it was 1.1% lower than Q4 2020.

  Social listening metrics (year-over-year and sequential month changes) 

  • Social MAUs fell 14.2% to 224 million; they were the same as Q4 2020.  
  • Social subscribers fell 12.5% to 11.3 million; they grew 4.6% from 10.8 million in Q4 2020.
  • Social users’ ARPU grew 35.7% to 149.7 yuan ($23.25) from Q1 2020 — when ARPU fell 12.9% from Q1 2019 due to the COVID-19 outbreak. Q1 2021 ARPU fell 13% from 172.1 yuan ($26.73) in Q4 2020.