Streaming subscriptions in China boost Tencent's revenues

By Emmanuel Legrand

China's music streaming company Tencent Music Entertainment (TME) has posted revenues of RMB29.2 billion ($4.47 bn) in 2020, up 15% year-on-year, with stable profits of RMB4.16 bn ($637 m). Revenues from online music services for the full year of 2020 increased by 30.7% to RMB9.35 bn ($1.43 bn).

  The company said the increase was driven "by strong growth in music subscription revenues and advertising revenues, supplemented by growth in sales of digital albums, despite a decrease in sub-licensing revenues."

  Revenues from music subscriptions reached RMB5.56 bn ($852m), up 56.0% from 2019's figures. The company's mobile monthly active users were down by 4% year-on-year, but the number of paying users went up 44% to 56 million from 39.9 million.

Investment in new products

  In parallel, cost of revenues for the full year of 2020 went up by 18.4% to RMB19.85 bn ($3.04 bn), primarily due to "increased investments in new products and content offering, and increased revenue sharing fees to strengthen our platform's competitiveness, and other increased royalty content costs related to variety shows."

  “While our online music MAUs slightly declined, core users on our platform are increasingly engaged and we saw a year-over-year increase in average daily user time spent on our platform during the fourth quarter,” said TME CEO Cussion Pang. “We demonstrated resilience and agility during and after the Covid-19 pandemic. We forged ahead with our operations, invested in technologies to customize services and introduced new products to meet the evolving demands of our users."
 

  In addition, TME and Warner Music Group have signed a new multi-year licensing agreement, covering the different platforms operated by TME (music streaming services QQ Music, Kugou Music and Kuwo Music, and karaoke platform WeSing). TME has set up in previous years similar deals to launch joint music labels with Universal Music Group  (August 2020) and Sony Music Entertainment (2018). 

An expanded partnership

  TME has also formed a new label in partnership with WMG, which will benefit from “Warner Music’s global resources and experience in supporting artists’ careers, as well as TME’s massive influence in mainland China’s music and entertainment market.”

  “Alongside our increased investment in artist & repertoire and marketing in Greater China, this renewed and expanded partnership means we can help make our artists impossible to ignore in one of the world’s fastest-expanding music markets,” said Simon Robson, President, International, Warner Recorded Music, WMG.