Tencent Music Entertainment revenues hit $1.2bn in Q3, up 3% YoY

Tencent Music Entertainment Group has published its financial results for Q3 2021 (the three months ended September 30, 2021).

The company generated total revenues of RMB7.81 billion (approx $1.21billion) in Q3, representing an increase of 3% year-over-year.

Meanwhile, TME reports that its total ‘Mobile MAUs – online music’ in Q3 were 636 million, a decline of 1.5% year-over-year from the 646 million the company counted in the prior year quarter.

According to TME, this year-over-year decline was primarily due “to churns of our casual users served by other pan-entertainment platforms”.

TME reports that its ‘online music paying users’ increased by 5m (37.7%) year-over-year however, reaching 71.2 million in Q3.

TME’s Monthly (Average Revenue per paying user) ARPPU – online music stood at RMB 8.9 ($1.39) in Q3, down 5.3% YoY from RMB 9.4 ($1.47) in the prior year quarter.

The company states that the decrease in ARPPU “was mainly due to additional promotions this quarter”.

TME’s total revenues from online music services in Q3 2021 increased by 24.3% to RMB 2.89 billion ($448 million) from RMB 2.32 billion ($363m) in the same quarter last year.

The company pins that increase on “strong growth in music subscription revenues, supplemented by growth in revenues from advertising”.

Revenues from music subscriptions in Q3 were RMB 1.90 billion ($295m), representing an increase of 30.2%, from RMB 1.46 billion ($228m) in Q3 2020.

TME says that this growth is primarily due to the 37.7% increase in the number of paying users, partially offset by a decrease in ARPPU from RMB 9.4 ($1.47) in Q3 2020 to RMB 8.9 ($1.39) in Q3 this year.

Elsewhere, TME’s revenues from social entertainment services ‘and others’ in Q3 2021 decreased by 6.4% to RMB4.92 billion ($763m) from RMB 5.25 billion ($821m) in the same quarter of 2020.

On a year-over-year basis, TME’s ARPPU and paying users of social entertainment services decreased by 1.7% and 4.8% in the third quarter of 2021, respectively.

The 6.4% decrease in social entertainment services revenues, according to TME, “was mainly due to the impact from new regulations as well as increased competition from other pan-entertainment platforms, despite a strong revenue growth in audio live streaming”.

The publication of TME’s latest financial results come at a time of sweeping regulatory reforms for Tech firms in China, and follows the news from July that the company and its majority parent Tencent Holdings were ordered by China’s State Administration of Market Regulation to relinquish any exclusive deals held with global labels in China.

Cussion Pang, Executive Chairman of Tencent Music Entertainment Group (TME) noted in the company’s filing that the “online music industry in China is adapting to regulatory changes and facing competition for time spent from short video services”.

“In the third quarter, our online music services delivered healthy growth driven by strong momentum in subscriptions as users continue to be attracted by our enhanced music streaming experience.”

Cussion Pang, Tencent Music Entertainment Group

Cussion Pang, Executive Chairman of Tencent Music Entertainment Group (TME), said: “In the third quarter, our online music services delivered healthy growth driven by strong momentum in subscriptions as users continue to be attracted by our enhanced music streaming experience.

“While the online music industry in China is adapting to regulatory changes and facing competition for time spent from short video services, we will continue to differentiate both our online music and social entertainment services and execute our dual engine content-and-platform strategy.

Added Pang: “In parallel with our efforts to promote the healthy and sustainable development of the music industry in China, we have made meaningful strides to build and expand our capability in music creation, discovery, promotion and monetization.

“In addition to increased investments in the production of high-quality music, we have allocated more resources to support and cultivate indie musicians and original music through our Tencent Musician Platform, with the goal of establishing our platform as the preferred destination for music enthusiasts.”

“To better serve our users, we are strengthening our platform’s capability to provide music lovers with more video-based content, share their passion for music within our community and have a more socially-engaging experience.”

Ross Liang, TME

Ross Liang, CEO of TME, added: “To better serve our users, we are strengthening our platform’s capability to provide music lovers with more video-based content, share their passion for music within our community and have a more socially-engaging experience.

“In this regard, we have launched several initiatives that are showing encouraging progress, including upgraded video and social features on QQ Music and Kugou Music.

“Moreover, our efforts to expand long-form audio content offering and features have resulted in long-form audio MAUs exceeding 140 million, growing by 89% year-over-year, as our users discover the complementary experience of music and audio streaming.

“We continue to embrace and collaborate with the broader Tencent ecosystem through multiple cross-platform partnerships with Weixin, Tencent Games and Tencent Video.

“With innovative product features and rich content partnerships, we expect these win-win collaborations to further expand our user reach and content offering, while simultaneously fulfilling the music needs of users on Tencent’s platform.”Music Business Worldwide