Tencent Music revenue beats expectations as more Chinese users pay for songs

The logo of Chinese group Tencent Music Entertainment is seen next to an earphone in this illustration photo taken March 22, 2021. REUTERS/Florence Lo/Illustration

Aug 16 (Reuters) – China’s Tencent Music Entertainment Group (TME.N) improved its quarterly revenue estimates on Monday as a slate of original content helped its music streaming platform attract more paying users.

The company’s US shares rose 5.9% in extended trading after it said users who paid for music online jumped by a quarter to 82.7 million. Music subscription revenue from the platform that operates like Spotify (SPOT.N) grew 18%.

Tencent Music has also benefited from a push for original content, including a partnership with parent company Tencent Holdings (0700.HK) to produce songs from popular game titles.

Its total revenue was 6.91 billion yuan ($1.02 billion) in the second quarter ended June 30, compared with 6.62 billion yuan expected by analysts, according to Refinitiv IBES data.

Cheuk Tung Yip, chief strategy officer of Tencent Music, said in a call with analysts on Tuesday that the company would continue to strengthen its paywall to boost revenue.

“We expect more content partners to be added to the paywall in the second half,” he said, adding that the company is also committed to meeting the needs of non-paying users, who help generate about 10% of its advertising revenue.

Tencent Music’s overall revenue, however, fell 13.8% compared to the same quarter last year, showing that fierce competition and an economic slowdown triggered by Beijing’s zero COVID policy were weighing on the company. the music sector.

Revenues also fell 20% in the social entertainment sector – the company’s biggest revenue driver and home to its karaoke app WeSing and live concert platform Kuwo Music.

Tencent Music has been in the crosshairs of regulators and last year was forced to end its exclusive contracts with major music labels, eroding its edge against rivals such as Cloud Music and music-sharing platform. short videos owned by Bytedance, Douyin. Read more

Yip, however, said the company was seeing a moderate second-half advertiser recovery in China as COVID-19 outbreaks in major cities such as Shanghai and Beijing were brought under control. He cited e-commerce, consumer staples and automotive as industries seeing growing demand.

Excluding items, Tencent Music earned 0.63 yuan per US depositary share (ADS) for the quarter, above estimates of 0.56 yuan per ADS.

($1 = 6.7715 Chinese yuan renminbi)

Reporting by Tiyashi Datta in Bengaluru; Editing by Aditya Soni and Muralikumar Anantharaman

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