China’s Tencent Music Is Little Shaken by Coronavirus Impact
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The coronavirus outbreak weighed on costs at Tencent Music Entertainment, China’s largest online music business. But the stay-at-home orders helped the group to increase its paying subscriber numbers.
For the first three months of the year, revenues the company showed revenues gaining by 10% to RMB6.31 billion ($891 million), and net profits down 10% to RMB887 million $125 million).
Subscription has traditionally not been the dominant business model for the company. So, the acceleration in paying subscriber numbers was welcomed by the company’s management. They rose 70% year-on-year, to reach 42.7 million at the end of March, now representing 6.5% of the company’s monthly users.
The company’s larger social entertainment services, which include karaoke platforms and live-streamed music, were dented by the lockdown measures that were imposed across much of China from late January in response to the COVID-19 outbreak. The lockdowns reduced karaoke usage and increased costs, as the company shared more revenues to retain top creators.
“While acknowledging the impact on our social entertainment services from the COVID-19 pandemic, we have started to see a moderate recovery recently,” said Cussion Pang, CEO of Tencent Music. “By ensuring our model offers a win-win situation for both the artists and ourselves, we were able to attract even more talented musicians and develop more original content.”
Live streaming across many entertainment sectors is a growing trend. Tencent Music said that it had launched a live-streaming model that integrates offline concerts with online live-streaming experience. “Within the short period of five weeks, we successfully held five online live concerts for both established artists including JJ Lin and Rene Liu, and special themes such as an OST concert for the popular web drama series ‘Someday Or One Day,’ and received positive initial user feedback,” it said in a statement.
The company, which is listed on the New York Stock Exchange, is majority controlled by tech giant Tencent, and sees global music streaming service Spotify hold a minority stake. Tencent Music holds stakes in both Spotify and Universal Music. Tencent will announce its own financial data on Wednesday.
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