On November 9, China’s online music and audio entertainment platform Tencent Music Entertainment Group (hereinafter referred to as “Tencent music”, “TME” or “company”) (NYSE Code: TME) released its unaudited financial report for the third quarter ended September 30, 2021.
In the third quarter of 2021, Tencent Music Entertainment Group’s overall performance continued to be stable, its total revenue, adjusted net profit and other core data reached or even exceeded market expectations, its online music paying users reached a new high of 71.2 million, the payment rate exceeded 11%, and many businesses made brilliant breakthroughs; Based on the strategy of one body and two wings, deepen the construction of a leading service system for the music content industry, continue to strengthen the ability of content production and promotion, constantly upgrade the support plan for independent musicians, and encourage content co creation, so as to improve ecology, cutting-edge technology and rich resources, so as to boost singers and musicians to gain more exposure and diversified development; Long audio, TME live and other innovative businesses have achieved milestone results again, the platform product functions and operation capabilities have been continuously upgraded, and the extensive cooperation with Tencent ecology has been further deepened. While providing users with more high-quality content and richer video, social and community interactive service experience, they have done a good job in all-round industry services and expanded new industrial opportunities, Comprehensively help China’s music industry become stronger, better and bigger.
Mr. Peng Jiaxin, executive chairman of Tencent Music Entertainment Group, said: “In the third quarter, our online music service achieved healthy growth driven by the strong growth of subscription revenue, which is mainly due to the fact that our continuously improved online music service experience has been favored by more and more users. Our overall performance is stable against the background of the change of regulatory environment and the long time of short video service competition in China’s online music industry Jian, in the future, we will also continue to improve the differentiated experience of online music and social entertainment services, deepen the practice of the “one body, two wings” content and platform dual engine strategy, and further drive high-quality growth. While striving to promote the healthy and sustainable development of China’s music industry, we have made great progress in establishing and expanding the ability of music creation, mining, promotion and commercialization In addition, as the preferred platform for music lovers, we continue to increase investment in high-quality music production and promotion, and provide more resource support for the support and cultivation of independent musicians and original music through Tencent musician platform, so as to continue to contribute to the diversified release of the value of China’s original music content. ”
Liang Zhu, CEO of Tencent Music Entertainment Group, said: “In order to better serve users, we continue to strengthen the platform capability to provide music lovers with more video-based content, so that they can share their enthusiasm for music in our community and have a richer social experience. Based on this, many innovative initiatives we launched also made encouraging progress in the third quarter, such as QQ music and Cool dog’s music video and social functions have been further upgraded. We are also committed to providing users with richer long audio content and functions to meet users’ all-round needs. As more and more users find that music and audio content have complementary experiences, our long audio Mau exceeded 140 million in the third quarter, with a year-on-year increase of 89%. In addition, we continue to deepen and expand cooperation With the cooperation relationship of Tencent ecology, we have reached cross platform cooperation with wechat, Tencent games and Tencent video. With innovative product functions and rich content cooperation ecology, we hope these win-win cooperation can further expand our user range and content matrix, and meet the music needs of a large number of users on Tencent platform. ”
Financial and Operational Highlights
For the three months ended September 30, 2021:
・ total revenue increased by 3.0% year-on-year to RMB 7.81 billion (US $1.21 billion).
・ online music service revenue increased by 24.3% year-on-year. Online music subscription revenue increased by 30.2% year-on-year to RMB 1.9 billion (US $295 million).
・ online music subscribers reached 71.2 million, with a year-on-year increase of 37.7%, including a net month on month increase of 5 million. The payment rate reached 11.2%, higher than 8.0% in the same period last year and 10.6% in the second quarter of 2021.
・ the net profit of the company is RMB 788 million (US $122 million), and the net profit attributable to the shareholders of the company is RMB 740 million (US $115 million).
・ the net profit of the company under non IFRS is RMB 1.06 billion (US $165 million), and the net profit attributable to shareholders under non IFRS is RMB 1.02 billion (US $158 million).
・ key operating indicators of Tencent Music Entertainment Group’s online music services and social entertainment services
・ in the third quarter of 2021, although some mild users temporarily lost to other pan entertainment platforms, resulting in a year-on-year decrease in the company’s online music Mau, the scale of the company’s online music Mau continued to rise month on month.
・ in the third quarter of 2021, due to changes in the regulatory environment and industry competition, the company’s social entertainment Mau and paying users decreased year-on-year and month on month, but the company will continue to strengthen the operation investment in social entertainment services such as audio live broadcasting, virtual live broadcasting room and cross server live broadcasting activities.
・ the company further strengthens the ability of music production and promotion, and more systematically supports high-quality music based on a deep understanding of music trends, complete ecological resources of musicians, songwriters and producers, original music creation and evaluation technology and internal and external promotion channels.
The company has produced the annual E-sports theme song and 2021 World Champions Cup theme song “unparalleled king” for the popular game “glory of the king”. Since its launch, this song sung by Deng Ziqi has topped many lists and is deeply loved by music and game users.
Wang Jingwen, a musician cultivated on tme platform, won the second place in the industry’s highly praised music variety “China’s good voice 2021”, which also set a new high in the popularity of her songs on the company’s platform. In the third quarter, the playback volume on the platform reached 1.9 billion.
・ the company continues to cultivate original music works and enrich the ecology of independent musicians for the industry through Tencent musician platform.
The company continues to provide independent musicians with effective creative tools and more cooperation opportunities to help them fully release their value in music creation, career development, music fan operation and commercialization. At the same time, the company also provides rich resource support for musicians, including TME live live performance opportunities, income incentive plan, promotion channels, vocational training and copyright protection.
In the third quarter, the company launched 1) Chengfeng plan to effectively match musicians with gold medal songwriters in the industry, so as to collide more high-quality original music content for the industry; 2) The newly upgraded RMB 100 million incentive plan 4.0 encourages qualified musicians to participate in music creation and production.
By the end of the third quarter, Tencent musician platform continued the strong momentum of year-on-year double-digit growth, the number of independent musicians settled exceeded 260000, and the playback of original works on the platform also continued to maintain a healthy growth.
・ TME live continues to move towards the vision of creating an online and offline integrated music scene with immersive experience. In the third quarter, it held 26 online performances, jointly created an offline stage performance plan with Tencent musician platform, and launched a series of indoor music festivals.
・ in terms of music platform, the company has further upgraded its products to stimulate content creation and innovation on the platform and enhance user stickiness.
The revision of QQ music short video section and cool dog music vertical screen MV has realized the continuous growth of its function usage penetration. By the end of the third quarter, the daily video views of QQ music and the daily independent visits of the platform had reached 100 million and 18 million respectively, with a growth rate of three digits.
Launch the function of one click binding into wechat video number. Independent musicians can release and distribute their music videos on wechat video number, QQ music, cool dog music, KuWo music and national k-song at the same time, making it easier for musicians to reach a wider audience.
・ the company is committed to continuously expanding long audio content products and functions. The long audio business Mau achieved a breakthrough growth in the third quarter, with a year-on-year increase of 89% and more than 140 million. By the end of the third quarter, the company’s long audio paying users had increased by more than 100% year-on-year to 5 million. As an effective supplement to music content and experience, most paying users in long audio business are also online music paying users.
・ in terms of social entertainment services, the company focuses on the continuous optimization of products and operations to better attract users.
The company launched the national karaoke virtual live room to provide users with a new interactive experience.
The company has made solid progress in expanding audio live broadcasting, and its user scale and revenue have increased significantly month on month and year-on-year.
Cool dog music, QQ music and national karaoke jointly held cross server live broadcasting activities again, which further promoted the participation of paying users.
・ the company continues to deepen its partnership with the broader Tencent ecosystem:
QQ music cooperates with Robles to launch an immersive virtual music festival, which provides users with exclusive special effects, fireworks, virtual gifts and mini music games in a 3D environment.
Tencent video users can easily find and enjoy the original soundtrack and music content related to the video content while watching the video.
Users can take k-song as their new social way to synchronize their singing behavior or k-song works on the national k-song platform to wechat status.