YY Music Reports More than Doubled Revenue in Q1 2013, Will Sell Mobile Virtual Items In Second Half

YY Music saw a 245.9% growth in revenue — RMB116.8 million (US$18.8 million) —  that accounts for 37% of YY’s total revenues, according to its newly released financials. About 40% would go to third parties, performers and sub-channel runners, on YY Music platform.

The increase reflects a 115.2% increase in the number of paying users to 495,000 and a 60.5% year-over-year increase in ARPU to RMB236 (US$38). The ARPU in Q4 2012 was even higher — RMB312. That is as high as that of MMORPGs provided by Chinese gaming companies such as Changyou and Perfect World, and much higher than that of casual games. In China’s gaming industry, item-based MMORPGs have even higher ARPU than time-based ones. Since YY Music makes most revenues from virtual gift sales, it works like an item-based game. If it doesn’t sound like a game to you, you’d also have to admit it is a business as profitable as games.

As we discussed before, the online music show business has become a big market and is hosting a handful of players. 9158  is preparing for an IPO in U.S., 6.cn is catching up in terms of income, and Guagua claimed that it made RMB589 million with 97 million registered users in 2012.

In Q1 2013, YY also shows big year-over-year revenue growth in all other businesses, 92.3% in online games, 150.8% in membership program and 55.7% in advertising. All of them result in a 130.5% year-over-year increase in total revenue, RMB315.0 million (US$50.7 million), 90% of which are from paid offerings including YY Music, gaming and membership subscriptions. Gaming is still the biggest revenue source that contributed over 40% of the total revenues. Total paying users grew by 35.3% year-over-year to over 1 million.

YY will submit a new version to the App Store on May 17th that would “enhance interaction and improve ease-of-use with audio and video” so that mobile phones wouldn’t be only for consuming content but also for producing content”, David Xuyling Li said on the earnings call, “mobile payments and mobile gift sales will be available in the third or fourth quarter.”