Tencent Music records solid revenue and paying user growth in 2018

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Screenshot of the Tencent Music Entertainment Group website (Image Credit: Tony Xu/TechNode).

Tencent Music Entertainment Group (TME) saw strong growth in total revenues in the fourth quarter and full year 2018 and a solid increase in paying users in 2018, according to earnings results released Tuesday.

Total revenues in the three months ended Dec. 31 increased more than 50% year-on-year to RMB 5.40 billion (around $785 million), and revenues for the full year 2018 increased 73% year-on-year to RMB 18.99 billion.

The company reported a net loss of RMB 876 million in the fourth quarter of 2018, primarily due to a one-off share-based accounting charge of more than RMB 1.5 billion related to equity issuance to two music label partners. Full-year gross profit for 2018 nearly doubled year-on-year, and net profit increased by around 38% despite the RMB 1.5 billion accounting charge.

Paying users of TME’s online music service segment grew close to 40% year-on-year in 2018 to 27 million, and purchased RMB 2.5 billion worth of subscription packages. Notably, the number of paying users comprised only around 4% of TME’s 644 million mobile monthly active users (MAU) in 2018.

TME’s social entertainment segment grew its paying users nearly 23% year-on-year. Products in this segment include online karaoke platform WeSing and concert live-streaming platforms Kogou Live and Kuwo Live. Together, these products drove social entertainment revenues up nearly 72% year-on-year to around RMB 13.5 billion.

The company said during the earnings call that it will step up investment in original music and video content, though CEO Cussion Kar Shun Pang stated that producing original content is just an addition to the company’s core business of music distribution.

“Our venture into more original content is really quite complementary to that core business, and we are doing it in a way that does not compete directly with our label partners…We are only doing things where our label partners do not do,” Pang said.