Net profits at Tencent Music Entertainment, China’s largest digital music company, rose 36% to $735 million (RMB 5.22 billion) in 2023 – although revenue fell 2% to $3.91 billion.
Fourth-quarter earnings were US$198 million (CNY 1.41 billion), on revenues down 7% to US$971 million (CNY 6.89 billion).
The final figures mark a year in which New York and Hong Kong-listed subsidiary Tencent saw its monthly active user (MAU) numbers fall as it successfully streamlined the transition of a growing number of free users to paid subscribers.
For the full year, revenue from music streaming subscriptions rose 39% to $1.70 billion. This resulted from a 21% growth in paid subscribers (from 88.5 million to 107 million) and a 20% increase in average revenue per subscriber to CNY 10.7 or US$1.49. The number of monthly active users of online music fell from 601 million to 576 million, but it still means that more than 40% of China’s massive population uses Tencent’s music streaming services on a monthly basis.
Streaming gains offset the mixed performance of the more lucrative “social entertainment” portion of TME’s business. Here the number of monthly active users fell by a significant 28% to 104 million, and the number of paying users rose a modest 5% to 8 million, but the average revenue per user per month fell by 54% to CNY 78 (10.8 dollars).
“2023 has been a pivotal year for TME. As we continue to shape and drive the robust evolution of the music industry, we are excited about the vibrant growth potential for years to come. “Q4 recorded accelerated year-over-year growth in subscription revenues,” said Cussion Pang, CEO of TME. Music, supported by continued increases in subscribers and average revenue per user.”
“The strong performance of online music services mitigated headwinds from social entertainment services and contributed to an increase in quarterly net profits. Looking ahead, we are well positioned to seize more multi-faceted opportunities, supported by our dual platform and content engines and supported by The relatively countercyclical nature of the online music business.
“Expanded user privileges, combined with AI-powered products and tools, have positively contributed to subscriber conversion and retention,” said Ross Liang, CEO of TME.
The company uses artificial intelligence in different ways. In music streaming, large language models are making music discovery more intelligent, and the company has updated its default music player by adding more songs for users. On the social entertainment front, it introduced Venus’ AI-powered authoring tool to support music creation for artists through text prompts and beat clips.
Tencent Music is a major shareholder of both Spotify and Universal Music Group.