Just listed is worth more than 150 billion. What is the value of Tencent Music?

Although Tencent’s market value has evaporated by nearly one trillion this year, it has also ushered in Tencent’s IPO. The 14 companies that Tencent holds are listed one after another. The total market value exceeds one trillion. Today, Tencent has another listed company.

Tencent Music Entertainment Group TME officially landed on the New York Stock Exchange, with an IPO price of $13 per share and a market capitalization of $21.3 billion (approximately 146.5 billion RMB), with the world’s largest music streaming Spotify. The market value is equivalent. On the first day of its listing, it closed up 7.69% at $14, and it’s market capitalization reached US$22.894 billion (approximately 157.5 billion RMB).

Although many foreign media like to call Tencent music “China’s Spotify”, in fact, the difference between the two is not small, Spotify’s main business is still losing money, and Tencent Music has achieved large-scale profit last year.

Tencent music is listed, but paid music does not make money.

According to the prospectus updated by Tencent Music, Tencent Music’s revenue for the first three quarters of 2018 was RMB 13.588 billion and its net profit was RMB 2.707 billion. Revenue has exceeded the full year of 2017, and net profit has doubled.

In the third quarter, Tencent’s music revenue increased by 71% year-on-year, which was slower than 96% and 89% in the previous two quarters, but it still, maintained relatively high growth.

Tencent Music is mainly composed of the online music business and social entertainment business. Both of these businesses have also grown, but you can know that paying music depends on the two key indicators of the rate of payment and average user consumption. Making money is really not easy.

Although Tencent Music’s data is already very beautiful in terms of user growth, Tencent Music’s QQ music, cool dog music, cool music, and national K songs have more than 800 million monthly applications, including online music business users. 660 million, but the 3.8% rate determines the contribution of paid music to revenue.

How does social entertainment in music make a lot of money?

Tencent Music can maintain rapid growth in the general performance of the paid subscription market. Social entertainment is undoubtedly the biggest driving force, contributing 70% of its revenue, and its gross profit margin is over 50%. Social entertainment is still Tencent’s strength.

The social entertainment business is mainly composed of online karaoke (National K songs) and live music (cool dog live and cool me stars), and the income mainly comes from the virtual gift reward on the platform.

Although compared to QQ Music and NetEase Cloud Music, the music products of National K songs are much less exposed, and it seems that listening to songs is a higher frequency than K songs, but in fact the size of the K song market has reached Yi 995 yuan, accounting for 52% of the total size of the music market, the National K song also achieved a “muffled fortune.”

Streaming music platform wants to be “Netflix”

Spotify, which relies heavily on paid subscriptions, and Tencent Music, which is multi-line in the field of pan-entertainment, basically represent the two major directions of streaming music platforms in Europe, America, and China. It seems that the diversified business layout is better for streaming music platforms.

As mentioned earlier, copyright is still the core competitiveness of these music platforms, but it is subject to several major record companies. To get rid of this dilemma, either cultivates more exclusive copyright songs and breaks the upstream monopoly. Either enters new areas such as live broadcasts to increase revenue to offset this part of the cost.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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