Tencent Music Entertainment, China’s largest music streaming company, reported forecast-beating financial results for the fourth quarter and full-year 2024, with annual subscription revenue surpassing the $2 billion milestone.
Annual subscription revenue surged 25.9% YoY in 2024 to RMB 15.23 billion (USD $2.12 billion at the average exchange rate for 2024) from RMB 12.1 billion in 2023 (USD $1.71 billion at the average exchange rate for 2023), according to TME’s latest financial report published Tuesday (March 18).
The company attributed this performance to the consistent expansion of its paying user base and improved average revenue per paying user (ARPPU), which in turn was partly boosted by its ‘Super VIP’ (SVIP) tier.
TME’s paying subscribers increased 13.4% YoY to 121 million in Q4 2024 from 106.7 million in Q4 2023. This also reflects an addition of 2 million subscribers between Q3 and Q4 2024. ARPPU rose to RMB 11.10 ($1.54) in Q4 from RMB 10.70 ($1.49) in Q4 2023.
“2024 was a year of solid progress for TME, marked by strong performance in our online music business driving overall revenue growth and expanding profit margins,” said Cussion Pang, Executive Chairman of TME, in the earnings release.
Ross Liang, CEO of TME, said, “Our SVIP initiative also recorded solid performance during the fourth quarter, resulting in user engagement improvement and ARPPU expansion.”
Back in Q3, Tencent Music noted that over 8% of its subscribers are Super VIP, equivalent to 10 million users. An SVIP subscription costs around RMB 40 per month, five times as much as a regular RMB 8 subscription.
The success of Tencent Music’s SVIP tier comes at a particularly interesting time as Spotify is reportedly preparing to launch its own super-premium tier. During an earnings call in July last year, Daniel Ek said Spotify will be launching a new “deluxe” tier that could include access to “superfan clubs” and new playlisting and song management tools.
TME said its SVIP tier gathered more traction after it rolled out enhanced audio quality and effects including AI-powered audio effects and voice extraction, an expanded digital album library, and the rollout of more perks for online concerts, such as high-definition modes for some shows.
For the whole year, TME’s revenue from online music services jumped 25.5% YoY to RMB 21.74 billion ($3.02bn) from RMB17.33 billion ($2.45bn) in 2023. The company said this was driven by strong growth in music subscription revenues, as well as revenue from advertising services. Overall, revenue for 2024 edged up 2.3% YoY to RMB 28.40 billion ($3.95bn).
In Q4 alone, revenue from online music services edged up 16.1% YoY to RMB 5.83 billion ($811.1m), pushing overall Q4 revenue higher by 8.2% YoY to RMB 7.46 billion ($1.04bn), beating the average analyst estimate of 7.30 billion yuan, according to data compiled by LSEG.
Despite its strong performance in music streaming, TME’s social entertainment services — which includes karaoke app WeSing and live concert platform Kuwo Music — continued to decline, with revenues decreasing 13% YoY to RMB 1.63 billion ($226.7m) in Q4. The company attributed the drop to “adjustments to certain live-streaming interactive functions and more stringent compliance procedures implemented.”
MAUs for the social entertainment segment fell 21.2% YoY to 82 million in Q4, while paying users decreased by 3.8% to 7.7 million. The social entertainment ARPPU also declined, down 9.7% to RMB 70.40 ($9.79).
TME’s net profit attributable to shareholders for 2024 surged 35% YoY to RMB 6.64 billion ($923.6m), or RMB 4.24 per diluted share. In Q4 alone, attributable net profit jumped 49.8% YoY to RMB 1.96 billion ($272.6m), or RMB 1.26 per share, topping the analyst consensus of RMB 1.22.
Beyond the regularly reported numbers, TME disclosed that it has incorporated China’s DeepSeek AI model (which sent global markets into a frenzy earlier this year) into its song creation features. The company said integrating DeepSeek “invigorated passion for music creation among our users.”
By adopting AI, TME said it has broadened its content base, now offering 260 million licensed and co-created music and audio tracks on its service — significantly more than the “over 100 million” Spotify reported in its most recent fiscal year report.
TME said its AI implementation extends beyond creation to personalization through integration with AI assistants, comment sections, and recommendation pages.
Looking ahead to 2025, Liang said the company aims “to harness the power of AI to personalize our services and bring more new experiences to users.”
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