Tencent Music Revenue Jumps 18% on Strong Subscription Growth: ‘Impressive Momentum’

China’s top music streaming platform Tencent Music Entertainment (TME) reported its second quarter revenue rose nearly 18% to 8.44 billion RMB ($1.18 billion), driven by a whopping 26% growth in its music services division, the company said on Tuesday (Aug. 12).

While Tencent Music’s total number of monthly average users fell 3% to 551 million, the number of subscribers rose 6.3% to 124.4 million. That drove a 17% year-over-year increase in music subscriptions revenue to a total of 4.38 billion RMB ($611 million). Overall online music services revenue rose to 6.85 billion RMB ($957 million).

Monthly average revenue per paying user (ARPPU) grew to 11.7 RMB ($1.63) from 10.7 RMB ($1.49) in the year ago quarter, driven mainly from Tencent Music’s premium audio subscription offering, called the SVIP membership program. The total number of SVIP subscribers now stands at 15 million, executives said.

“We delivered high-quality growth in the second quarter, achieving solid year-over-year increases in both revenue and profitability,” Tencent Music’s executive chairman Cussion Pang said. “While our music subscription business remained a core growth driver, our expanding suite of music-related services — including advertising, concerts, and artist merchandise — showed impressive momentum.”

Tencent Music streaming company operates three music streaming services — Kugou Music, QQ Music and Kuwo Music — as well as WeSing, a karaoke app. In recent years, the company’s social entertainment business has declined due to local regulations and a strategic shift to music, live entertainment, merchendase and advertising. Social entertainment services revenues in the second quarter fell by 8.5% to 1.59 billion RMB ($222 million) from a year ago.

Tencent Music has expanded its K-pop music offering over the past year as China has eased nearly decades-old restrictions on the import of Korean cultural content. Tencent Music launched partnerships with THEBLACKLABEL, whose powerhouse producers are behind the chart-topping soundtrack of KPop Demon Hunters, and H MUSIC, and collaborated with SM Entertainment around the launch of Chinese-born actor and singer NCT CHENLE’s Chinese EP Lucid.

On a conference call discussing the earnings, Pang said the company aims to build a “one-stop music destination” where creators can “reshape” their connections to fans.

Net profit for shareholders rose 43% from last year to 2.41 billion RMB ($336 million).