SHENZEN, CHINA (CelebrityAccess) — Chinese music streaming giant Tencent Music Entertainment announced the financial results for their first fiscal quarter of 2022, reporting revenue shortfalls following a crackdown by Chinese regulators last year.
According to Tencent’s unaudited financial filings, the company posted total revenue of RMB6.64 billion (US$1.05 billion), representing a 15.1% decrease from the same period in 2021.
However, revenue from subscriptions to Tencent’s music streaming platforms was up by 17.8% year-over-year RMB1.99 billion (US$314 million) and paying users reached 80.2 million during the quarter, representing an increase of 31.7% from 2021.
On a sequential basis, the number of online music paying users grew by 4.0 million. TME’s paying user ratio improved as well, with the company reporting 13.3%, up from 12.4% and 9.9% in the fourth and first quarter of 2021, respectively, TME said.
Those gains were partially offset by declines in TME’s mobile music with monthly active users falling in the first quarter by 1.8% to 604 million. TME’s mobile social entertainment platforms weighed on results as well, with monthly active users down by 27.7% to 162 million in Q1 2022.
According to TME, the year-over-year decline in online music mobile MAUs was primarily due to churn of what the company describes as casual users and reduced marketing spending required by our more disciplined cost management.
The declines in monthly active users for TME’s social entertainment platforms were mirrored by declines in paying users, which fell from 11.3 million in Q1 2021 to just 8.3 million during the same period this year, representing a decline of 26.5%.
The company attributed the poor results to “industry and macro headwinds” and pledged to improve competitiveness in future quarters through product innovation, as well as experiments with audio live streaming, international expansion and virtual interactive product offerings.
“We delivered a healthy 18% year-over-year growth in subscription revenues with paying users exceeding 80 million in the first quarter, as supported by our dual engine content-and-platform strategy. Despite the headwinds in an evolving market landscape, which resulted in a year-over-year decline in total revenues, our efforts to optimize cost structure and improve operating efficiency led to improved profitability quarter-over-quarter,” said Mr. Cussion Pang, Executive Chairman of TME. “In an era of increasing entertainment choices, the ability to sustain a competitive advantage is awarded to those who offer users a differentiated experience. We are encouraged by the increasing benefits our original content production investments and Tencent Musician Platform have brought to our users, musicians and the overall content ecosystem. With these initiatives, we continue to make critical investments that align with our long-term strategic goals and create sustainable value for all our music stakeholders.”
“In the first quarter, we continued to build an immersive music entertainment ecosystem, bringing music lovers innovative possibilities for how they listen, watch, sing and play. With the goal of creating a sense of belonging that makes our products a must-have, we look for ways to address the multi-faceted needs of diverse user cohorts,” said Mr. Ross Liang, CEO of TME. “In the first quarter, we further strengthened our cooperation with Tencent’s ecosystem in content production and promotion, with the rewards becoming increasingly manifest. In addition, our long-form audio continued to gain traction thanks to differentiated content, and we are working on improving its monetization efficiency mainly through memberships. Moving forward, we will continue to make our ecosystem, content, products and services differentiated and highly specialized. This, in turn, will help us better serve hundreds of millions of music lovers, music creators and the music industry as a whole, and unlock the massive opportunity in front of us,” concluded Mr. Liang.