Tencent Music Entertainment (TME) reported soaring profits today, with a revenue increase of 17.5%. Their second-quarter earnings released Monday, August 10th, and saw a stealthier pace than Spotify’s growth at 13.2%.
This means Wall Street is aching for their shares, as their prices went up 33.6% year-to-date. They beat the New York Stock Exchange index and Nasdaq’s, though TME’s current pace doesn’t outmatch Spotify’s. The Best of the West’s streaming service has a 99.4% year-to-date growth rate. However, TME remains profitable and acts like Spotify in a number of ways.
Let’s Compare The Two
Both have long-form licenses and spoken word content that transition into a pan-audio platform. But while Spotify boasts podcasts, TME happily serves talk show audios and a direct-upload feature plus promotional backing. Independent artists can make a killing in discovery.
Looking into their financials, TME is a two-pronged business that creates $157 million operating profit on $981 million of revenues. They have four music services: QQ Music, Kugou Music, Kuwo Music, and WeSing. All of these services combined make up $314 million. Which means they boosted the revenue by 42.2% from 2019. Much of this can be attributed to subscription growth from 47.1 million users.
What’s interesting to note is that TME’s majority of revenue comes from its social features rather than its slim margin of licensed music. So, what will happen with Trump’s ban that targets WeChat and other partnering Tencent subsidiaries? Gaming, music, and social media are on the line. Not much is known about what will happen but for now, we may as well enjoy it.
Limited bans mean making communicating with overseas clients and contacting western consumers more difficult. Surely there can be some sort of agreement to all this. Now, we just wait as they are in the process of seeking further clarification.
Nevertheless–and all politics aside–business is business.
