Net profits at Tencent Music Entertainment, China's largest digital music company, increased by 36% to $735 million (RMB5.22 billion) in 2023, despite a 2% decline in revenues to $3.91 billion. The fourth quarter saw profits of $198 million (RMB1.41 billion) from revenues down 7% at $971 million (RMB6.89 billion). This performance reflects a strategic shift towards converting free users into paying subscribers, resulting in a 39% growth in music streaming subscription revenues to $1.70 billion for the full year.
The number of paying subscribers grew by 21% to 107 million, with an average revenue per subscriber of RMB10.7 or $1.49, a 20% increase. Although monthly active users for online music decreased from 601 million to 576 million, Tencent Music still reaches over 40% of China's population monthly. The success in streaming services offset challenges in the 'social entertainment' segment, where monthly active users dropped by 28% to 104 million.
CEO Cussion Pang highlighted the pivotal transition in 2023, emphasizing the company's growth potential and the accelerated year-over-year growth in music subscription revenue. AI played a significant role in enhancing user experience, with AI-powered music discovery and composition tools introduced in both music streaming and social entertainment services.
Tencent Music's position as a major stakeholder in Spotify and Universal Music Group further solidifies its influence in the global music industry. Looking ahead, the company aims to leverage its content and platform strengths to capture diverse opportunities, supported by the relatively counter-cyclical nature of its online music business.
