On March 23, 2021, Tencent Music Entertainment Group (NYSE:TME) released its unaudited financial report on Q4 for 2020 and for the whole year. In the fourth quarter of 2020, Tencent Music's total revenue rose 14.3% year-on-year to 8.34 billion yuan, of which online music service revenue rose 29.0% year-on-year, up from 25.9% in the third quarter of 2020. For the whole year to December 31, 2020, Tencent Music's total camp increased 14.6 per cent year-on-year to 29.15 billion yuan, while net profit attributable to shareholders rose 4.3 per cent year-on-year to 4.16 billion yuan, while net profit attributable to shareholders under non-international financial reporting standards (Non-IFRS) reached 4.95 billion yuan.
Peng Jiaxin, CEO of Tencent Music Entertainment Group, said: "We achieved solid results in the fourth quarter of 2020, with online music subscription revenue growing by 42 per cent year-on-year and advertising business growing by more than 100 per cent year-on-year. Even in the context of the uncertainty brought about by the epidemic and the changing competitive environment, our social entertainment services have achieved steady growth."
The number of online music paying households has doubled in two years.
In this quarter, the number of paid households and rates for Tencent Music's online music continued to climb, with the number of online music paying users reaching 56 million, an increase of 40.4 percent over the same period last year. Month-on-month net growth was 4.3 million, with payment rates historically above 9 per cent, up from 8 per cent in the third quarter and 6.2 per cent in the same period in 2019. Driven by the accelerated growth in the number of paying users, online music subscription revenue maintained a strong growth, up 42% from the same period last year.
Tencent Music's trend of rapid growth of online music payment business for many consecutive quarters has fully verified the feasibility of the business model of digital music payment. Goldman Sachs Group has been making a series of reports on the global music industry since around 2016, and has always been optimistic about Tencent Music. In 2019, Goldman Sachs Group predicted that there will be 1.15 billion paid subscribers to streaming music worldwide by 2030, while Tencent Music, based in China, is on the rise and has become the third largest music platform in the world in 2018, accounting for 11% of the world's music paying users. the proportion is expected to rise further to 23% by 2030.
In the fourth quarter of 2018, the number of Tencent Music online music payment households was 27 million, doubling in just two years. This high growth shows that users have a significantly increased awareness of paying for music content under Tencent Music's cultivation for many years. According to the data of Tencent Entertainment White Paper, nearly 70% of people are willing to pay for music, and the entire digital music industry has steadily formed a positive cycle. Upstream musicians and creators can get their due value return, and can continue to invest in future music creation to enhance the productivity and sustainable development of the industry, while downstream from more users' recognition and support, so that the digital music platform continues to provide high-quality music content at the same time, provide a stronger driving force for the development of the music industry.
Under the premise that the number of monthly active users is stable over 800 million, the continuous high-speed transformation of free users to paying users will prompt Tencent Music and the industry to usher in a new blue ocean of growth.
The content ecology continues to upgrade, renewing the contract with Warner in advance leads a new stage of win-win cooperation.
In the fourth quarter, Tencent Music continued to expand coverage and deepen the infiltration of more diverse music content, further meeting the changing needs of a diversified user group of the platform. According to the financial report, Tencent Music continues to lead the music trend by adding diversified music content in different styles, greatly increasing the coverage of new hot content based on the company's proprietary trend prediction algorithm and strong promotion ability, establishing extensive cooperative relations with leading rap music brands such as GOSH and 404Rapper, and making major breakthroughs in the promotion of rap music and national style music. In 2020, Guofeng music was played more than 100 billion times on the platform.
Tencent Music and more partners jointly opened an innovative value-creating cooperation model. On the day of the release of the results, Tencent Music and Warner Music Group, one of the international record companies, jointly announced that the two sides renewed the long-term strategic cooperation authorization agreement. The agreement not only represents the high degree of trust and firm confidence that the two sides have developed together for many years since the strategic cooperation agreement was signed more than a decade ago. It also marks a further upgrade of the strategic partnership between the two sides. Under the agreement, the two sides also announced that they would jointly establish a new music brand based on Warner Music's global resources and artist development experience, as well as TME's strong influence and ecological advantages in the Internet music and entertainment market in Chinese mainland region. At the same time, TME's online music platform will also provide Warner Music Library content to Chinese mainland users through specific intelligent terminal devices such as in-car music systems.
Sony Group Corp Music, Universal Music and Warner Music are the three major record companies in the world. the advanced cooperation agreement with Warner Music represents that Tencent Music has once again reached a deep strategic cooperation with the three major record companies in the world. it also marks that the strategic cooperation mode of the global music industry will enter a new era of content co-creation and value win-win.
At the same time, Tencent Music is committed to establishing a fair and authoritative content evaluation system for the Chinese music industry. In the fourth quarter of 2020, at the Technology Innovators Conference organized by Playplay, a content platform that serves global technological innovators, your music list won the title of "most influential Digital Music list of the year" with its objective and comprehensive data product architecture and industry influence.
The innovative business engine has sufficient power to depict a new blueprint for China's digital music industry.
In 2020, on the basis of the virtuous circle of the two-wheel drive model of "online music + social entertainment", Tencent Music gathered his diversified ecological products to make two-way efforts from the industry side and users, carried out multi-dimensional innovation around the platform and model, upgraded the innovative business such as plus-length audio layout and TME live at the beginning of the year, and expanded its commercial space.
The financial report shows that with the continuous expansion of the business scope, Tencent Music has vigorously promoted the ecological layout in the long audio field and achieved important milestone results by working with existing music products and launching independent long audio products. In the fourth quarter, the number of long audio albums increased by 370% compared with the same period last year, greatly enriching the long audio content pool, MAU penetration increased to 14.8% from 5.5% in the same period last year, and the average daily use time of long audio users continued to grow. In January 2021, the company reached a final agreement with all the shareholders of Shenzhen lazyman online Technology Co., Ltd. (lazy listeners) to acquire 100% stake in lazy listeners, rapidly expand the group audio content pool and greatly promote the company's audiobooks quality content output. Long audio not only inspires a broader imagination in the commercialization of China's digital market, but also makes Tencent Music decide to continue to work in this field and contribute more potential energy to the development of new entertainment consumption.
With the accelerated popularity and popularity of the Internet, Tencent Music has built an innovative performance ecology that combines online and offline as a new engine of growth. As the panoramic music live entertainment brand of Tencent Music Entertainment Group, TME live has held more than 60 online concerts since its launch in March 2020. Among them, a total of 25 performances were held in the fourth quarter of 2020, including Zhang Huimei, May Day, Stefanie Sun, Billie Eilish and Tomorrowland and other domestic and foreign famous musicians and performers IP. Thanks to the continuous improvement of brand awareness, TME live continues to attract well-known brand sponsorship, which further lays an effective foundation for its commercial prospects. In 2020, TME live has made great progress, and its audience and influence are also expanding. Based on its influence, the company hopes to continuously expand the coverage of TME live beyond the category of top musicians and cultivate and incubate more quality musicians by providing more performance opportunities.