SHENZHEN: Tencent Music, a streaming and download service, is expected to raise a minimum of $1bn at its IPO next year and, with twice as many subscribers as Spotify, the service looks to push out competition from both Apple and Spotify in China.
The figure comes from comments made by people familiar with the matter, who spoke to Bloomberg. Though the sources said there was no decision as to which exchange would list the company, the mobile gaming company’s music arm is set to become the biggest streaming service in the region, in terms of both listeners and value. As it stands, the sources said, Tencent Music is valued at $10bn.
Tencent Holdings is already the biggest internet company in Asia with strong brand equity. In the recently released BrandZ brand value study, compiled by WPP, Tencent sits at number eight in the world.
Part of this comes from its WeChat app, understood to have almost single-handedly taken control of China’s mobile phones. A leader in China, Tencent is well poised to take control of the country’s digital music sales market, which PwC expects will surge 88% in the next four years.
“Tencent Music has a dominant status in China,” Li Yujie, an analyst at RHB Research Institute in Hong Kong, told Bloomberg. “It would make sense to spin off the unit, allowing it to create strategic alliances and unlock value for investors. It could be one of the most-anticipated IPOs next year.”
While Spotify has 60m paying users worldwide, Tencent Music enjoys 120m paying users, and a total monthly active user base of 700m.
Spread across three platforms - QQ Music, KuGou and Kuwo – all of the platforms offer KTV, an immensely popular karaoke service. In addition, the integration of transactional elements, including cash rewards for tournaments and virtual gift-giving are part of these services’ power.
Monetisation is Tencent’s strong suit, said Alex Yao, an analyst at JPMorgan Chase. "Far better than Spotify … If you want to make a singer not only sell copies but also have a great way to interact with fans, which company in the world can compete with Tencent?”
Though there is still rivalry between it and Spotify, both companies last week agreed to swap stakes. TechCrunch observed that the move followed hot on the heels of Google’s intent, reported a day prior by Bloomberg, that it would launch a music streaming service in 2018, with the support of major US labels.
Sourced from Bloomberg, BrandZ, TechNode, TechCrunch; additional content by WARC staff