Speaking on the day of the company’s debut on the NYSE, chief executive Cussion Pang and chief strategy officer Tony Yip were upbeat about Tencent Music’s potential to increase revenues from streaming.
As reported by the Financial Times, the company is looking to emulate Spotify, the Swedish firm whose focus on streaming has shaken up the music industry, and sees “a lot of room to grow” with the subscription model.
“China is still at an early stage, but there are mega-trends that are very helpful,” said Pang, as he pointed to the growth of mobile payments in China as well as increased adoption of 4G networks that make it easier for people to stream on their phones.
He also noted that Spotify has a pay ratio at least ten times bigger than the less than 4% Tencent Music currently generates. “Spotify’s pay ratio is 45% … we believe we will catch up,” Pang said.
Tencent Music is already a significant player in the Chinese music market, operating services such as streaming app Kagou Music, Kuwo Music and QQ Music, as well as karaoke music app WeSing.
In total, it reports having 800 million monthly active users, or four times more than Spotify, and analysts believe the Chinese online music market is on course to grow dramatically.
Despite ongoing concerns about industry fragmentation and piracy, iResearch Consulting Group has forecast that China’s online music market will grow to Rmb215.2bn (£31.3bn) in 2023 from Rmb33bn in 2017.
“The sheer scale of the addressable consumer market is clear,” said Mark Mulligan, an analyst at Midia Research. “However this is set against uneven levels of digital sophistication across rural and urban areas, coupled with … what was previously one of the weakest intellectual property regimes on the planet.”
Sourced from Financial Times; additional content by WARC staff