In the second quarter of 2019, the business performance of Tencent Music Group was basically stable, and the core data continued to grow.

Tencent Music Group released its second quarter earnings report for the 20th quarter on the 13th. The data showed that the Group’s total revenue in the second quarter increased by 31% year-on-year to RMB 5.9 billion. Among them, social entertainment business revenue increased by 35.3% year-on-year to RMB 4.34 billion, and online music service revenue increased by 20.2% year-on-year to RMB 1.56 billion.

In terms of profit, operating profit increased by 7% year-on-year to RMB 1.09 billion, and net profit increased by 3% year-on-year to RMB 928 million.

Overall, in the second quarter of 2019, the business performance of Tencent Music Group was basically stable, and the core data continued to grow.

Financial Excavator | Three major revenue engines are accumulating, Tencent's music ecological advantage is highlighted

Data Source: Tencent Music Entertainment Group (as of August 13, 2019)

The three major revenue engines are accumulating

In terms of revenue, whether it is social entertainment business or online music service revenue, it is inseparable from three important business performance indicators: user scale, paid conversion rate and paid user ARPPU. It can be said that these three major influencing factors are Tencent. The music entertainment group’s revenue growth troika.

Among them, the growth of paying users ARPPU is the main driving force for the rapid growth of social entertainment services business; and the huge user scale is the most important source of imagination for the online music service business to generate sustained growth momentum in the future. With the development of user awareness, the increase in the rate of paid conversion will become an inevitable trend, and this will have a blessing effect on Tencent’s two major sources of revenue.

User size has reached new heights

Financial report data shows that in the second quarter of 2019, the number of active users of social entertainment business reached 239 million, an increase of 4.8%; the number of active users of online music service reached 652 million, an increase of 1.2%; non-de-weighted users It has reached 891 million, a record high.

Overall, whether it is online music business or social entertainment business, the growth of its user scale is still stable and the overall performance is good.

Financial Excavator | Three major revenue engines are accumulating, TencentLe ecological advantage highlights

Data Source: Tencent Music Entertainment Group (as of August 13, 2019)

Among them, the active user size of the online music service business has reached a high level (652 million). According to QuestMobile’s recently published “2019 China Mobile Internet Half Year Report”, as of June this year, China Mobile Internet active users reached 1.136 billion, which means that, in simple terms, the Internet user penetration rate of Tencent Music’s online music service business. Already more than 50%, more than half of mobile Internet users will choose Tencent Music’s APP when listening to songs.

It is expected that with the further development and sinking of the mobile Internet, the active user scale of the online music service business is expected to grow further in the future. However, in general, as the size of users grows, its growth rate will gradually slow down, but for Tencent Music, such a large user scale has become the most important advantage of its online music service business.

Now, getting customers is almost a top priority for the entire Internet industry. QuestMobile released data show that in the second quarter of 2019, mobile Internet active users fell by nearly 2 million in a single quarter, traffic dividends are fading, and competition will become synonymous with the next phase. In this case, the customer is almost a big stone in the minds of every Internet player, but there is no such pressure on Tencent music with a large user scale. For Tencent Music, it is now only necessary to consider how to effectively commercialize existing users.

Financial excavator | Three major revenue engines are accumulating, Tencent music ecological advantage highlights

Pay conversion rate continues to increase

Financial report data shows that in the second quarter of 2019, the number of paid users of social entertainment services increased by 16.8% year-on-year to 11.1 million, higher than the 13% growth rate in the previous quarter, and the number of paid users of online music service business increased year-on-year.33.0%, to 31 million people, higher than the previous quarter’s growth rate of 27%.

From this perspective, in the context of the continuous growth of user scale, the scale of paying users of Tencent Music is also growing, and the conversion rate of paying users is steadily increasing, which indicates that both online music services and social entertainment services have more The more users come to try to pay.

Financial excavator | Three major revenue engines are accumulating, Tencent music ecological advantage highlights

Data Source: Tencent Music Entertainment Group (as of August 13, 2019)

According to the latest data released by iQiyi, as of June 22, the number of iQiyi members exceeded 100 million, and the Chinese video payment market officially entered the “100 million” membership era. Compared with the scale of paying users of Tencent Music, there is still a lot of room for growth. In fact, this paid campaign, which started in the video field, has expanded to include consumer (88VIP membership), social networking, and the entire spectrum of entertainment (audio, music, etc.). With the development of consumer awareness, membership or other forms of payment are becoming a new feature of the Internet age.

In this context, the increase in the size of paying users and the increase in the conversion rate of paying users will become an inevitable trend. From this point of view, one of the three troikas of Tencent’s music revenue, paid conversion rate The power of this small motor has enough room for improvement.

ARPPU growth space for social entertainment business

Financial report data shows that in the second quarter of 2019, the paid entertainment user ARPPU of social entertainment business was RMB 130.2, a year-on-year increase of 16.5%, reaching the highest level in history.

Despite this, Tencent music social entertainment business ARPPU value still has more than 100% improvement compared to the main live broadcast platform. It is estimated that as of the first quarter of 2019, the ARPPU values ​​of Huya, Betta and Momo are RMB 287, RMB 226 and RMB 299, respectively.

From this point of view, the social entertainment business ARPPU value will continue to provide sufficient growth momentum for Tencent Music’s total revenue.

In contrast, the ARPPU value of the online music service business remained basically stable. At the current stage, it is the business that increases the size of paid users and the paid conversion rate.