China’s leading music streaming company Tencent Music Entertainment Group reported on Tuesday a 9.3% decline in the company’s annual revenues last year, as falling earnings from its social entertainment services business compounded a decline in monthly active users on its music platform.
Revenues from music subscriptions rose 18.6% to RMB 8.70 billion helping TME’s online music services revenues to increase overall by 8.9% to RMB 12.48 billion for 2022. The number of paying subscribers grew by 22.7%. However, average revenue per user was slightly lower — RMB 8.6 in 2022 compared to RMB 8.9 in 2021 — due to higher marketing costs, and the number of mobile monthly active users of its online music division fell 7.8% to 567 million in the fourth quarter.
Declining social entertainment services revenues held one benefit for TME: lower revenue sharing fees in 2022. That contributed to a savings of more than RMB 2.27 billion, as its cost of revenues for the year fell 10.4% year-over-year to RMB 19.57 billion . TME expects 2023 total revenues and profitability to be up from last year, and for the share of quarterly revenues coming from online music services will exceed those coming social entertainment services at some point this year as they continue to achieve “high quality growth in both subscription and non-subscription revenue,” Yip said.Mobile monthly active users for its online music division fell 7.