Tencent Music hits low pitch after first earnings report exposes costs

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Chinese streaming firm Tencent Music Entertainment Group delivered its first ear...

BEIJING - Chinese streaming firm Tencent Music Entertainment Group delivered its first earnings report as a public company, meeting market expectations but exposing soaring license and content production costs which pulled its shares down 6 percent.

Unlike Western peers such as Spotify Technology SA, Tencent Music generates only a fraction of revenue from music subscription packages, and instead relies heavily on services popular in China such as online karaoke and live streaming. Tencent Music, controlled by Chinese technology giant Tencent Holdings Ltd and backed by Spotify, said quarterly revenue jumped 50.5 percent to 5.4 billion yuan , versus analysts’ average estimate of 5.3 billion yuan.

There is a lot of growth potential given the paying ratio is still very low in comparison with international peers, he said.

 

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