Tencent Music Reaches $2 Billion in Subscription Revenue Annually

Tencent Music Entertainment, the largest music streaming service in China, recently announced impressive financial results for the fourth quarter and full-year 2024. The company has crossed the $2 billion mark in annual subscription revenue, showcasing significant growth.

In 2024, Tencent Music’s annual subscription revenue increased by 25.9% year-over-year (YoY), amounting to RMB 15.23 billion (approximately USD $2.12 billion), compared to RMB 12.1 billion last year (USD $1.71 billion). This growth was highlighted in TME's latest earnings report released on March 18.

The company's continued success stems from an expanding base of paying users and an increase in average revenue per paying user (ARPPU), partly driven by the introduction of their ‘Super VIP’ subscription tier.

As of Q4 2024, Tencent Music saw a 13.4% YoY rise in paying subscribers, now totaling 121 million, up from 106.7 million a year earlier. Notably, there was an addition of 2 million subscribers between Q3 and Q4 of 2024. The ARPPU also saw an increase, rising to RMB 11.10 (approximately $1.54), compared to RMB 10.70 ($1.49) in the same quarter of 2023.

“2024 was a year of solid progress for TME, with strong performance in our online music business driving overall revenue growth and expanding profit margins,” remarked Cussion Pang, Executive Chairman of TME in the earnings report.

CEO Ross Liang noted that the SVIP initiative performed well in the fourth quarter, leading to enhanced user engagement and an increase in ARPPU. Back in Q3, Tencent Music mentioned that more than 8% of subscribers are part of the Super VIP tier, which equals approximately 10 million users. This SVIP subscription is priced at around RMB 40 per month, which is five times the cost of a standard RMB 8 subscription.

The popularity of Tencent Music’s SVIP plan comes at a time when Spotify is also preparing to launch its own premium tier. CEO Daniel Ek mentioned plans to introduce a new “deluxe” tier that could provide access to “superfan clubs” along with novel playlisting and song management tools during an earnings call last July.

Tencent Music's SVIP offerings gained traction after the company enhanced audio quality and incorporated features such as AI-powered audio effects and voice extraction. Furthermore, they expanded their digital album library and introduced additional benefits for online concerts, including high-definition viewing options for some events.

Over the entire year, Tencent Music’s revenue from online music services grew 25.5% YoY to RMB 21.74 billion (around $3.02 billion), up from RMB 17.33 billion ($2.45 billion) in 2023. This growth is attributed to thriving music subscription revenues and advertising income. The company’s total revenue for the year increased by 2.3% YoY, reaching RMB 28.40 billion (approximately $3.95 billion).

In Q4 alone, revenue from online music services increased by 16.1% YoY to RMB 5.83 billion ($811.1 million), contributing to an overall Q4 revenue rise of 8.2% YoY to RMB 7.46 billion ($1.04 billion). This figure exceeded average analyst projections of RMB 7.30 billion, according to compiled data.

Despite these strong results in music streaming, revenues from TME’s social entertainment services, which includes the karaoke app WeSing and live concert platform Kuwo Music, saw a decline, dropping 13% YoY to RMB 1.63 billion ($226.7 million) in Q4. This decrease was attributed to "adjustments to certain live-streaming interactive functions and stricter compliance procedures."

The social entertainment segment recorded a 21.2% YoY drop in monthly active users (MAUs), now sitting at 82 million in Q4, with paying users falling by 3.8% to 7.7 million. The ARPPU for social entertainment also declined, dropping 9.7% to RMB 70.40 ($9.79).

Tencent Music's net profit attributable to shareholders for 2024 surged by 35% YoY to RMB 6.64 billion (approximately $923.6 million), which translates to RMB 4.24 per diluted share. In Q4 alone, the attributable net profit experienced a remarkable 49.8% YoY increase, amounting to RMB 1.96 billion (around $272.6 million), or RMB 1.26 per share, surpassing analyst expectations of RMB 1.22.

In addition to their financial achievements, TME shared that they have integrated China’s innovative DeepSeek AI model into their song creation tools. The company reported that using DeepSeek has helped to inspire a renewed passion for music creation among their users.

With the incorporation of AI, TME has significantly expanded its content offerings, now providing a library of 260 million licensed and co-created audio tracks—which is considerably more than the “over 100 million” tracks reported by Spotify in its most recent fiscal year.

Furthermore, TME's AI initiatives extend beyond content creation to enhance user experiences through integration with AI assistants, interactive comment sections, and personalized recommendation pages.

Looking forward to 2025, Liang emphasized the company’s goals to leverage AI in personalizing services and delivering new experiences for users.

Tencent, Music, Revenue