Reduce people, reducing and reducing profit, TME is short of gas

Picking / Wan Tiannan

Growth is the mission, and the downlink is fate.

Gu is the boss of the industry. Tencent Music has kept a good place, but did not make good results.

Despite the perspective of the industry, the position of Tencent Music Boss is still very stable -"Comprehensive Annual Analysis of the 2022 China Online Music Market in 2022" released by Observatory shows that in the academic hegemony of online music TOP5 Music, Cool Dog Music, Cool Music, Netease Cloud followed behind, ranking fourth.

However, the story of Tencent's music growth is already a yellow flower.

In 2022, for two consecutive quarters, Tencent Music's revenue and net profit continued to decline year -on -year.

The Q2 financial report just released shows that Tencent's total revenue was RMB 6.91 billion (US $ 1.03 billion), a year -on -year decrease of 13.8%, while in the previous quarter, revenue decreased by 15.1%year -on -year.

The company's net profit was RMB 892 million (US $ 133 million), and the net profit of the company under non-international financial reporting (NON-IFRS) was RMB 1.07 billion ($ 159 million), a year-on-year decrease of 8.3%.

More embarrassing than the decline in revenue and profits is that the monthly living users of Tencent Music Online Music and Social Entertainment have also fallen by 4.8%and 20.6%year -on -year respectively.

Tencent music that reduces and reduces profits, do itself, but does not get in exchange for growth.

What happened to TME?

From Q2, 2021, in the past year, Tencent's revenue has shown a downward trend as a whole.

Specifically, in terms of income structure, the revenue of music subscription in this quarter was 2.11 billion yuan, an increase of 17.6%year -on -year; the revenue of social entertainment services and other businesses was 4.03 billion yuan, a year -on -year decrease of 20.4%.

Among them, the social entertainment service income occupying the big head includes the sales of live broadcast rewards and membership fees.

In the past few years, social entertainment services have been picked up in Tencent's revenue.

From 2016 to 2021, more than 60 % of the income was contributed. The peak period was from 2017 to 2019. At that time, the revenue contribution of social entertainment accounted for more than 70 %. In 2021, it fell to about 60 %. In this quarter, it fell below 60 %.

In this quarter, the revenue of social entertainment services fell 20.4%year -on -year, and the company explained that it was due to factors such as macro -environment impact and intensified competition between the industry.

Those who are followed by the revenue are like a monthly active user -Tencent Music's online music and social entertainment monthly living households, which also shows a downward trend.

Among them, the highest peak number of online music monthly activities appeared in Q3, 2019, reaching 661 million, and then declined all the way.

This year's Q1 and Q2, the user income of this sector decreased by 1.8%and 4.8%year -on -year, respectively.

The number of users of social entertainment, the highest peak in the second quarter of 2020, reached a peak of 241 million people.

Compared with the slow gliding of the number of warm water boiled frogs in the number of online music users, the scale of social entertainment users has accelerated. Since the 2020Q3 quarter, the same quarter users are the same as above.

This year's Q1 and Q2, the user income of this sector decreased by 27.7%and 20.6%year -on -year, respectively.

In fact, not only Tencent Music, Netease Cloud has not exceptions -in the first quarter of this year, Netease Cloud Music Online Music Service Monthly Active users were 182 million. Essence

Of course, the financial report is not all bad news. The steady rise of online music paid users is a rare bright color in the financial report.

In this quarter, the number of online music payment households climbed to 82.7 million, which was almost doubled compared to the QP142.7 million in Q142.7 million in 2020.

However, compared to the wealth of social entertainment users, the ARPPU (the average income of each payment households) reached 169.9 yuan. In this quarter, the ARPPU value of online music paid users was only 8.5 yuan, and it was not even 9.0 yuan in the same period last year. Of course Compared with 8.3 yuan in the previous quarter, it is still slightly improved.

However, Tencent's ARPPU data is better than Netease Cloud. In Q1 in 2022, Netease Cloud Online Music Services pays 6.4 yuan per month, and 7.1 yuan in the same period last year.

Although it seems that Tencent music users are more "rich in wealth", in terms of payment rate, it is not as good as NetEase Cloud. In Q1 in 2022, the payment rate of NetEase Cloud Online Music users was 20.2%, while Q1 and 2022 Q2 in 2022, Tencent Music's data were 13.3%and 13.9%, respectively.

Whether it is Netease Cloud or Tencent Music, the scale and payment rate of payment of fees should only be kneeling in front of Spotify.

This year's Q2, Spotify's total global paid users reached 188 million. In the same period, the total user reached 433 million. As a result, its user payment rate was as high as 43%. Earlier in Q2 2019, its user payment rate even climbed to 46.6.6 %.

Therefore, the growth challenges in front of Tencent Music and Netease Cloud are how to increase the payment rate.

Under the open source blockage, Tencent Music Slocation Self -rescue — this quarter, sales and marketing costs fell by 54%year -on -year, but even so, due to the decline in revenue, the amount of cost reduction is greater than the cost. The amplitude is 15.3.%and 8.3%, respectively. It is not easy to get up upwards

The position of the industry is very stable. Tencent music has not lay flat, but can you win the future after doing yourself? Where is the opportunity to turn around?

First, can the user's decline in the size of the user be turned around? The answer is difficult.

From the perspective of the industry, the size of online music users has reached the top.

The report released by CNNIC shows that since the second half of 2020, the growth rate of industry users has decreased to less than 5%, and the data in 2020 and 2021 were 3.8%and 5.0%, respectively.

Although in this market, some players such as shrimp are exiting, but there are also new players in the fish, such as the internal rolls and internal consumption of the industry, the internal consumption of the industry. , It may be a normal state that is difficult to reverse.

To the top of the top, there are the entire music market.

According to data released by the Music Industry Development Research Center of China University of China, since 2020, the size of the Chinese music industry has increased to under 5%. In 2020 and 2021 Although the growth rate is slightly higher, it is also lacking. At the same time, it is only 8.4%and 4.6%.

Under the continuous downward pressure of the user scale, what Tencent Music can do is to increase the payment rate of loyal users.

But it is worth mentioning that at present, users in the entire music industry are structural transfer.

The "Comprehensive Annual Annual Annual Annual Annual Annual Annual Analysis of China's Online Music Market" released by Observatory shows that the current existing music users are mostly concentrated on the first and second lines, mainly male users, and younger music users, concentrated on the third and fourth line sinking sinking on the third and fourth lines. Market, women.

However, it is clear that in the sinking market, compared to the relatively high and widow online music platform, the ubiquitous short video platform and Douyin Divine Comedy may be more attractive.

In addition, for users, an important killing device that can raise the payment rate is that people have the exclusive content that I have nothing, but as the exclusive agreement is stopped, Netease Cloud has also won several heavyweight copyrights. Tencent Music, or Netease Cloud, is difficult to copy the high payment rate of Spotify.

Secondly, can the advertising business of To B be provoked?

Tencent Music is accelerating the realization of B -end, and has held a customized online and offline music activities sponsored by brands sponsored by Sprite, Beijing Hyundai, Pepsi.

Especially the 520 Jay Chou concert, according to statistics from the two entrances of Tencent Music and TME LIVE, more than 32 million people poured into the video number that night.

In this concert, Pepsi is an exclusive title. This is also considered a successful case of Tencent Music relying on advertising monetization.

Anxin Securities also believes that the advertising business may have the opportunity to expand new revenue increases for Tencent music.

However, if the commercial sponsorship of Jay Chou's concert can be copied, I am afraid that a question mark can be made.

A person in charge of a new consumer brand told "Financial Story", "It is more because Jay Chou's influence is sufficiently influential, and the video number is full of traffic."

In fact, shortly after the concert, Tencent Music held a platter -type concert on the eve of the World Ocean Day, called "Sound of Sound Blue Born to the Sea".

However, the above -mentioned person in charge was quite embarrassing to find that the concert started at 7:30 in the evening. As of 7:49, the number of viewers in the video number was only 6040. By 8:30, the number of viewers was only 45,000.

"How can tens of thousands of people have any marketing value?!"

Therefore, the case similar to Jay Chou's concert, Yu Tencent Music is not obtained lightly. Whether it is the singer's coffee position or the inclined video number resources, it is indispensable.

Third, how to deal with the time and attention of short videos?

For the popular group, compared with the music of ear consumption, short videos are undoubtedly more immersive, which has also led to the decline in the number of online music users and the duration of user duration.

According to the report of "Comprehensive Annual Annual Analysis of China's Online Music Market in 2022", in January 2022, all mobile music users used for a single day for a single day for 21 minutes, a year -on -year decrease , Year -on -year decreased by 21%.

Short videos are also dominating the taste of the public. At the end of 2021, at the Tencent Music Entertainment Ceremony, the top ten hot songs promulgated in the year were almost all "Douyin Divine Comedy".

Grab users and grab the musicians.

In the past, quick trembling was criticized because of rumors on music copyrights, but now, the quick shake is gradually "being cleaned."

When Andy Lau entered Douyin, his 28 music works also authorized Douyin. When Jay Chou settled in the fast hand, he also carried 179 music copyrights simultaneously.

How does Tencent Music respond to the impact of short videos such as quick shake?

Its approach is to hold the thigh of the video number, "Continue to deepen the linkage with the WeChat video number, and attract more wide users in the WeChat ecosystem in a visual way."

Just released Tencent's financial report shows that the total use time of the video number exceeds 80%of the user circle users, and the total video playback volume of the video number increased by 200%year -on -year.In Q1 in 2022, the daily video updated by the musician and the TME platform in the WeChat video number has exceeded 100 million, and the quarter-quarter increased by more than 70%; by May 20-21 this year, TME LIVE Jay Chou concert two consecutive screenings watching watchThe number of people is nearly 100 million.

Conclusion

All in all, for Tencent Music and Netease Cloud, challenging is imminent, and the present days are not better.

At present, Netease Cloud has not yet tasted the profitable taste, and has not yet lost losses.

In contrast, Tencent's music is not bad, profit has become the norm, and has sufficient cash flow, but how to return to the growth channel is its biggest challenge.

Since its listing, its stock price has also fallen from the highest $ 32 to about $ 4.79 today -although the $ 1 billion repurchase funds have used 700 million yuan, but now, as long as the problem is not answered, the capital is not available.The market will not pay for it.

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