Tencent Music Entertainment<\/a>, China\u2019s largest music streaming company, reported forecast-beating financial results for the fourth quarter and full-year 2024, with annual subscription revenue surpassing the $2 billion milestone.<\/p>\n Annual subscription revenue surged 25.9% YoY<\/b><\/span> in 2024 to RMB 15.23 billion<\/b> (USD $2.12 billion<\/strong> at the average exchange rate for 2024) from RMB 12.1 billion in 2023 (USD $1.71 billion at the average exchange rate for 2023), according to TME\u2019s latest financial report published Tuesday (March 18).<\/p>\n The company attributed this performance to the consistent expansion of its paying user base and improved average revenue per paying user (ARPPU), which in turn was partly boosted by its \u2018Super VIP\u2019<\/strong> (SVIP) tier.<\/p>\n TME\u2019s paying subscribers increased 13.4% YoY<\/b><\/span> to 121 million<\/b> in Q4 2024 from 106.7 million in Q4 2023. This also reflects an addition of 2 million<\/b> subscribers between Q3 and Q4 2024. ARPPU rose to RMB 11.10<\/b> ($1.54<\/strong>) in Q4 from RMB 10.70 ($1.49) in Q4 2023.<\/p>\n \u201c2024 was a year of solid progress for TME, marked by strong performance in our online music business driving overall revenue growth and expanding profit margins,\u201d said Cussion Pang<\/b>, Executive Chairman of TME, in the earnings release.<\/p>\n Ross Liang<\/b>, CEO of TME, said, \u201cOur SVIP initiative also recorded solid performance during the fourth quarter, resulting in user engagement improvement and ARPPU expansion.\u201d<\/p>\n Back in Q3, Tencent Music noted<\/a> that over 8%<\/b> of its subscribers are Super VIP, equivalent to 10 million<\/b> users. An SVIP subscription costs around RMB 40<\/b> per month, five times as much as a<\/a>\u00a0regular RMB 8<\/b> subscription.<\/p>\n The success of Tencent Music\u2019s SVIP tier comes at a particularly interesting time as Spotify<\/a><\/b> is reportedly<\/a> preparing to launch its own super-premium tier. During an earnings call in July last year, Daniel<\/b> Ek<\/b> said Spotify will be launching<\/a> a new \u201cdeluxe\u201d tier that could include access to \u201csuperfan clubs<\/a>\u201d and new playlisting and song management tools.<\/p>\n TME said its SVIP tier gathered more traction after it rolled out enhanced audio quality and effects including AI-powered audio effects and voice extraction, an expanded digital album library, and the rollout of more perks for online concerts, such as high-definition modes for some shows.<\/p>\n For the whole year, TME\u2019s revenue from online music services jumped 25.5% YoY<\/b><\/span> to RMB 21.74 billion<\/b> ($3.02bn<\/strong>) from RMB17.33 billion ($2.45bn) in 2023. The company said this was driven by strong growth in music subscription revenues, as well as revenue from advertising services. Overall, revenue for 2024 edged up 2.3% YoY<\/strong><\/span> to RMB 28.40 billion<\/b> ($3.95bn<\/strong>).<\/p>\n In Q4 alone, revenue from online music services edged up 16.1% YoY<\/b><\/span> to RMB 5.83 billion<\/b> ($811.1m), pushing overall Q4 revenue higher by 8.2%<\/b> YoY<\/strong><\/span> to RMB 7.46 billion<\/b> ($1.04bn), beating the average analyst estimate of 7.30 billion yuan, according to data<\/a> compiled by LSEG.<\/p>\n Despite its strong performance in music streaming, TME\u2019s social entertainment services\u00a0 <\/span>\u2014 which includes karaoke app WeSing<\/b> and live concert platform Kuwo Music<\/b> \u2014 continued to decline, with revenues decreasing 13% YoY<\/b><\/span> to RMB 1.63 billion<\/b> ($226.7m) in Q4. The company attributed the drop to \u201cadjustments to certain live-streaming interactive functions and more stringent compliance procedures implemented.\u201d<\/p>\n MAUs for the social entertainment segment fell 21.2% YoY <\/b><\/span>to 82 million<\/strong> in Q4, while paying users decreased by 3.8%<\/b><\/span> to 7.7 million<\/strong>. The social entertainment ARPPU also declined, down 9.7% <\/b><\/span>to RMB 70.40<\/b> ($9.79).<\/p>\n TME\u2019s net profit attributable to shareholders for 2024 surged 35% YoY<\/b><\/span> to RMB 6.64 billion<\/b> ($923.6m<\/strong>), or RMB 4.24<\/b> per diluted share. In Q4 alone, attributable net profit jumped 49.8% YoY <\/b><\/span>to RMB 1.96 billion<\/b> ($272.6m<\/strong>), or RMB 1.26<\/b> per share, topping the analyst consensus of RMB 1.22.<\/p>\n Beyond the regularly reported numbers, TME disclosed that it has incorporated China\u2019s DeepSeek<\/b><\/a> AI model (which sent global markets into a frenzy<\/a> earlier this year) into its song creation features. The company said integrating DeepSeek \u201cinvigorated passion for music creation among our users.\u201d<\/p>\n By adopting AI, TME said it has broadened its content base, now offering 260 million<\/b> licensed and co-created music and audio tracks on its service \u2014 significantly more than the \u201cover 100 million<\/b>\u201d Spotify reported<\/a> in its most recent fiscal year report.<\/p>\n TME said its AI implementation extends beyond creation to personalization through integration with AI assistants, comment sections, and recommendation pages.<\/p>\n![](\"https:\/\/www.musicbusinessworldwide.com\/files\/2024\/11\/tme-paying-music-users-quarterly-1-80x44.png)
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