Tencent Music reported a second-quarter profit that surpassed expectations of analysts, as its advertising business made a comeback and more people subscribed to its music streaming platform.
The music entertainment group said on Monday that its online subscriptions were unlikely to be seriously affected by China’s copyright rules, and that it agreed with what the regulators aimed to achieve; the promotion of a healthy development of the music industry.
Tencent’s second-quarter experienced an increase of 41 percent in the number of paid subscribers for its online music service; growing to 66.2 million. The figure was boosted by investments in long-form audio and a refreshed music library expanded by licensing deals with Universal Music Group, Sony Music and other labels.
Tencent Music shares rose by 3.1 percent in extended trading after its earnings release, paring back losses that saw it fall 9% earlier on Monday.
China’s persistent clampdown on its tech giants, and a ruling that made the company’s parent company, Tencent Holdings Ltd, to give up exclusive rights to the music group, have caused the shares of Tencent Music to lose half their market value this year.
Tencent Music Group, in the report, said that it expects the decision of China’s regulators on copyright agreements to affect its operations and online subscriptions, but not drastically.
Tencent Music made most of its income from social entertainment services business which includes online karaoke platforms where users can live stream concerts. The music entertainment group posted a 7.4 percent increase in revenue to 5.06 billion yuan in the quarter, with the music company’s social entertainment accounting for most of the revenue.
Tencent is forging ahead with plans to continue improving its music service to provide maximum satisfaction for users, as the chapter with regulators and rules, seems to be coming to an end. “Tencent Music is now focusing on content creation and user experience improvement. They are on the right road as the fight over copyright is over.” Frank Zhao, a Beijing-based independent music industry analyst, said.
Tencent Music Group’s total revenue rose by 15.5% to 8.01 billion yuan ($1.24 billion). The company earned 0.66 yuan per American depository share on an adjusted basis, more than estimates of 0.62 yuan.